S VAIDYANATHASWAMI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee was plying two route buses on the routes Kangeyanalloor to Krisharasampattu and Minnal Railway Station to Tiruttani. He had also a spare bus. On June 1, 1966, he sold these buses along with the route permits. THE sale itself is evidenced by a document, and it is not in dispute that in the said document, separate sale considerations for the buses and the value of the rights to ply in the respective routes were given. THE value of the route permits in respect of the route, Kangeyanalloor to Krisharasampattu was Rs. 5, 000 and Minnal Railway Station to Tiruttani was Rs. 17, 500, thus making a total of Rs. 22, 500. This amount of Rs. 22, 500 was sought to be brought to tax as capital gain in respect of the assessment year 1967-68. THE contention of the assessee was that the route permit is not property and in any case since there was no cost of acquisition, the amount realised by the sale of it could not be subjected to tax as capital gains. Both these contentions were rejected by the ITO as well as the AAC And the Tribunal. At the instance of the assessee, the following question has been referred "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the amount of Rs. 22, 500 was taxable as capital gains for the assessment year 1967-68 under the provisions of the Income-tax Act, 1961 ?" *THE learned counsel for the assessee contended that the right to ply buses or vehicles on public roads is a fundamental right of every citizen and the requirement of taking a permit was only a regulation of such right and that, therefore, the permit granted would not amount to a capital asset. He also sought to support this contention with reference to the provisions of the Motor Vehicles Act. But we are afraid that it is too late for the assessee to contend that such a right was not property.

(2.) THIS court has been taking a consistent view that the route permits have value and that it is property and it can be the subject-matter of transfers for consideration or gifts. In fact in A. Vimalan v. CGT add the decision in T.C. No. 148 of 1971 (Ramaswami Udayar v. CIT/GT it has been held that the transfer without consideration of these route permits would amount to a gift and be subjected to tax. The G.T. Act defines "gift" as meaning a transfer by one person to another of any existing movable or immovable property. Apart from these, in this case, as already noted, the sale deed specifically referred to the sale of the route permits and also separately gave the sale consideration. In these circumstances, we could not accept the contention of the learned counsel for the assessee that the route permit was not propertyThe Tribunal rejected the contention of the assessee that there was no cost of acquisition of the permits and that, therefore, the amount realised by the sale of it would not be subjected to tax as capital gains. The Tribunal observed that this is not a self-generating asset, and that, though the cost incurred by the assessee in securing it may be negligible, nevertheless some cost must have been incurred in the process of acquiring the property. In the absence of any material to show as to what was the cost of acquisition, the Tribunal held that the entirety of Rs. 22, 500 would be liable to tax as capital gains.