SAJJAN BAGARIA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE following question of law has been referred by the Income-tax Appellate Tribunal, Gauhati Bench, Gauhati, under Section 256(1) of the Income-tax Act, 1961, to this court for decision :

(2.) THE firm owned a house property at 61, Mcleod Street, Calcutta. This house property was sold by the firm for Rs. 3,25,000. THE cost of the building was determined at Rs. 2,23,212. THE sum of Rs. 1,01,788, which is the difference between the selling price of Rs. 3,25,000 and the cost of Rs. 2,23,212, was determined to be long-term capital gain of the firm. After making the deductions as per provisions of Section 80T of the Income-tax Act, 1961 (hereinafter referred to as " the Act "), the amount of capital gain was determined by the Income-tax Officer assessing the firm at Rs. 53,233. This amount was allocated amongst the assessee and the two other partners in equal shares. THE amount allocated to the assessee was Rs. 17,744.

(3.) THE Income-tax Officer rejected the claim holding that whatever deductions were to be allowed for finding out the capital gains would be allowed in the hands of the firm and no deduction could be allowed in the hands of the assessee. THE Income-tax Officer also noted that the amount of Rs. 25,863 had been paid by the assessee for becoming a partner in the firm, M/s. Bagaria Building Corporation, and not for purchasing the property. THE amount, therefore, according to the Income-tax Officer, could not be treated as the cost of the property in the hands of the assessee.