COMMISSIONER OF INCOME TAX Vs. HARBHAGWAN

JUDGEMENT

(1.) THE following question relating to the asst. yr. 1972-73 has been referred by the Tribunal, Chandigarh, at the instance of the Department, under s. 256 (1) of the IT Act, 1961 (for short, "the Act") : "whether, on the facts and in the circumstances of the case, the Tribunal has been in error in holding that no capital gains arose to Harbhagwan in relation to his individual assessment for the asst. yr. 1972-73 by holding that HUF of Lala Harbhagwan was the last previous owner of the plots at Mall Road, Karnal, in terms of s. 49 (1) of the IT Act, 1961, as applicable to the relevant assessment year ?

(2.) THE assessee, in the status of an individual, was assessed for the asst. yr. 1972-73 under s. 143 (3) of the Act. Accounting year of the assessee ended on 7th September, 1971. The assessment was, however, set aside by the AAC and the case was remanded to the AO. Thereafter, assessment was reframed by the AO, adding a sum of Rs. 6,623 as capital gains as a protective measure. The aforesaid amount of Rs. 6,623 had also been assessed in the hands of the Hindu undivided family (HUF) of the assessee.

(3.) ANY profit or gain arising from the transfer of a capital asset is chargeable to income-tax under the head "capital gains" under s. 45 of the Act. Such income (capital gains) is to be computed under s. 48 of the Act by deducting from the full value of consideration, the cost of acquisition of the capital asset including the cost of any improvement and also the amount of expenditure incurred wholly and exclusively in connection with the transfer. Cost of acquisition is to be determined under s. 49, keeping in view the mode of acquisition. Since s. 49 is relevant for the purpose of the present case in hand, it would be necessary to examine s. 49 which read as under as the relevant time :