RAMAN KRISHNAN Vs. INCOME TAX OFFICER
INCOME TAX APPELLATE TRIBUNAL
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M. Fatima Beebi, Judicial Member -
(1.) THESE two appeals by the assessee arise from the consolidated order dated 21-6-1979, of the AAC relating to the income-tax assessment for the assessment years 1976-77 and 1977-78. The ground raised by the assessee is common for the two assessment years and it relates to the computation of capital gains.
(2.) The assessee under order of the Land Tribunal dated 4-7-1974 got assigned in his favour, 37 1/2 cents of land, while holding the same as cultivating tenant. Under two sale deeds dated 30-12-1975 and 18-3-1976, the assessee conveyed 14 cents out of that for a total consideration of Rs. 61,000. In the assessment for the assessment year 1976-77, the ITO computed the capital gains arising out of the transfers at Rs. 21,422. In the previous year for the assessment year 1977-78 the assessee transferred another plot of 6 cents for a consideration of Rs. 33,000. The capital gains arising out of the transfer was computed at Rs. 16,039 in the assessment for the assessment year 1977-78. The ITO rejected the claim of the assessee that no capital gains, chargeable under the Income-tax Act, 1961 ('the Act'), arose on the transfer of these assets. The cost of acquisition to the assessee was found to be 'nil' while deduction of costs of improvements and other expenses were allowed in each year.
The appeals preferred by the assessee against the assessments were dismissed by the AAC who agreed with the ITO in that the land transferred was capital asset and the gains arising out of the transfer was chargeable to tax. The AAC also confirmed the computation at Rs. 21,422 and Rs. 16,039, respectively, for the two assessment years.
(3.) THE assessee in further appeal before us has reiterated the contention that no capital gains arose on transfer of the assets by the assessee. According to the assessee, the right acquired by the assessee over the property is self-created and what is transferred is a self-generated asset, the acquisition of which did not cost anything in terms of money to the assessee and, therefore, capital gains tax is not exigible. It is stated that the assessee had as cultivating tenant fixity of tenure over 37 1/2 cents of land, the land owner's right over the same had been assigned in his favour under the provisions of the Kerala Land Reforms Act without payment of any consideration, that the right the assessee acquired over the land was on account of his long possession and physical labour and the transfer of such an asset would not attract tax on capital gains. It is urged on behalf of the assessee that as no capital gains arise in the case of goodwill of a newly commenced business, on the principles stated by the Supreme Court in CIT v. B.C. Srinivasa Setty  128 ITR 294, no capital gains tax is exigible in the instant case.;
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