K.N.Seth, J. - (1.) At the instance of the department, the Income-tax Appellate Tribunal, Allahabad Bench, has referred the following question for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the capital gains ought to have been computed on the basis of transactions spread over a period of 27 years in question or on the basis of transactions occurring in each assessment year ?"
(2.) The assessee is an HUF. It was following two different accounting years, i.e., the calendar year for business and the financial year for property. The proceedings relate to the assessment year 1969-70. The dispute relates only to the capital gains in respect of sale of land at Amritsar.
(3.) The assessee purchased land measuring 28,278 square yards during the period 1942-1947 for a sum of Rs. 1,66,273. A sum of Rs. 81,000 was spent on improvement raising the total cost of land to Rs. 2,47,723. The assessee showed a capital gain of Rs. 30 only in the return of income for the assessment year in question. The ITO, while determining the capital gains, took into account only the sale of plots measuring 5,673 square yards for Rs. 1,05,700 during the previous year relevant to the assessment year and after working out the proportionate cost held that there was a capital 'gain of Rs. 55,670. On appeal by the assessee, the AAC came to the conclusion that the capital gain computed by the ITO could not be sustained. The department went up in appeal to the Tribunal. The Tribunal upheld the decision of the AAC principally on the reasoning that the land purchased during the period 1942 to 1947 was developed as a single unit; that the assessee sold plots spread over a long period and still retained a considerable parcel of the land. The Tribunal also took into account the fact that in earlier years the assessee's stand that loss or gain on the sale of the property would be considered when the entire plots of land were sold had been impliedly accepted by the department. In the opinion of the Tribunal, the principle adopted by the ITO by working out the cost of the land per square yard and determining the profits after adjusting it against the sale of each plot was unwarranted.;