Law:

Section:

Section 49 of the Income-tax Act, 1961 - Capital gains - Cost with reference to certain modes of acquisition - Assessment year 1975-76 - Assessee was entitled to one-fifth share on partial partition of HUF which worked out to Rs. 44,000 - Sub-plot, including incompletely constructed bungalow valued at Rs. 67,000, fell to lot of assessee, but since his share in HUF property at time of partition had come to only Rs. 44,000, he paid Rs. 23,000 more to HUF for getting said sub-plot - Whether assessee was entitled to deduction of additional amount paid in computation of capital gains, accrued to him, as cost of acquisition of additional interest in property in question over and above interest which was allotted to him as his share in property of larger HUF at time of partial partition - Held, yes FACTS The partial partition of the HUF of which the assessee was a member was effected on 15-10-1971 when the total property of the HUF was valued at Rs. 2,20,000. One-fifth share of the assessee came to Rs. 44,000. A sub-plot, including incompletely constructed bungalow, fell to the lot of the assessee which was valued at Rs. 67,000. Since the assessee's share in the HUF property was only Rs. 44,000, he had to pay Rs. 23,000 more to the HUF for getting the said sub-plot and incompletely constructed building. He sold the said property at Rs. 1,42,000 on 4-10-1974 and, inter alia, claimed deduction of additional amount of Rs. 23,000 while calculating capital gains. The ITO rejected the claim. On appeal, the AAC accepted the stand of the ITO and held that deduction was not permissible under section 49(1) as the assessee had not made any improvement to the said property. On further appeal, the Tribunal accepted the assessee's contentions and allowed the claim holding that the assessee paid the said amount for getting the additional interest in the property over and above the interest which he got at the time of partial partition and that was the cost of acquisition to the assessee for the additional interest in the property. On reference, besides taking the earlier stand, an alternative contention was raised on behalf of the revenue, namely, that if the assessee's contention…

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