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Section 55 of the Income-tax Act, 1961 - Capital gains - Cost of acquisition - Whether only condition which must be satisfied in order to attract charge to tax under section 45 is that property transferred must be a capital asset on date of transfer; it is not necessary that it should have been capital asset also on date of its acquisition by assessee - Held, yes - Whether cost of acquisition/fair market value of an asset is to be computed as on 1-4-1981 in terms of section 55(2)(b) and not as per date of notification, on which date asset was notified as a capital asset - Held, yes CASES REFERRED TO CIT v. Smt. M. Subaida Beevi [1986] 160 ITR 557 /[1987] 30 Taxman 50 (Ker.) [Para 2] and CIT v. Karvalves Ltd.[1992] 197 ITR 95 / 60 Taxman 483 (Ker.) [Para 2]. JUDGMENT P.R. Raman, J. - The point that arises for consideration in this appeal is as to what is the date on which the cost of acquisition/fair market value of the appellant's property has been computed. Is it the date of the notification, namely 6-1-1994, on which date the asset was notified as the capital asset or is it to be computed as on 1-4-1981 in terms of section 55(2)(b) of the Income-tax Act. 2. The property held by the assessee became a capital asset as per the notification issued on 6-1-1994. But as per section 55(2)(b), the cost of any improvement in relation to a capital asset means all expenditure of a capital nature incurred in making any additions or alterations to the capital asset on or after 1-4-1981 by the previous owner or the assessee. Admittedly, the asset which was declared as capital asset by notification became the asset of the assessee long prior to 1-4-1981. Thus the Legislature while explaining the term of cost of acquisition has in express terms provided that it is the value of the assets acquired as on 1-4-1981 together with all such expenditure of capital nature incurred in making any additions or alterations to the said asset. Therefore, the contention of the assessee that the value of the asset should be as on the date of the notification when it became a capital asset cannot be accepted. In this connection a Bench decision of this Court reported in CIT v. Smt. M. Subaida…

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