Law:

Section:

Section 45 of the Income-tax Act, 1961 - Capital gains - Chargeable as - Assessment year 1966-67 - Assessee carrying on business of bus transport, sold six buses for certain amount - Income-tax Officer held that capital gain arose to assessee by sale of buses - On appeal, assessee contended that assessment made by Income-tax Officer represented in effect sale of route permits and that no capital gain could arise therefrom - AAC as well as Tribunal dismissed assessee's appeal - Whether though assessee did not produce any material to show actual cost of acquisition, yet it was clear that there was acquisition of route permit, and in such a situation, it was necessary for Income-tax Officer or appellate authorities to estimate cost of such route permits and then bring to tax balance of sale proceeds - Held, yes (-Matter remanded back) FACTS The assessee, carrying on the business of bus transport, sold six buses for Rs. 1,85,00. The written down value of the buses was Rs. 68,329. The Income-tax Officer held that the capital gain arose to the assessee by the sale of the buses. The assessee appealed against this assessment to the AAC, contending that the assessment as made by the Income-tax Officer represented in effect the sale of the route permits and that no capital gains could arise therefrom. The AAC dismissed the appeal. The Tribunal upheld the order of the AAC. On reference : HELD In the instant case, the route permit was not a self-generaling asset. The route permit was one granted to the assessee as a result of an application having been made therefor and as a result of the assessee succeeding in the appeal and subsequent proceedings before courts, in case there was any objection by any one else to the grant. There was no material to show that the assessee purchased the buses along with the route permits and then sold the buses along writ the route permits to third parties. If the assessee had so purchased the buses with the route permits, then the purchase price would itself include consideration for the purchase of the route rights and, therefore, there would be cost to that extent, of the route permits. If the assessee had not paid for the route permits…

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