Law:

Section:

Section 48, read with section 45, of the Income-tax Act, 1961-Capital gains-Computation of-Assessee purchased land in different lots during period 1942 to 1947 but combined entire such plots into one unit and developed it as such under one scheme-During assessment year 1969-70, assessee sold few of plots-Whether profit or loss earned on venture could not be correctly determined unless transaction of sale of entire lands was complete-Held, on facts, yes-Whether ITO justified in working out cost of land per square yard and determining profits after adjusting it against sale of each plot-Held, on facts, no Facts The assessee-HUF, had purchased land in different lots during the period 1942 to 1947 and incurred a sum on its improvement. During the accounting year, relevant for the assessment year 1969-70, the assessee had sold a small part of the aforesaid land measuring and showed a capital gains of Rs. 30 only in the return of income. In the earlier assessment years, the assessee's stand that loss or gain on the sale of the said lot of land would be considered when the entire plots of land were and sold had been impliedly accepted by the department. For the assessment year 1969-70, however, the ITO computed the capital gains by taking into account only the sale of part of the aforesaid land, and, after working out the proportionate cost of the land per square yard, and held that there was a capital gain of Rs. 55,670. On appeal, the AAC held that the capital gains computed by the ITO could not be sustained. The Tribunal, on second appeal, sustained the AAC's order on the grounds, inter alia, ( i) that the land purchased during the period 1942 to 1947 was developed as a single unit; (ii) that the assessee sold plots spread over a long period and still retained a considerable parcel of the land ; and (iii) that the principle adopted by the ITO by working out the cost of the land per square yards and determining the profits after adjusting it against the sale of each plot was unwarranted. Held Although the land was purchased in different lots during the period 1942 to 1947 but the entire land was combined into one unit and developed as such under one scheme. Hence,…

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