Law:

Section:

I. Section 48 of the Income-tax Act, 1961 - Capital gains - Computation of - Assessment year 1996-97 Where Tribunal had in fact not examined facts and circumstances of case before applying principle as evolved in CIT v. B.C. Srinivasa Setty [1981] 128 ITR 294 (SC) and recording a finding that principle was attracted to facts and circumstances of case, matter was to be remanded to Tribunal [Case remanded] Apart from transferring his entire shareholding in the company in favour of the buyer, the assessee had, under a separate agreement, agreed to transfer the liabilities in connection with a software that the assessee himself had developed, some of the assets of the company, namely computers and some software information, Oracle software as also intellectual property rights of all patents and copyrights which he personally owned and the total value of all the items was Rs. 45 lakhs. He had also offered a further sum of Rs. 8.78 lakhs as capital gain from the sale of copyright (computer software) indicating that the price which he had received for the sale of this item itself was the capital gain, as according to the assessee the cost of acquisition was nil. The assessee had also received an amount of Rs. 25,00,000 by way of advance in respect of Rs. 45 lakhs which the assessee was to receive from the transferee. The Assessing Officer was of the view that the sum of Rs. 25,00,000 should have been offered as capital gain in the very year and not avoided for offering on the pretext of being advance payment as in the opinion of the Assessing Officer the transaction was well over and amount was regarded as part of the sale consideration. On such premise, the Assessing Officer finalized the assessment adding a sum of Rs. 25,00,000 to the capital gain already worked out by the assessee himself and called upon the assessee to pay commensurate tax. The Tribunal, however, deleted the addition. Held that, the Tribunal had simply proceeded to apply the ratio of the decision of the Supreme Court in CIT v. B.C. Srinivasa Setty [1981] 128 ITR 294 to the situation and also for the reason that the provision of section 55(2) had not come in the statute for the assessment year…

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