Dharmakumar C. Kapadia Vs ACIT (Bombay High Court)
(i) In terms of Section 48 of the Act, the income taxable under the head ‘capital gains’ is to be computed after deducting from the full value of consideration received on sale of capital asset, the cost of acquisition and improvement of the asset. Section 49 of the Act provides the manner of computing the cost of capital asset obtained by certain modes of acquisition. In this case, both the Appellant Assessee have acquired the capital asset i.e. tenancy rights by inheritance i.e. from their father. Thus, the cost of acquisition of an asset is to be computed in terms of Section 49(1) (iii) (a) of the Act. It provides that the cost of acquisition, would be deemed to be the cost for which the previous owner of the property acquired as increased by the cost of improvement.
(ii) Section 55(2) (a) of the Act, deals with a capital assets, being in the nature of tenancy rights as in this case. It provides that the cost of acquisition would be either the cost of purchase price by assessee or in any other case, it would be taken as nil, excluding capital assets such as tenancy which has been acquired by succession or inheritance.
