Section 48-Cost of Acquisition of land to partner would be deemed as its book value

Cost of Acquisition of land to partner would be deemed as its book value on date of transfer on dissolution of firm

[2015] 57 taxmann.com 352 (Hyderabad - Trib.)

IN THE ITAT HYDERABAD BENCH 'B'

Bimco Electrical Products (P.) Ltd.

v.

Assistant Commissioner of Income-tax, Circle-1 (3), Hyderabad

I. Section 48, read with section 45, of the Income-tax Act, 1961 - Capital gains - Computation of (Cost of acquisition) - Assessment year 2006-07 - Land in question was allotted to a partnership firm in 1973 at Rs. 10,000 per acre - In 1987 said firm revalued land at Rs. 13,40,000 and credited partners' accounts - On 1-10-1991, firm was dissolved and assessee-company took over its assets and liabilities - Assessee sold aforesaid land and adopted cost of acquisition of land at Rs. 13,40,000 - Assessing Officer adopted cost of acquisition of land at Rs. 10,000 per acre and computed capital gains - Whether in terms of section 45(4) book value of land as on date of transfer, i.e., Rs. 13,40,000, should be taken as consideration paid by assessee to partnership firm and thus, cost of acquisition in its hands - Held, yes [Paras 9 and 10][In favour of assessee]