A.R. KRISHNAMURTHY & ANR versus C.L.T. MADRAS

A.R. KRISHNAMURTHY & ANR versus C.L.T. MADRAS

Grant of a mining lease for any period is included in the ambit of 'transfer' of a capital asset under section 45 of the Income Tax Act, 1961. The cost of acquisition of the leasehold right is determinable, as it forms part of the cost of acquiring the land; apportionment of cost is a question of fact to be determined based on evidence. Computation provisions under the Act are applicable, and capital gains tax is attracted.

Parties
Appellant: A.R. Krishnamurthy & Anr.; Respondent: C.I.T. Madras
Jurisdiction
India
Judgment Date
10 February 1989
Procedural Posture
Civil Appeal / Supreme Court Appeal From Madras High Court Decision
Outcome
Appeal dismissed
Legal Topics
Capital Asset, Cost of Acquisition, Mining Lease, Leasehold Interest, Capital Gains Tax
Income Tax Capital Gains Capital Asset Cost of Acquisition Mining Lease Leasehold Interest Capital Gains Tax

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Parties

A.R. Krishnamurthy & Anr.

Appellant

C.I.T. Madras

Respondent

Procedural Posture

Civil Appeal / Supreme Court Appeal From Madras High Court Decision

Legal Issues

  1. 1 Whether the grant of a mining lease for ten years by the assessee gives rise to a capital gain taxable under section 45 of the Income-tax Act, 1961.
  2. 2 Whether the cost of acquisition of leasehold right is capable of valuation such that capital gains can be computed.

Ratio Decidendi

Grant of a mining lease for any period is included in the ambit of 'transfer' of a capital asset under section 45 of the Income Tax Act, 1961. The cost of acquisition of the leasehold right is determinable, as it forms part of the cost of acquiring the land; apportionment of cost is a question of fact to be determined based on evidence. Computation provisions under the Act are applicable, and capital gains tax is attracted.

Court Disposition

Appeal dismissed

Orders

  • Appeal dismissed with costs.