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Commissioner Of Income-Tax, Tamil Nadu-Ii v. Shri Venkateswara Bus Union

Madras High Court

Jan 31, 1979

Judgment

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Structured Summary of the Opinion (Sethuraman, J.)

Factual and Procedural Background

The reference arises under section 256(1) of the Income Tax Act and raises seven specific questions concerning taxation consequences of certain transfers by the assessee, a partnership firm engaged in bus transport. The firm owned nine buses and associated route rights between Tirupati and Kalahasthi.

On November 16, 1967, the assessee transferred the nine buses and route permits to one Velu Mudaliar for a total consideration of Rs. 4,20,000. In its accounts the assessee allocated Rs. 1,50,000 to the buses and Rs. 2,70,000 to the route rights. The Income Tax Officer (ITO) disagreed with this allocation, computed a higher market value for the buses (working back from market value as at date of transfer after allowing depreciation), and assessed a profit under section 41(2) on the difference between his computed sale proceeds for the buses and their written down value; the balance was assessed as capital gains on route permits.

Separately, the assessee sold ten grounds of land in Tirupati to M/s Pratap Talkies. An agreement dated January 15, 1961 showed consideration of Rs. 10,000, but the sale deed was executed on March 22, 1968. The ITO took the fair market value as on the date of conveyance (March 22, 1968) at Rs. 1,06,000 and computed capital gains accordingly. The assessee had earlier agreed before the ITO to a valuation of Rs. 50,000.

The Assessing Officer's computations were confirmed by the AAC. The assessee appealed to the Appellate Tribunal, which accepted the assessee's allocation of Rs. 1,50,000 for buses and Rs. 2,70,000 for route rights, directed computation of s.41(2) profits on that basis, held that there was no liability to capital gains on route permits (relying on an earlier Tribunal order and a decision of the Andhra Pradesh High Court), and for land adopted Rs. 50,000 as a fair value (because the assessee had earlier agreed to that figure) despite noting the agreement of 1961 for Rs. 10,000 and the deed of 1968.

The present reference (questions 1–7) asks this Court to consider the correctness of the Tribunal's allocations and computations, capital gains treatment of route permits, and the proper basis and amount for valuation of the land sold to Pratap Talkies.

Legal Issues Presented

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding and had valid materials to hold that the value of the buses should be taken only at Rs. 1,50,000?
Whether, on the facts and in circumstances of the case, the Appellate Tribunal was right in allocating the sale price of the buses at Rs. 1,50,000 and the route value at Rs. 2,70,000?
Whether, on the facts and in the circumstances of the case, profits under section 41(2), computed by the Tribunal is valid and proper?
Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that there was no liability to capital gains on the transfer of route permits?
Whether the Appellate Tribunal was right in holding that the correct basis for evaluating the market value of the land sold to Pratap Talkies on March 22, 1968, would be to take into account the market value as on January 15, 1961, on which date the agreement of sale was executed?
Whether the Appellate Tribunal was right in fixing the value of the land at Rs. 50,000 in view of the appellant's agreeing with the income-tax department for the valuation of the land at Rs. 50,000 on the facts and circumstances of the case?
Whether the computation of capital gains from the land sold by the assessee to Pratap Talkies, as directed by the Tribunal, is proper and valid in law?

Arguments of the Parties

Assessee's Arguments

The assessee allocated the total sale consideration of Rs. 4,20,000 between the buses (Rs. 1,50,000) and route rights (Rs. 2,70,000) in its accounts and contended that this allocation fairly reflected the sale price of the buses.
In relation to land, the assessee relied on the earlier agreement dated January 15, 1961 showing consideration of Rs. 10,000 and had, at an earlier stage before the ITO, agreed to a valuation of Rs. 50,000 for the land.
Before the Tribunal, the assessee represented that in the purchaser's hands the cost of the buses had been taken at Rs. 1,50,000; the revenue's authorised representative did not challenge that statement before the Tribunal.

Revenue's (Department's) Arguments

The ITO did not accept the assessee's allocation; he took the market value of the buses as on November 16, 1967 and worked back the market value by allowing depreciation at 15% to arrive at a higher sale price for the buses (Rs. 2,69,816) and assessed the difference as income under s.41(2), treating the remainder as capital gains on route permits.
As regards land, the ITO proceeded on the basis that fair market value should be ascertained on the date of conveyance (March 22, 1968) and adopted a value of Rs. 1,06,000 for computation of capital gains.
In the Tribunal, the department relied (as apparent from the Tribunal's discussion) on an earlier Tribunal order and the Andhra Pradesh High Court decision in CIT v. Krishna & Sons to argue that route rights might not constitute a capital asset liable to capital gains (though the Court notes the Tribunal's reliance on that decision and that the A.P. High Court decision was under appeal to the Supreme Court at the relevant time).

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
CIT v. Krishna & Sons (A.P. High Court) — as noticed by Tribunal; appeal to SC reported as CIT v. Krishna and Sons, [1968] 70 ITR 733 (SC)	Held (at High Court level) that route rights did not represent property and could not be a capital asset.	The Tribunal relied on the A.P. High Court decision to hold no capital gains on route rights; this Court observed that the Supreme Court's report did not pronounce on assessability to capital gains and therefore did not support the Tribunal's conclusion.
G. Vijayaranga Mudaliar v. Commissioner of Income-Tax, Madras, [1963] 47 ITR 853 (Mad)	Consideration of value and capital gains treatment of route rights (route permits having value and being assessable).	The Court cited this decision as one of several of the Madras High Court taking the view that route rights have value and are liable to capital gains; used to reject the Tribunal's contrary position.
A. Vimalan v. CGT, [1974] 94 ITR 21 (Mad)	Madras High Court decision on route rights being assets with value for capital gains purposes.	Referred to among precedents establishing that route rights attract capital gains; supports remittal to Tribunal to determine actual cost of acquisition.
Ramaswami Udayar v. CIT, [1979] 116 ITR 493 (Mad)	Madras High Court view that route rights have value and are assessable to capital gains.	Used by this Court to show consistent view of the Madras High Court contrary to the Tribunal's reliance on the A.P. High Court decision.
K. Balasubramania Nair v. Commissioner Of Income-Tax, Tamil Nadu-II, [1979] 119 ITR 504 (Mad) (T.C. No.110 of 1975)	Considered the question of actual cost of acquisition of route rights and remitted matter to Tribunal for that determination.	This Court directed that the Tribunal consider the actual cost of acquisition of route rights in the light of this decision; remitted computation of capital gains on route rights to Tribunal accordingly.
Commissioner Of Income-Tax, Madras v. K. Rathnam Nadar, [1969] 71 ITR 433 (Mad)	Concerned with self-generating asset (goodwill) where no cost of acquisition was paid; relied on by an assessee in another case to argue route rights had no cost of acquisition.	The Court distinguished Rathnam Nadar as inapplicable to route rights because route permits involve an application and processes resulting in acquisition and may have a cost; thus, Rathnam Nadar does not support treating route rights as self-generating assets free of acquisition cost.
CIT v. Rikadas Dhuraji, [1976] 103 ITR 111 (Mad)	Principle that under-statement of consideration in an instrument must be established as a factual basis before invoking s.52(2) to vary consideration.	Applied to hold that there was no factual basis to vary the sale consideration beyond Rs. 50,000 (which the assessee had itself admitted), so the Tribunal properly used Rs. 50,000 for computing capital gains on the land.
Addl. CIT v. Kuppuswamy (P.S.), [1978] 112 ITR 1012 (Mad)	Same principle as Rikadas Dhuraji regarding requirement of factual basis for invoking s.52(2) to vary consideration in an instrument.	Relied upon to support the conclusion that, absent facts showing under-statement of consideration, the Tribunal correctly adopted Rs. 50,000 (the amount admitted by the assessee) as the basis for capital gains computation for the land.

Court's Reasoning and Analysis

The Court considered the questions in grouped issues and applied the following reasoning strictly as stated in the opinion:

Questions 1–3 (allocation between buses and route rights and s.41(2) computation):
- The central issue was whether the Tribunal had valid material to accept the assessee's allocation of Rs. 1,50,000 for the buses (and therefore Rs. 2,70,000 for route rights).
- The Tribunal relied on multiple grounds: (a) that the ITO had taken Rs. 1,50,000 as value of the buses in making assessment on the purchaser for depreciation purposes (though the present Court notes absence of material to show a higher figure was taken in purchaser's case), (b) detailed examination of the written down value of each bus, their ages, and the subsequent sale prices fetched by the purchaser soon after acquisition.
- The Court observed that even if the Tribunal's reference to the purchaser's assessment were incorrect or not the principal reason, the Tribunal provided independent reasons based on age, written down value, and subsequent resale prices that constituted adequate material to accept Rs. 1,50,000 as the buses' sale price.
- On that basis the Court concluded that the Tribunal's allocation was supported by sufficient material and that the corresponding treatment under s.41(2) should be consistent with this allocation.
Question 4 (capital gains on route permits):
- The Tribunal had held that route rights did not give rise to capital gains relying on its earlier order and the Andhra Pradesh High Court decision in CIT v. Krishna & Sons, which held route rights were not property and not capital assets.
- The Court noted the Andhra Pradesh High Court decision was under appeal to the Supreme Court and the Supreme Court's report did not pronounce on assessability to capital gains. The earlier Tribunal order relied upon was not produced to this Court, so its reasoning was not before the Court.
- The Court then referred to a series of Madras High Court decisions (G. Vijayaranga Mudaliar; A. Vimalan; Ramaswami Udayar; and K. Balasubramania Nair) which consistently held route rights have value and are liable to capital gains; in particular, K. Balasubramania Nair remitted the matter to the Tribunal to consider actual cost of acquisition for computing capital gains.
- The Court distinguished Rathnam Nadar (which dealt with a self-generating asset, goodwill) and explained that route permits involve applications and processes that can give rise to a cost of acquisition, so they are not akin to self-generated goodwill that has no acquisition cost.
- Accordingly, the Court found the Tribunal's view based on the A.P. High Court decision (as relied on by the Tribunal) to be incorrect in light of the number of Madras High Court decisions to the contrary, and answered the question in the negative (i.e., there can be capital gains on route rights). The Court remitted to the Tribunal the question of the actual amount of capital gains to be determined in the Tribunal's further order, in light of its observations and the K. Balasubramania Nair decision.
Questions 5–7 (capital gains on land sold to Pratap Talkies):
- The facts: agreement dated January 15, 1961 showed consideration of Rs. 10,000; conveyance executed March 22, 1968. The ITO assessed on fair market value as on conveyance date (March 22, 1968). The assessee had earlier agreed before the ITO to take the value at Rs. 50,000.
- The Tribunal held that the correct basis for market value was as on January 15, 1961 (date of agreement), and on that basis the Rs. 10,000 in the agreement would be correct. However, because the assessee had admitted Rs. 50,000 before the ITO, the Tribunal directed that Rs. 50,000 be taken as the basis for computing capital gains.
- The Court noted question No. 6 (challenging adoption of Rs. 50,000) appeared to have been included at the assessee's suggestion but had not been the subject of any application for reference by the assessee; the assessee thereby could not challenge the figure in the present reference and in fact did not challenge it at hearing.
- The Court further observed there was no finding by the income-tax authorities or the Tribunal of any under-statement of consideration that would permit invoking s.52(2) to vary the consideration in the instrument. The Court relied on two Madras High Court decisions (CIT v. Rikadas Dhuraji and Addl. CIT v. Kuppuswamy) which require a factual basis to be shown before varying the consideration. Absent such factual basis, and given the assessee's own admission to Rs. 50,000, the Tribunal was held to be right in using Rs. 50,000 for computation of capital gains.
- Therefore, Questions 5 and 7 were answered in the affirmative and in favour of the assessee; question 6 was not answered as unnecessary in view of the concession made for the assessee.

Holding and Implications

Holding:

Questions 1 to 3: Answered in the affirmative and in favour of the assessee — the Tribunal had sufficient material to accept the allocation of Rs. 1,50,000 to the buses and Rs. 2,70,000 to the route rights, and the s.41(2) computation is to be consistent with that allocation.
Question 4: Answered in the negative and in favour of the revenue — the Tribunal was not correct in holding that there was no liability to capital gains on transfer of route permits; route rights have value and are liable to capital gains. The matter of actual capital gains amount is remitted to the Tribunal for determination (with reference to K. Balasubramania Nair v. CIT and related observations).
Questions 5 and 7: Answered in the affirmative and in favour of the assessee — the Tribunal was correct in its approach regarding valuation basis for the land (taking the agreement date into account) and in applying Rs. 50,000 (the figure admitted by the assessee) as the basis for computing capital gains.
Question 6: Not answered as unnecessary, in view of the assessee's concession and the procedural posture (no application for reference by the assessee to challenge the figure).

Implications:

The direct effects on the parties are: (a) acceptance of the Tribunal's allocation between buses and route rights means the assessee benefits from the lower amount attributed to buses for purposes of s.41(2) computation; (b) route rights are to be treated as capable of giving rise to capital gains, and the Tribunal must determine the actual amount of capital gains after considering cost of acquisition; (c) the land's capital gains computation will be based on Rs. 50,000 as adopted by the Tribunal given the assessee's prior admission and absence of evidence to vary the instrument value under s.52(2).
The Court did not purport to lay down any novel principle beyond applying and distinguishing earlier authorities; it followed Madras High Court authority that route rights are assets with value for capital gains purposes and remitted detailed quantification to the Tribunal. The opinion thus resolves the questions in the reference largely by applying existing precedents and the factual record before the Tribunal rather than creating a new precedent.

The reference is answered as above and there will be no order as to costs.

Show all summary ...

Sethuraman, J.:— In the reference under s. 256(1) of the I.T Act, the following are the questions that require consideration:

“1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding and had valid materials to hold that the value of the buses should be taken only at Rs. 1,50,000?

2. Whether, on the facts and in circumstances of the case, the Appellate Tribunal was right in allocating the sale price of the buses at Rs. 1,50,000 and the route value at Rs. 2,70,000?

3. Whether, on the facts and in the circumstances of the case, profits under section 41(2), computed by the Tribunal is valid and proper?

4. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that there was no liability to capital gains on the transfer of route permits?

5. Whether the Appellate Tribunal was right in holding that the correct basis for evaluating the market value of the land sold to Pratap Talkies on March 22, 1968, would be to take into account the market value as on January 15, 1961, on which date the agreement of sale was executed?

6. Whether the Appellate Tribunal was right in fixing the value of the land at Rs. 50,000 in view of the appellant's agreeing with the income-tax department for the valuation of the land at Rs. 50,000 on the facts and circumstances of the case?

7. Whether the computation of capital gains from the land sold by the assessee to Pratap Talkies, as directed by the Tribunal, is proper and valid in law?”

2. The assessee was a partnership firm doing business in bus transport with 9 buses and route rights from Tirupati to Kalahasthi.

3. On November 16, 1967, it transferred the buses and the route permits to one Velu Mudaliar for a total sum of Rs. 4,20,000. In its accounts, the assessee allocated the sale price for the buses at Rs. 1,50,000 and the value of the route rights at Rs. 2,70,000. The ITO did not agree with this allocation and took the market value of the buses as on November 16, 1967, the date of transfer, and worked back the market value by allowing a depreciation at the rate of 15%. By this process he arrived at the sale price of the buses at Rs. 2,69,816 and took the balance of Rs. 1,50,184 as representing the value of the route permits. The written down value of the buses came to Rs. 1,09,499. The difference between the sale proceeds of the buses as taken by him, viz., Rs. 2,69,816 and the written down value of Rs. 1,09,499 came to Rs. 1,60,317 and this amount was brought to tax under s. 41(2) of the Act. The balance of Rs. 1,50,184 was assessed as capital gains on the sale of the route permits.

4. The assessee had 10 grounds of land in Tirupathi and the lands were sold to M/s. Pratap Talkies for a sum of Rs. 10,000 as stated in the sale deed. The ITO took the sale price at Rs. 1,06,000 and computed the capital gains accordingly.

5. The computation of the profit under s. 41(2) and of the capital gains in relation to the lands was confirmed by the AAC. The assessee appealed to the Appellate Tribunal. The Tribunal took the sale price of the 9 buses at Rs. 1,50,000 for various reasons to be presently considered and took the value of the route rights at Rs. 2,70,000. The computation of the profit liable to tax under s. 41(2) was directed to be made accordingly. As far as route rights are concerned, the conclusion of the Tribunal was that there was no capital gains. Regarding the sale of land, the Tribunal held that the assessee had agreed for the valuation of the land at Rs. 50,000 and that it would be fair and reasonable to take the value of the land at that figure and computed the capital gains accordingly. It is this order that has given rise to the questions already extracted.

6. Questions 1 to 3 go together. The point to be examined with reference to these questions is whether allocation of the sale price between the buses and the route rights at Rs. 1,50,000 and Rs. 2,70,000, respectively, as made by the Tribunal is proper or not. In coming to the conclusion that the sale price of the buses can only be taken at Rs. 1,50,000, which is incidentally the amount allocated by the assessee in its accounts, the Tribunal has given more than one reason. The Tribunal has made reference to the ITO himself having taken the value of the buses at Rs. 1,50,000 in making assessment on the purchaser for the purpose of granting the allowance of depreciation and pointed out incidentally that the same basis should be adopted in the assessee's case also. The Tribunal has gone into the facts in detail and examined the written down value of each of these buses, and their age and the prices at which these buses were subsequently sold by the purchaser. Having regard to these data, the Tribunal considered that the allocation of Rs. 1,50,000 made by the assessee in its accounts as representing the sale price of the buses was quite fair and reasonable and should be accepted. Question No. 1 challenges only the existence of the materials to support the conclusion of the Tribunal in allocating the sale price of the buses at Rs. 1,50,000, though during the course of the arguments it was stated that in the case of the purchaser of the 9 buses, viz., Velu Mudaliar, the Appellate Tribunal itself had taken their value at a higher figure for the purpose of grant of depreciation, and that, therefore, the higher figure should have been taken in the present case also, we do not have any material to show that in the purchaser's case a higher figure was taken. In fact, before the Tribunal the contention for the assessee was that a sum of Rs. 1,50,000 had been taken as the cost of the buses in the hands of the purchaser, and the authorised representative for the revenue did not challenge the statement made on behalf of the assessee herein that the sum of Rs. 1,50.000 alone would represent the sale price of the buses as taken in the hands of the purchaser. The other reasons are independent reasons given by the Tribunal. Even assuming that the reference in the Tribunal's order as regards the cost of the buses taken in the hands of the purchaser is not correct, as we read the order we are not convinced that it was the main or only reason for its conclusion. The discussion in the Tribunal's order regarding the purchaser's case was only to show that the department was taking inconsistent positions in the two cases. But the real reasons that have been given by the Tribunal are based on the age of the buses, their written down value in the hands of the assessee himself and the sale price at which the purchaser had sold them soon after he purchased the buses. We are satisfied that there are enough materials to come to the conclusion that the sum of Rs. 1,50,000 represented the sale price of the buses. It would, therefore, follow that the value of the route permit would have to be taken at Rs. 2,70,000. The assessment under s. 41(2) has also to be consistent with this view and on the same basis. Questions Nos. 1 to 3 are, therefore, answered in the affirmative and in favour of the assessee.

7. We now take up for consideration question No. 4. This relates to the computation of capital gains as regards route rights. As already seen the Tribunal had taken the value of the route rights at Rs. 2,70,000. The Tribunal has held that the sale price of the route rights did not give rise to any capital gains because of its earlier order in I.T.A No. 1621.MDS/1972–73, dated November 30, 1973, and also of a decision of the Andhra Pradesh High Court in CIT v. Krishna & Sons. The Tribunal's order dated November 30, 1973, is not before us and we have no idea of the reasons given by the Tribunal in that case to come to the conclusion that there can be no capital gains on the sale of the route rights. Presumably the reasons given by them in the said order are also, to be found in sub-paras, (a) and (b) of para. 10 of the order now under consideration. In the decision of the Andhra Pradesh High Court in CIT v. Krishna & Sons, it was held that the route rights did not represent any property and that it could not be a capital asset. The decision of the Andhra Pradesh High Court as noticed by the Tribunal itself was under appeal before the Supreme Court and the Supreme Court's decision is reported as CIT v. Krishna and Sons, [1968] 70 ITR 733 (SC). The Supreme Court did not, however, pronounce on the question of the assessability to capital gains out of the amount realised as sale proceeds of the route lights.

8. However, there are decisions of this court which have considered the question of the value of the route right. Those decisions have been reported in G. Vijayaranga Mudaliar v. Commissioner Of Income-Tax, Madras., [1963] 47 ITR 853 (Mad), A. Vimalqn v. CGT, [1974] 94 ITR 21 (Mad) and Ramaswami Udayar v. CIT, [1979] 116 ITR 493 (Mad). In all these cases, the uniform view taken by this court is that the route rights have value and that they are liable to be assessed to capital gains. The matter had also to be considered recently in T.C No. 110 of 1975 in the case of K. Balasubramania Nair v. Commissioner Of Income-Tax, Tamil Nadu-Ii in the judgment dated January 17, 1979 (since reported in [1979] 119 ITR 504 (Mad)). The assessee in that case relied on the decision in Commissioner Of Income-Tax, Madras v. K. Rathnam Nadar, [1969] 71 ITR 433 (Mad) in support of its contention that the route rights would have to be considered in the same way as in the decision cited and that there would be no liability to capital gains. It has been pointed out in our judgment that the decision in Rathnam Nadar's case, [1969] 71 ITR 433 (Mad) was rendered in connection with a self-generating asset, viz., goodwill, and that the assessee in that case had not to pay anything as and by way of cost of acquisition of such an asset. It was pointed out that the route permit is one granted to the assessee as a result of an application having to be made and as a result of the assessee succeeding in the appeal and subsequent proceedings before courts, in case there is any objection to the grant of the permit by any one else. It was, therefore, pointed out that in the case of route rights, it would not be possible to proceed on the basis that it was a self-generating asset that it could have no cost of acquisition, and that the provisions of s. 45 and the sections following it would not be applicable. In T.C No. 110 of 1975 (K. Balasubramania Nair v. Commissioner Of Income-Tax, Tamil Nadu-Ii 504 supra) the matter was remitted to the Tribunal for consideration of the question of the actual cost of acquisition of the route rights in the matter of computation of capital gains. In view of the number of decisions of this court, the Tribunal's view based on the decision of the Andhra Pradesh High Court,—there is no reference to any report in which it is published,—would not be correct. The question is accordingly answered in the negative and in favour of the revenue. The Tribunal will consider the question of actual amount of the capital gains in the order that it will be passing in the light of the observations made here and in T.C No. 110 of 1975 (K. Balasubamania Nair v. CIT—see p. 504 supra).

9. Questions 5, 6 and 7 go together and they relate to the capital gains arising out of the sale proceeds of the land sold to M/s. Pratap Talkies. There was an agreement with the purchaser for the sale of the land on January 15, 1961, and in the said agreement the consideration was shown at Rs. 10,000. The sale deed, however, came to be executed only on March 22, 1968. The ITO proceeded on the basis that the fair market value of the property had to be ascertained as on the date of conveyance. He, therefore, took the fair market value of the property as on March 22, 1968, at Rs. 10,000 and computed the capital gains accordingly. Even before the ITO, the assessee had agreed to the sale price being taken at Rs. 50,000. The Tribunal examined the point as regards the market value of the property and came to the conclusion that the market value as on the date of the agreement, viz., January 15, 1961, would alone have to be taken. On that basis, in the view of the Tribunal, the sum of Rs. 10,000 shown in the agreement was the proper consideration. However, as the assessee had agreed even before the ITO to the sale price being taken at Rs. 50,000, the Tribunal directed that the sum of Rs. 50,000 would be taken as the basis for the computation of the capital gains. It is this conclusion of the Tribunal that is the subject-matter of the reference in the three questions, viz., 5, 6 and 7.

10. Out of the three questions, question No. 6 seems to challenge even the correctness of the Tribunal's action in taking the sale proceeds at Rs. 50,000 as agreed to by the assessee itself. The question was presumably referred as suggested by the assessee. The question had, however, not been raised by the assessee by filing any application for reference. Therefore, the assessee would not be in a position to challenge the correctness of the figure of Rs. 50,000 in the present reference. In fact, Mr. K.R Ramamani, the learned counsel appearing for the assessee, did not challenge the correctness of this figure. As far as the department's stand is concerned, there is no finding in the order of the income-tax authorities or of the Tribunal that there was any under-statement of consideration so as to justify the application of the provisions of s. 52(2). That such an under-statement of consideration is necessary as a condition precedent to invoking the provision has been pointed out in two decisions of this court in CIT v. Rikadas Dhuraji, [1976] 103 ITR 111 (Mad) and Addl. CIT v. Kuppuswamy (P.S), [1978] 112 ITR 1012 (Mad). As necessary factual basis for varying the sale consideration as shown in the instrument had not been made out except to the extent of Rs. 50,000 as admitted by the assessee itself, it would follow that the sum of Rs. 50,000 was rightly taken by the Tribunal in arriving at the basis for the capital gains. We, accordingly, answer questions Nos. 5 and 7 in the affirmative and in favour of the assessee. We do not think it necessary to answer question No. 6 in view of the concession made for the assessee.

11. The reference is accordingly answered. There will be no order as to costs.