1. The Income-tax Appellate Tribunal, Indore Bench, Indore, at the instance of the Commissioner of Income-tax, Bhopal, has made this reference under Section 256(1) of the Income-tax Act, 1961, for the opinion of this court on the following question of law:
"Whether, on the facts and in the circumstances of the case, and having regard to the provisions of Section 55(2) of the Income-tax Act, the Income-tax Appellate Tribunal was correct in law in holding that no capital gains accrued to the assessee ?"
2. The facts giving rise to this reference, as per the statement of case received, may be stated in brief, thus : The respondent-assessee is an ex-ruler of the erstwhile State of Ratlam, which was founded by the late Maharaja Ratansinghji. A jagir was conferred upon Shri Ratansingh with the rank of seh-hazari (commander of 3,000 horses), the insignia of the chaur (yak's tail), morchal (peacock plumes) suraj-mukhi (representation of the sun and the moon on fans), and mahimaratib (insignia of the fish) in the 17th century. During the accounting year for the period ending March 31, 1977, the present Maharaja of Ratlam, on June 22, 1976, by a registered sale deed sold land within the compound of Shri Ranjit Vilas Palace, Ratlam, for Rs. 6,12,958. The Income-tax Officer got the property valued by the Valuation Officer and ultimately accepted the sale price at this figure, besides the land at Lokendra Bhawan Palace at Rs. 48,000. The Income-tax Officer took the cost of acquisition of the palace as on January 1, 1954, at Rs. 1,51,200 and the market value of the said land at Rs. 3,000. So the total cost of acquisition was taken at Rs. 1,54,220 allowing brokerage of Rs. 24,488 and the exemption and other allowances, the Income-tax Officer assessed the assessee to tax a sum of Rs. 3,57,953 on account of capital gains on this sale, though the assessee had shown a loss of Rs. 94,471 in the matter of capital gains.
3. The assessee took up the matter in appeal and the Commissioner (Appeals) after hearing, estimated the fair market value of the land in question as on January 1, 1954, at Rs. 2,58,207 against Rs. 1,51,200 adopt ed by the Income-tax Officer. Against this order of the Commissioner (Appeals), both the assessee and the Department came up in second appeal before the Tribunal.
4. The assessee, before the Tribunal, for the first time took the additional ground that there was no cost of acquisition of the asset in question and as such there could be no capital gain as a result of the transfer of the property in dispute. The Tribunal permitted the assessee to take up this additional ground.
5. After hearing the representatives of the parties and considering the entire facts and circumstances of the case including the history of the Ratlam State which has been considered by the Tribunal elaborately and in great detail by tracing its origin, came to the conclusion that no capital gain arose in the present case as a result of the sale of land and building in question. Hence this reference.
6. The learned counsel for the Revenue did not dispute that Ratlam State was received in gift by Shri Ratan Singh, the forefather of the assessee. Shri Ratan Singh attacked with dagger a mad elephant and as a result of the blow of the dagger, the said elephant was killed. The then Emperor Shajahan was pleased with the daring feat showed by Shri Ratan Singh and he gave the entire Ratlam State to him. The property in question is included in the said State and the said property was inherited by the assessee.
7. The learned counsel for the Revenue contended that the Tribunal has committed an error in holding that no capital gain arose in the present case. According to learned counsel, the main controversy in the present case is whether the sale proceeds of the lands in question situated within the compound of Shri Ranjit Vilas Palace, Ratlam, and within the compound of Shri Lokendra Bhavan are in the nature of capital receipts and, if so whether such receipts attract the provisions of Section 45 of the Income-tax Act, 1961.
8. In order to appreciate the contentions raised on behalf of the Revenue, it would be relevant to reproduce the relevant provisions of the Income-tax Act:
9. Section 2(14) of the Act is as follows :
"capital asset" means property of any kind held by an assessee whether or not connected with his business or profession, but does not include-
(i) any stock-in-trade, consumable stores or raw materials held for the purposes of his business or profession;
(ii) personal effects, that is to say, movable property (Including wearing apparel and furniture, but excluding jewellery) held for personal use by the assessee or any member of his family dependent on him."
10. Section 2(47) of the Income-tax Act, 1961, is as follows :
" transfer ", in relation to a capital asset, includes the sale, exchange or relinquishment of the asset or the extinguishment of any rights therein or the compulsory acquisition thereof under any law. "
11. Section 45 of the said Act, with which we are directly concerned is as follows:
"45. Capital gains.--(1) Any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in Sections 53, 54, 54B, 54D, 54E and 54F be chargeable to income-tax under the head 'Capital gains' and shall be deemed to be the income of the previous year in which the transfer took place."
12. The learned counsel for the Revenue also placed reliance on Section 49 and Section 55, which are as under:
"49. Cost with reference to certain modes of acquisition.--(1) Where the capital asset became the property of the assessee-
(i) on any distribution of assets on the total or partial partition of a Hindu undivided family;
(ii) under a gift or will;
(iii) (a) by succession, inheritance or devolution, or
(b) on any distribution of assets on the dissolution of a firm, body of individuals or other association of persons, or
(c) on any distribution of assets on the liquidation of a company, or
(d) under a transfer to a revocable or an irrevocable trust, or
(e) under any such transfer as is referred to in Clause (iv) or Clause (v) or Clause (vi) of Section 47;
(iv) such assessee being a Hindu undivided family, by the mode referred to in Sub-section (2) of Section 64 at any time after the 31st day of December, 1969, the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the asset incurred or borne by the previous owner or the assessee, as the case may be.
Explanation.--In this sub-section, the expression 'previous owner of the property' in relation to any capital asset owned by an assessee means the last previous owner of the capital asset who acquired it by a mode of acquisition other than that referred to in Clause (i) or Clause (ii) or Clause (iii) or Clause (iv) of this sub-section.
(2) Where the capital asset being a share or shares in an amalgamated company which is an Indian company became the property of the assessee in consideration of a transfer referred to in clause (vii) of section 47, the cost of acquisition of the asset shall be deemed to be the cost of acquisition to him of the share or shares in the amalgamating company."
"55. Meaning of 'adjusted', 'cost of improvement' and 'cost of acquisition'.--(1) For the purposes of Sections 48, 49 and 50,
(a) 'adjusted' in relation to written down value or fair market value means diminished by any loss deducted or increased by any profit, assessed under the provisions of Clause (iii) of Sub-section (1) or Clause (ii) of Sub-section (1A) of Section 32 or Sub-section (2) or Sub-section (2A) of Section 41, as the case may be, the computation for this purpose being made with reference to the period commencing from the 1st day of January, 1964, in cases to which Clause (2) of Section 50 applies;
(b) 'cost of any improvement' in relation to a capital asset,
(i) where the capital asset became the property of the previous owner or the assessee before the 1st day of January, 1964, and the fair market value of the asset on that day is taken as the cost of acquisition at the option of the assessee, means all expenditure of a capital nature incurred in making any additions or alterations to the capital asset on or after the said date by the previous owner or the assessee, and
(ii) in any other case, means all expenditure of a capital nature incurred in making any additions or alterations to the capital asset by the assessee after it became his property, and where the capital asset became the property of the assessee by any of the modes specified in Sub-section (1) of Section 49, by the previous owner, but does not include any expenditure which is deductible in computing the income chargeable under the head 'Interest on securities', 'Income from house property', 'Profits and gains of business or profession', or 'Income from other sources', and the expression 'improvement' shall be construed accordingly, (2) For the purposes of Sections 48 and 49, 'cost of acquisition', in relation to a capital asset,--
(i) where the capital asset became the property of the assessee before the 1st day of January, 1964, means the cost of acquisition of the asset to the assessee or the fair market value of the asset on the 1st day of January 1964, at the option of the assessee;
(ii) where the capital asset became the property of the assessee by any of the modes specified in Sub-section (1) of Section 49, and the capital asset became the property of the previous owner before the 1st day of January, 1964, means the cost of the capital asset to the previous owner or the fair market value of the asset on the 1st day of January, 1964, at the option of the assessee;
(iii) where the capital asset became the property of the assessee on the distribution of the capital assets of a company on its liquidation and the assessee has been assessed to income-tax under the head 'Capital gains' in respect of that asset under Section 46, means the fair market value of the asset on the date of distribution;
(v) where the capital asset, being a share or a stock of a company, became the property of the assessee on-
(a) the consolidation and division of all or any of the share capital of the company into shares of larger amount than its existing shares,
(b) the conversion of any shares of the company into stock,
(c) the re-conversion of any stock of the company into shares,
(d) the sub-division of any of the shares of the company into shares of smaller amount, or
(e) the conversion of one kind of shares of the company into another kind, means the cost of acquisition of the asset calculated with reference to the cost of acquisition of the share or stock from which such asset is derived.
(3) Where the cost for which the previous owner acquired the property cannot be ascertained, the cost of acquisition to the previous owner means the fair market value on the date on which the capital asset became the property of the previous owner."
13. The learned counsel, therefore, submitted that as the assessee had received the said property by way of inheritance and as he himself had opted for the cost of the capital asset as on January 1, 1954, (which was the relevant date at that time), the Tribunal has committed an error in coming to the conclusion that in the present case there being no cost of acquisition of the said property to the initial owner, there is no question of any capital gain. The learned counsel, therefore, relied on the passage from "Income Tax Law" by Chaturvedi (3rd Edn), page 1763, which is as follows :
" Cost of acquisition when the cost to the previous owner cannot be ascertained--Section 55(3).--In cases where the cost to the previous owner is to be taken as the basis of determination of the cost of the asset to the assessee and the assessee does not produce evidence by which such cost to the previous owner can be ascertained, the Income-tax Officer is to take such cost at a figure which, in his opinion, was the fair market value [ defined in Section 2(22A) ] of the asset on the date the capital asset became the property 6f the previous owner. The provisions of Section 55(3) cannot be applied to a case where "the cost for which the previous owner acquired the property can be ascertained."
14. In this connection, the learned counsel for the Revenue also placed reliance on Circular No. 31 dated September 21, 1962, issued by the Board which is as follows :
" 2. Under Clause (ii) of Sub-section (2) of Section 55, where the capital asset became the property of the assessee by any of the modes specified in Section 49, including inheritance, and the capital asset became the property of the previous owner before January 1, 1954, ' cost of acquisition ' means the cost of the capital asset to the previous owner or the fair market value of the asset on January 1, 1954, at the option of the asses-see. It has been argued that in case of successive inheritance (of the type referred to in the preceding paragraph) the provisions of Section 55(2)(ii) would not apply and that these provisions would apply only to a case where some actual cost was incurred in the immediate by previous year.
3. The Board have, however, been advised that the above view is not correct. Where Section 49 applies, the provisions of Section 55(2) also become applicable and in the context the expression 'the previous owner' need not be taken to mean the immediate preceding owner but may be considered as including 'the previous owners'. In such a case, where an assessee acquires an asset by inheritance before January 1, 1954, the assessee has the option of substituting the fair market value of the asset as on January 1, 1954, in place of the original cost, if it is to his advantage."
15. The learned counsel for the Revenue, therefore, submitted that in view of this circular also, the Tribunal was not right in deciding the point raised in favour of the assessee.
16. On the other hand, the learned counsel for the assessee submitted that though the property in question is a capital asset, there is no " gain " as such because admittedly the forefathers of the assessee were not required to pay any cost in terms of money for acquiring the said property, looking into the history of the Ratlam State, and consequently the provisions of Section 45 of the Income-tax Act, 1961, are not attracted because Section 45 uses the words " any profits or gains ". Obviously this is not a case of profits. So far as gains are concerned, it is necessary to find out that the property sold was acquired at some cost in terms of money and the difference in the cost of acquisition and the price at which the property was sold could be the basis for levying capital gains. But in a case as the present one where the forefathers of the assessee did not acquire the said property by paying any money, in the absence of any cost of acquisition, even though the assessee has sold it at a high price, no liability to capital gains could be fastened on him even though he may have accepted the valuation as on January 1, 1954, and even though he may have on account of this sale shown a loss of Rs. 94,471 by showing his net income at Rs. 19,223, he cannot claim the said loss in his returns as the stand taken by the assessee regarding the said loss is not proper and that amount has to be included in his income. In support of his contentions, the learned counsel for the assessee placed reliance on a number of decisions.
17. In CIT v. Home Industries and Co. [1977] 107 ITR 609, a Division Bench of the Bombay High Court has held as under (headnote at pp. 610 &611) :
"The goodwill in the instant case was a self-created and self-generated asset of the assessee created or generated by the activities of the assessee-firm and probably by the name which the firm had earned and the goodwill it had created among its customers. It grew along with the business which was carried on by the assessee-firm right up to April 9, 1959, on which day the business together with the goodwill was transferred by the firm to the company. The goodwill of the assessee-firm, though a capital asset of the firm, could not be said to have been acquired by it at any particular point of time or for any cost in terms of money and the question arises whether this type of capital asset of the assessee-firm is one whose transfer will give rise to chargeable capital gains under Section 12B(1) of the Act."
18. It will be clear on a reading of both the charging provisions, Section 12B(1) of the 1922 Act and Section 45 of the 1961 Act, that the incidence of tax is on 'profits or gains' arising from the transfer or sale of a capital asset. The concept of 'profit or gain' arising from transfer or sale necessarily implies that there is something received in excess of the cost of the capital asset which is transferred or sold. The charging provision in both the Acts itself brings in the concept of actual cost to the assessee of the capital asset and what is done by the machinery provision which is contained in Section 12B(2) of the 1922 Act and Section 48 of the 1961 Act, is to elaborate that concept and lay down the mode or method by which such profit or gain is to be computed : the machinery provision reiterates what is contained in the charging provision and goes on to indicate that capital gain is to be arrived at after deducting the actual cost from the full value of the consideration for which the transfer of the capital asset is made. If the capital asset is such that it has cost nothing, in terms of money to the assessee, the charging provision must be interpret ed as being not referable to such capital asset and a self-created or self-
generated goodwill being such an asset, will be outside the purview of the charging section. Therefore, on a proper interpretation of the charging provision itself, it seems clear that the concept of actual cost expressed in terms of money to the assessee of the capital asset at some particular point of time would be a necessary ingredient before the transfer of that capital asset can give rise to chargeable gain. Since self-created or self-generated goodwill is not a capital asset which could be said to have been acquired by the assessee-firm at any particular point of time and is not a capital asset which could be said to have cost something in terms of money to the assessee, such goodwill will not be a capital asset the transfer of which will give rise to chargeable capital gain under Section 12B(1) of the 1922 Act or Section 45 of the 1961 Act.
19. Therefore, there was no transfer or sale of goodwill to the private limited company so as to attract Section 12B(1) of the 1922 Act."
20. In CIT v. Jaswantlal Dayabhai [1978] 114 ITR 798, a Division Bench of this court has held as under (headnote):
"Section 45 of the Income-tax Act, 1961, which is the charging section for levy of tax on capital gains, shows that the charge is on 'any profits and gains arising from the transfer of a capital asset' and not on the capital asset itself. The concept of 'profits and gains' made chargeable under Section 45 itself implies that there is something received in excess of the cost of the capital asset which is transferred. In the case of a self-created or self-generated goodwill, the assessee incurs no cost in terms of money. On the transfer of such goodwill, the assessee makes no profits or gains chargeable under Section 45. If the whole of the consideration received on such a transfer is taken to be 'profits or gains' of the assessee within the meaning of Section 45, it would amount to taxing the capital asset itself and not 'profits or gains' arising from its transfer. This construction of Section 45 is supported by the scheme of Section 48 which provides that the income chargeable under Section 45 is to be computed by deducting from the full value of the consideration ' the cost of acquisition of the capital asset and the cost of any improvements thereto '. The mode of computation provided in Section 48 shows that the capital asset, the transfer of which is taxable under Section 45, is one which costs in terms of money to the assessee, and is also one which can be improved by investing money. Self-created or self-generated goodwill is not that type of capital asset and its transfer cannot be the subject of taxation under Section 45 of the Act.
Therefore, the amount obtained by the assessee, a partner of a firm, in consideration of his interest in the goodwill of the firm at the time of his retirement, was not liable to capital gains tax."
21. In CIT v. B.C. Srinivasa Setty [1981] 128 ITR 294, the Supreme Court has held as under (headnote):
"Goodwill generated in a newly commenced business cannot be described as an 'asset' within the terms of Section 45 of the Income-tax Act, 1961 (or of Section 12B of the Indian Income-tax Act, 1922), and the transfer of goodwill initially generated in a business does not give rise to a capital gain for the purposes of income-tax.
Goodwill denotes the benefit arising from connection and reputation. A variety of elements goes into its making, and its composition varies in different trades, and in different businesses in the same trade, and while one element may preponderate in one business, another may dominate in another business. Its value may fluctuate from one moment to another depending on changes in the reputation of the business. It is affected by everything relating to the business, the personality and business rectitude of the owners, the nature and character of the business, its name and reputation, its location, its impact on the contemporary market, the prevailing socio-economic ecology, introduction to old customers and agreed absence of competition. There can be no account in value of the factors producing it. It is also impossible to predicate the moment of its birth. The benefit to the business varies with the nature of the business and also from one business to another. No business commenced for the first time possesses goodwill from the start. It is generated as the business is carried on and may be augmented with the passage of time.
The charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section.
All transactions encompassed by Section 45 must fall under the governance of its computation provisions. A transaction to which those provisions cannot be applied must be regarded as never intended by Section 45 to be the subject of the charge. What is contemplated by Section 48(ii) is an asset in the acquisition of which it is possible to envisage a cost : it must be an asset which possesses the inherent quality of being available on the expenditure of money to a person seeking to acquire it. None of the provisions pertaining to the head 'capital gains' suggests that they include an asset in the acquisition of which no cost at all can be conceived. When goodwill generated in a new business is sold and the consideration brought to tax, what is charged is the capital value of the asset and not any profit or gain. Further, the date of acquisition of the asset is a material factor in applying the computation provisions pertaining to capital gain; but in the case of goodwill generated in a new business, it is not possible to determine the date when it comes into existence."
22. In Bawa Shiv Charan Singh v. CIT [1984] 149 ITR 29 (Delhi), which relates to surrender of tenancy rights, it has been held as under (head-note) :
"The assessee, an advocate, had taken certain permises on rent in 1947-48. He had not paid anything for the acquisition of the tenancy right or for being let into possession of the premises. During the accounting period relevant to the assessment year 1966-67, the assessee surrendered the tenancy rights of the first floor of the premises and received a sum of Rs. 30,000 therefor. The question was whether the assessee was liable to capital gains tax on the net amount of Rs. 25,000 after statutory deduction. The Tribunal held that the tenancy right represented a capital asset and the surrender thereof for consideration would amount to a transfer of a capital asset. Though the assessee had not exercised any option in this regard, the Tribunal held that from the gross amount should be deducted that amount which the assessee would have got if he had surrendered the tenancy rights on January 1, 1954, and there would be no difficulty in determining the market value of the tenancy right as on that date. On a reference :
Held, (i) that the assessee's tenancy right was a capital asset and its surrender would result in the right being extinguished and would, therefore, amount to a transfer of a capital asset within the meaning of the Act;
(ii) that when the interest of the lessor is parted with, the price paid therefor would be premium or salami, but the periodical payments by the lessee for the continuous enjoyment of the benefits under the lease were in the nature of rent: the former was a capital receipt and the latter a revenue receipt. What distinguished rent from premium was that the latter represented money paid as price or a consideration for being let in possession. The periodic payments of rent made by the assessee were not for the acquisition of the capital asset of leasehold rights;
(iii) that a variety of elements contributed to the making of the value of the tenancy rights, but there could be no account in value of the factors producing it. It was a composite thing referable in part to its locality, in part to the use to which the premises were put, in part to the nature of the business carried on, if commerical premises, in part to the success of the business conducted, in part to the trend of the customers or litigants, in part to the likelihood of competition and in part to several other unpredictable factors like whims and eccentricities of persons wanting to acquire the tenancy rights. The value might fluctuate from one day to another day depending upon the uncertain demand and supply of comparable premises. In the year 1947-48, there was no premium. It was not possible to predicate as to the exact moment of its birth and the rate or period of its growth. The process of the growth in value was imperceptible. It was self-created without any contribution by the assessee, monetarily or otherwise. The fact remained that the capital asset had been acquired by the assessee without the payment of any money. It was, therefore, not possible to ascertain, when the assessee did not pay any amount for the acquisition of the tenancy rights, as to what was the 'cost of acquisition' or 'cost of improvement' for the purpose of computation of capital gains under Section 48. If the whole of the value of the capital asset transferred was brought to tax, then what was charged would be the capital value of the asset and not any profits or gains as contemplated by Section 45. Therefore, it could not be said that any capital gains had arisen on the receipt by the assessee of Rs. 30,000 on surrendering the tenancy rights of the first floor of the premises.
(iv) that the authorities under the Act had no jurisdiction or power to direct the ascertainment of the cost of acquisition in relation to a capital asset. The option was given to the assessee whether to adopt the cost of acquisition of the asset to the assessee or the fair market value of the asset on January 1, 1954. The assessee had not exercised the option I he had not even been called upon to do so. Therefore, there was no basis for directing the determination of the value of the tenancy rights as on January 1, 1954.
It is not possible to apply the computation sections for quantifying the profits and gains on the transfer of leasehold rights which were acquired by assessee without any cost. The mode of computation and deduction set forth in Section 45 provided the principal basis for quantifying the income chargeable under the head 'Capital gains'. What is contemplated is an asset in the acquisition of which it is possible to envisage a cost. In the case of self-created value of a tenancy right, it is not possible to determine the date of acquisition of the asset. "
23. In CIT v. Mrs. Shirinbai P. Pundole [1981] 129 ITR 448, a Division Bench of the Bombay High Court has held as under (headnote):
The assessee was a tenant occupying a flat in a building under a lease taken in 1964. The tenancy was terminated by a notice to quit given in 1965. The assessee thereafter occupied the flat as a statutory tenant. The building in which the flat was situated was sold to a company, which served on the assessee a notice to quit under Section 13(1)(hh) of the Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947. The assessee disputed the validity of the notice to quit. Ultimately, pursuant to an arrangement arrived at between the company and the assessee, the assessee handed over vacant possession of the flat to the company and was given alternate accommodation in the shape of an ownership flat of a lesser area in another building. On the question whether the transaction attracted any liability to capital gains tax under Section 45 of the Income-tax Act, 1961:
Held, that the surrender of the tenancy right to the company in exchange for an ownership flat in the building did not attract capital gains tax under Section 45 of the Act. "
24. A similar view has been taken in Vaidhyanathswami v. CIT [1979] 119 ITR 369 (Mad) which related to the sale of a motor permit. Also see CIT v. Upper Doab Sugar Mills [1979] 116 ITR 240 (All).
25. It is no doubt true that none of these cases relate to the sale of immovable property as in the present case. But the gist of all these decisions has been the same that if there is no cost of acquisition, then the sale price would not attract the provisions of capital gains. Thus, it would be clear that the liability for capital gains tax would arise in respect of only those capital assets in the acquisition of which the element of cost is either actually present or is capable of being reckoned and not in respect of those assets in the acquisition of which the element of cost is altogether inconceivable, as in the present case. The circular of the Board referred to above on which learned counsel for the Revenue placed reliance--though not binding on this court--only indicates that the section does not relate to only the immediate past owner but to past owners in succession.
26. Thus, we are not persuaded to agree with the submission made by learned counsel for the Revenue that in such a case as the present one, according to the provisions of Section 55 of the Income-tax Act, 1961, where cost cannot be ascertained, the fair market price has to be taken into consideration because the very basis of capital gains to us appears to be that at some point of time, the person who initially acquires acquires the property at some cost in terms of money. For instance, if A acquires the property for Rs. 10,000 and gives it to B who in turn by a will gives it to C and if C sells that property for Rs. 50,000 then the initial cost of acquisition will be calculated at Rs. 10,000 and the difference between Rs. 10,000 and Rs. 50,000 would be treated as a capital gain. However, in a case where A acquires some property by way of gift or reward, for instance, jagirs from a ruler, and the property passes on by inheritance to (succeeding) generations and the same is sold even though for a valuable consideration, in such a case because A had not acquired it at some cost in terms of money, it would not attract capital gain in such a transaction of sale, there being no "gain" as such.
27. In the result, the reference is answered in favour of the assessee and against the Revenue with no order as to costs. Our answer to the question referred, therefore, is :
"That on the facts and in the circumstances of the case and having regard to the provisions of Section 55(2) of the Income-tax Act, 1961, the Income-tax Appellate Tribunal was correct in law in holding that no capital gains accrued to the assessee."
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