JUDGMENT
G.T. Nanavati J.
1. The following five questions are referred to this court by the Income-tax Appellate Tribunal at the instance of the assessee under section 256(1) of the Income-tax Act, 1961 :
“1. Whether, on the facts and in the circumstance of the case, the Tribunal was right in law in holding that the cost for which the bigger Hindu undivided family as the previous owner acquired the property in question on March 25, 1970, is capable of being ascertained ?
2. Whether, on the facts and in the circumstance of the case, the Tribunal was right in law in holding that (i) Navinchandra, (ii) Dhirajlal and (iii) Lalitchandra were not previous owners of the property in question within the meaning of Explanation below section 49(1), Income-tax Act (as the text stood on April 15, 1972) ?
3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that in the face of provisions of section 49(1), Income-tax Act, the general doctrine of real profits or gains could not be attracted ?
4. If question No. 3 is answered in the negative and in favour of the assessee, what basis is to be adopted for applying the said general doctrine of real profits and gains ?
5. Whether, on the facts and in the circumstances of the case, the amount paid by the assessee to Dhirajlal and Navinchandra (i.e., other two parties to the partition dated July 20, 1970, could be, for applying the general doctrine of real profits or gains, adopted as the assessee Hindu undivided family’s cost of acquisition of the asset in question ?”
2. The main point, which arises for consideration an a result of these five questions, is covered by the decision of this court in CIT v. Ashwin M. Patel [1983] 144 ITR 566, which has been followed in CIT v. Chandrakant C. Gandhi [1993] 114 Taxation 41 (Guj) and Deepak Anubhai Shah v. CIT [1993] 201 ITR 577 (Guj). In Ashwin M. Patel’s case [1983] 144 ITR 566, this court has held that for the purpose of working out capital gains on the transfer of a capital asset, which the assessee himself has not purchased, the correct method of finding out the cost of acquisition of the capital asset to the assessee is to ascertain the real value of the capital asset to the assessee at the time he acquired it. The real value of the capital asset to the assessee is the market value as on the date of acquisition. This court further held that the throwing of shares by a member of a Hindu undivided family into the family hotchpot is not a transfer in the strict legal sense. However, the substance of the transaction is that as a result of throwing shares into the common hotchpot, the Hindu undivided family acquires an absolute title to the shares. It is held that when shares are thrown by the karta of a Hindu undivided family into the family hotchpot, the cost of acquisition of the shares to the Hindu undivided family for the purpose of computing capital gains arising from the sale of those shares by the Hindu undivided family, would be the market value of the shares as on the date on which it acquired them, namely, the date on which they were thrown into the common hotchpot by the karta. In this case, we are concerned with land but the same reasoning would apply and, therefore, following the decision of this court in Ashwin M. Patel’s case [1983] 144 ITR 566, we answer the questions as under :
Question No. 1 is answered in the affirmative. So also question No. 2 is answered in the affirmative. Questions Nos. 3, 4 and 5 are answered in the negative. The said questions are answered by holding that the general doctrine of real profits or gains was attracted and that the basis for adopting the said general doctrine was the market value of the land in question as on the date on which the same was acquired by the Hindu undivided family. No order as to costs.