Section 45 of the Income Tax Act

When the cost of acquisition of a capital asset cannot be determined, the computation mechanism for capital gains fails, and thus no capital gains can be charged. This establishes a broader principle that a charging section cannot operate in the absence of specific machinery provisions for computation.

A transfer of immovable property, for the purpose of capital gains under section 2(47)(v) of the Income-tax Act, occurs only when the agreement allowing possession in part performance of a contract is a registered instrument, as mandated by Section 53A of the Transfer of Property Act.

For capital gains purposes, a 'transfer' under section 2(47)(v) occurs and capital gains arise in the year when possession of the property is handed over in part performance of a contract, such as a joint development agreement. This was the settled position before the specific provisions of section 45(5A) were introduced.

A receipt not chargeable as capital gains under Section 45 cannot be taxed under the residuary head of income from other sources (Section 56). If a receipt is not taxable under specific provisions, it cannot be brought to tax under any other section.

A transaction involving the purchase and sale of property can be treated as an adventure in the nature of trade, resulting in gains taxable as income from business rather than capital gains, when the lands were acquired for a company's profit-making purpose.

For capital assets acquired by gift or will, the indexed cost of acquisition under Section 48 is computed with reference to the year the previous owner first held the asset. The period of holding for determining if an asset is long-term also includes the previous owner's holding period, as per Section 2(42A).

The cost of acquisition of leasehold rights can be determined, and it is not conceptually impossible to ascertain such cost for the purpose of computing capital gains.

When a taxpayer's sole source of income is from the letting out of properties, such rental income is to be assessed under the head 'Income from House Property'.

The 'full value of consideration' for computing capital gains under Section 48 of the Income Tax Act, 1961 (or its predecessor, Section 12B of the 1922 Act), means the actual price bargained for and received or accrued by the parties. It does not refer to the market value or any notional value of the asset transferred.

The terms 'income' or 'profits and gains' are inclusive of losses, signifying that losses are 'minus income' to be factored into the computation of taxable income. Therefore, set-off and carry forward provisions for losses apply exclusively to taxable income or gains and cannot be pressed into service against non-taxable gains, such as those exempt under a DTAA or other specific provisions.