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ThynkTax /Tax Reference /Case Laws /B.C. Srinivasa Setty

B.C. Srinivasa Setty

Supreme Court of India·1981·ITR
Facts

Transfer of goodwill of a partnership firm.

Issue

Whether self-generated goodwill is a capital asset subject to capital gains tax when its cost of acquisition is indeterminable?

Held

No. If cost of acquisition cannot be determined, the computation provisions fail, and the charge of capital gains tax does not apply.

Ratio

Machinery section failure → charging section cannot operate. (Specifically reversed for goodwill by Finance Act 2021 - Section 55(2) amendment.)

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