Prakash Naratn, C.J.
1. The question of law referred to the High Court by the Income-tax Appellate Tribunal, Delhi Bench 'A', reads as under :
' Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the cost of acquisition of shares to the assessed should be taken at Rs. 40,000 for purposes of computation of capital gains arising out of the sale of shares '
2. For the assessment year 1963-64, the relevant accounting year being the financial year 1962-63, the assessed, which is an HUF, filed a return of income showing a total income of Rs. 29,720 comprising of capital gains of Rs. 21,000 and interest income of Rs. 8,720. It was mentioned in the return that the assessed became the owner of 40 shares in Roadways and General Finance Private Ltd. on April 4, 1961, which were sold by the assessed on April 18, 1962. According to the assessed the acquisition of the shares was for Rs. 40,000, the sale price was Rs. 61,000 and, thereforee, the difference between the two, namely, Rs. 21,000 was the capital gain within the meaning of Section 45 of the I.T. Act, 1961. The aforesaid 40 shares had become the property of the assessed not by purchase. The said 40 shares belonged to Madan Lal Jain, the karta of the assessed-HUF. Madan Lal Jain had acquired these 40 shares from his own moneys and not from HUF moneys. According to the assessed on April 4, 1961, the said Madan Lal Jain impressed, with the character of an HUF, property the said 40 shares. He made a written declaration in that regard on April 6, 1961. It may be noticed that Madan Lal Jain filed his gift-tax return and even paid gift-tax on the above transaction, said to have been done by him on April 4, 1961.
3. The ITO held that the cost of acquisition to the assessed of these 40 shares was nil and, thereforee, the capital gain was Rs. 61,000. In appeal by the assessed, the contention that Section 49 of the said Act was attracted was repelled by the AAC, who upheld the order of the ITO. On further appeal by the assessed to the Tribunal, the assessed succeeded in its contention. The Tribunal held that the cost of acquisition within the meaning of Section 48 of the Act would be Rs. 40,000 which was the cost of acquisition of Madan Lal fain as the assessed had returned the cost of acquisition at Rs. 40,000, though the Tribunal noticed, on the date when the said 40 shares were impressed with the character of family property, the value of the shares was Rs. 46,520. The Tribunal did not give its opinion on whether Section 49 was attracted. Accordingly, the Tribunal held that only Rs. 21,000 could be added to the return of the assessed for the purposes of taxation as capitalgains. The Commissioner, not being satisfied, made a motion for making a reference to this court of a question of law as to whether Section 48 was at all attracted in the circumstances of the case. This motion of law having been accepted, the Tribunal has made the above reference.
4. Learned counsel for the Revenue submits that the cost of acquisition has to be the cost actually incurred by the assessed. In the present case, the assessed incurred no cost in acquiring the 40 shares. thereforee, the cost of acquisition would be 'nil'. This cost of 'nil' has to be deducted from the sale price. The profit or gain, thereforee, was rightly computed at Rs. 61,000 by the ITO.
5. In our view, the contention is not sound. The taxing section in the Act is Section 45. The relevant part-thereof reads as under :
'45. (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 and 54E 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.'
6. The relevant portion of Section 48 reads as under :
'48. The income chargeable under the head 'Capital gains' shall be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely:--...
(ii) the cost of acquisition of the capital asset and the cost of any improvement thereto.'
7. We do not find the words 'in the hands of' or 'to the assessed' in Section 48 of the Act. thereforee, the cost of acquisition contemplated by Section 48 has to be the cost of acquisition of the capital asset in some one's hands, not necessarily in the hands of the assessed. Section 45 speaks of profits or gains arising from the transfer of a capital asset which will be in contradistinction to any loss or cutting even when a capital asset is transferred. A profit or gain can accrue only when there is a cost of acquisition and not otherwise. The crucial question is cost of acquisition to whom. In this context we may with advantage read some observations of R.S. Pathak J., who spoke for the court, in CIT v. B.C. Srinivasa Setty : 128ITR294(SC) . The Supreme Court was really concerned with deciding capital gain for an asset known as 'goodwill'. All the same, what his lordship observed was that in Section 48 cost of acquisition of capital asset means, to quote (p. 300) 'What is contemplated is an asset in the acquisition of which it is possible to envisage a cost. The intent goes to the nature and character of the asset, that it is an asset which possesses the inherent quality of being available on the expenditure of money to a person seeking to acquire it. It is immaterial that although the asset belongs to such a class, it may, on the facts of a certain case, be acquired without the payment of money.' Earlier, in the same judgment it was observed (p. 299). '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. This inference flows from the general arrangement of the provisions in the I.T. Act, where, under each head of income, the charging provision is accompanied by a set of provisions for computing the income subject to that charge. The character of the computation provisions in each case bears a relationship to the nature of the charge. Thus, 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.'
8. Now, it is not urged nor we are called upon to decide whether Section 49 covers the present case. No other section has been brought to our notice which would directly deal with computation of the income in the manner in which the Revenue wants us to read Section 48. We would like to read it in the manner, in which the Supreme Court has said, that if the asset is such which it is possible to acquire by spending money then what could be spent or what was actually spent by Madan Lal Jain would be the cost of acquisition within the meaning of Section 48.
9. We cannot read the words 'to the assessed' as incorporated in Section 48(2) of the Act. Wherever the Legislature has wanted such words to be part of a taxing provision, the Legislature has specifically said so. By way of example, we may refer to Section 43 of the Act where, inter alia, the term 'actual cost' has been defined. This provision reads as under :
'43. In Sections 28 to 41 and in this section, unless the context otherwise requires--
(1) 'actual cost' means the actual cost of the assets to the assessed, reduced by that portion of the cost thereof, if any, as has been met directly or indirectly by any other person or authority...... '
10. It is settled law that in taxing provisions a strict view has to be taken, and words cannot be added or subtracted unless one is compelled in the context to do so. Here, we are not compelled to do so.
11. We, thereforee, answer this reference in the affirmative and in favor of the assessed. No costs.