Pnb Finance Ltd vs Commissioner Of Income Tax-I, New Delhi

The Supreme Court addressed the issue of taxable capital gains under Section 45 of the Income Tax Act, 1961, concerning the transfer of a banking undertaking during the assessment year 1970-71. The Court clarified that the computation of capital gains must consider either the cost of acquisition or the fair market value as of January 1, 1954, as per Section 55(2)(i). The Court held that the assessee's option to choose the method of valuation was valid, but the absence of a clear formula for computation prior to the 2000 amendment meant that the assessment must adhere to the law as it stood at the time of transfer, leading to the conclusion that the surplus from the transfer was chargeable to tax under Section 45.