AI Drafter 
TaxTMI 
TaxTMI 
2001 (8) TMI 1403
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....s claim that Rs. 1 lakh received as per agreement dt. 3rd July, 1986, as consideration for transfer of possession of shop No. 9/866, is exempt and thus deleting the same from the computation of capital gains arising during the year on the basis of shop Nos. 9/865 and 9/866?" The facts of the case are as follows : On Appukutty was the managing partner of a partnership firm, M/s M. Appukutty. Originally, it was a proprietary concern. It was converted into a partnership only in 1964. Appukutty was a tenant of shop No. 9/866 from 1941. By document No. 2225 of 1960, Appukutty brought the Jenmom right of shop 9/866 and the adjacent shop No. 9/865 for a consideration of Rs. 10,800. The firm was in possession of building 9/866. By agreement dt. ....
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....ongs to No. 1 amongst us (No. 1 is Appukutty) in jenmom right and we are conducting business therein as partners and the same is in our exclusive possession. And whereas we have decided to sell the possession right that we have along with No. 1 in the said shop room retaining the jenmom right through mediators for a consideration of Rs. 1,00,000 (rupees one lakh only)". In the body of the document, it is stated that : "In consideration of Rs. 1,00,000 fixed for delivering the possession of the said shop room paid by you as per cheque No. 009155, dt. 27th June, 1986 drawn on chartered bank for a sum of Rs. 1,00,000 the receipt of which we do hereby acknowledge". Copy of document dt. 30th Aug., 1960 was produced, which shows that Appukutty....
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....ly in connection with such transfer; (ii) the cost of acquisition of the asset and the cost of any improvement thereto". 6. In CIT vs. B.C. Srinivasa Setty (1981) 21 CTR (SC) 138 : (1981) 126 ITR 294 (SC) : TC 20R.148, the Supreme Court had occasion to decide the question whether the transfer of goodwill come within the meaning of transfer of capital assets. In that case, their Lordships dealt with s. 45 of the Act and held as follows : "Sec. 45 charges the profits or gains arising from the transfer of a capital asset to income-tax. The asset must be one which falls within the contemplation of the section. It must bear that quality which brings s. 45 into play. To determine whether the goodwill of a new business is such an asset, i....
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.... applying the computation provisions pertaining to capital gains. 7. Another case referred to us is the decision A.R. Krishnamurthy & Anr. vs. CIT (1989) 76 CTR (SC) 18 : (1989) 176 ITR 417 (SC) : TC 20R.202. In that case, the appellant, a body of individuals, purchased two pieces of land in 1966 at a price of Rs. 27,600. In 1970 it granted a mining lease to a private company to extract clay for a period of 10 years at a premium of Rs. 5 lakhs in addition to payment of royalty. The ITO determined a sum of Rs. 4,82,960 as long-term capital gains after determining 5/8ths of the price of the land as cost of acquisition of the leasehold interest. The question arose whether there is any capital gains. Dealing with the contention, the Supreme ....
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....nancy right. Regarding the question whether the amount received by the assessee was liable to capital gains, the Court held that the consideration received by a tenant for parting with the tenancy right is not exigible to tax as capital gains in cases where no cost of acquisition for the tenancy can be predicated. Therefore, the Tribunal was justified in holding that no tax on capital gains was leviable on the amount of consideration received on the transfer of the tenancy right. In that decision, this Court mainly referred to the decision of the Delhi High Court Bawa Shiv Charan Singh vs. CIT (1985) 47 CTR (Del) 12 : (1984) 149 ITR 29 (Del) : TC 20R.233. In that case, the Delhi High Court held as follows : "It is not possible to apply t....