TaxTMI 
TaxTMI 
2015 (6) TMI 1158
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....been heard together and are being disposed of by this common order. The issues involved in both the appeals are identical in nature. For the sake of convenience, the facts have been taken from ITA No.2488/M/2011. ITA No.2488/M/2011 2. The assessee has taken the following grounds of appeal: "1. The learned Commissioner of Income-tax (Appeals) erred in upholding that the appellant is not entitled to a deduction in respect of "fair market value" of rights in the residential property. It is submitted that the learned assessing officer in computing the Capital Gains on surrender of tenancy rights, ought to have allowed the deduction in respect of "fair market value" of rights in the property as on 1-4-1981 acquired by the appellan....
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....ts were duly protected by law and as such the assessee and his brother were de-facto owners of the portions of the premises occupied by them. It was claimed that since the rights of the assessee were like that of an owner of the property, hence the cost of acquisition of the tenancy rights was required to be taken as fair market value of the property as on 01.04.1981 for the purpose of computing the capital gains while allowing the indexation cost. The Ld. CIT(A), however, held that there was no evidence on the file that the father of the assessee namely Shri Charandas Kapadia was the tenant of the property. Even it was not known as to from what date the tenancy rights came into existence. He observed that the assessee had placed on record ....
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.... He has invited our attention to his application dated 18.06.12 moved before this Tribunal for admission of additional evidence wherein he has sought to produce in evidence the rent receipts in respect of rent paid to the landlord Shri Krishanraj Dwarakadas Kapadia by the father of the assessee namely Shri Charandas Kapadia. The Ld. A.R. has submitted that some of the rent receipts pertained to the period before 01.04.1981. He has submitted that the evidence in the shape of rent receipts prior to 01.04.1981 proves that the father of the assessee was tenant of the property prior to 01.04.1981 and further that the tenancy rights have devolved upon the assessee and his brother. 6. The Ld. AR has further contended that as per the provisions ....
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....any distribution of assets on the dissolution of a firm, body of (c) on any distribution of assets on the liquidation of a company, or (d) under a transfer to a revocable or an irrevocable trust, or (e) under any such transfer as is referred to in clause (iv) or clause (v) or clause (vi) or clause (via) or clause (viaa) or clause (vica) or clause (vicb)] or clause (xiii) or clause (xiiib) or clause (xiv) of section 47; [(iv) in sub-section (2) of section 64 at any time after the 31st day of December, 1969,] the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or bo....
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..... As per the provisions of section 49(1)(iii) where the capital asset becomes the property of the assessee by succession, inheritance or devolution, then the cost of acquisition of the asset is deemed to be the cost for which the previous owner of the property acquired it. However, we find that section 55(2)(b) deals with capital asset other than that being discussed in section 55(2)(a) of the Act. Since the tenancy rights have been dealt with/discussed in section 55(2)(a), hence, in our view, the provisions of section 55(2)(b) are not attracted in the case of the assessee. However, section 55(3) states that where cost for which the previous owner acquired the property cannot be ascertained the cost of acquisition to the previous owner will....
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....eipts to be true or correct cannot be ruled out. In our view, the facts on this issue required detailed examination, hence, we restore this issue to the file of the AO with the direction that the AO will give proper opportunity to the assessee to produce the evidences relating to the tenancy rights and cost of the acquisition of the tenancy rights by the father of the assessee in the property in question and thereafter to decide the issue afresh as per provisions of law and in the light of observations made above. 10. The issue relating to ground No.2 is as to whether the provisions of section 54 are applicable in case of transfer of tenancy rights. The Ld. A.R. of the assessee has fairly admitted that the issue is covered against the as....