TaxTMI 
TaxTMI 
TaxTMI 
2019 (4) TMI 1839
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.... and held for more than 3 years. 2. Without prejudice to the above, the appellant submits that Learned CIT(A) has seriously erred in treating the amount received on relinquishment of assessee's right in a property as interest merely because no calculations / arithmetical basis for the sum given by the builders to the assessee were provided. 3. The appellant craves leave to add, amend, alter and/or vary any of the grounds at the time or before the hearing of this appeal. 4. The appellant therefore prays that Assessing Officer may please be directed to treat the amount received on relinquishment of his rights on Long Term Capital Gain as well grant consequential benefit of deduction of the same u/s. 54 /54F of the LT. Act, 1961. 2. Brief facts of the case are that the assessee for assessment year 2012-13, the filed his return of income on 31.10.2012 declaring total income of Rs. 84,21,100/-. The return of income was selected for scrutiny. In the return of income, the assessee has shown the Capital Gain of Rs. 2,68,122/- on sale of Flat and also claimed exemption under section 54 of the Act on the ground that sale proceed were invested in purchase of another residential....
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....i is only an arrangement of lending money to Builder and consideration received is nothing but an interest. The Assessing Officer treated the compensation as "Income from Other Sources". On appeal before the ld. CIT(A), the action of Assessing Officer was upheld. The ld. CIT(A) while upholding that order of Assessing Officer concluded that no conveyance deed was executed nor the possession of flat was taken. It was only a provisional booking as per cancellation letter dated 25.07.2011. The Builder has mentioned that he has agreed to give the assessee a sum of Rs. 9,26,804/- over and above the amount paid by the assessee as a compensation. Thus, further aggrieved against the order of ld CIT(A) the assessee has filed the present appeal before us. 3. We have heard the submissions of the ld. Authorized Representative (AR) of the assessee and ld. Departmental Representative (DR) for the revenue and perused the material available on record. We have also deliberated on the various case laws relied by the lower authorities. 4. Ground No.1 relates to treating the compensation received by assessee for relinquishment of right as interest and taxed the same under the head 'income from othe....
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....onveyance-deed was executed nor the assessee has taken possession. The ld CIT(A) also concluded that the assessee has made a provisional booking as shown in the cancellation letter dated 25.07.2011. 7. Section 2(14) of the Act defines the word 'capital asset' mean 'property of any kind held by an assessee' whether or not connected with business or profession. The word 'transfer' in relation to a capital asset is defined under section 2(47) which include the sale, exchange or relinquishment of the asset or the extinguishment of any rights therein. In our view the word 'property', is a term of widest import and signifying every possible interest which a person can clearly hold or enjoy, it has been held so by Hon'ble Apex Court in Ahmed GM. Ariff v. CWT [1970] 76 ITR 471 (SC). 8. The Hon'ble Jurisdictional High Court in PCIT vs. Vembu Vaidyanathan (supra) while considering the following question of law "Whether on the facts and circumstances of the case and in law, the ITAT was justified in treating the gain arising from the sale of capital asset as Long Term Capital Gain without appreciating the fact that mere letter of allotment does not lead to creat....
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....cular No.672 dated 16th December, 1993. In such circular representations were made to the board that in cases of allotment of flats or houses by co-operative societies or other institutions whose schemes of allotment and consideration are similar to those of D.D.A., similar view should be taken as was done in the board circular dated 15th October, 1986. In the circular dated 16th December, 1993 the board clarified as under: "2. The Board has considered the matter and has decided that if the terms of the schemes of allotment and construction of flats/houses by the co-operative societies or other institutions are similar to those mentioned in para 2 of Board's Circular No.471, dated 15-10-1986, such cases may also be treated as cases of construction for the purposes of sections 54 and 54F of the Income-tax Act." It can thus be seen that the entire issue was clarified by the CBDT in its above mentioned two circulars dated 15th October, 1986 and 16th December, 1993. In terms of such clarifications, the date of allotment would be the date on which the purchaser of a residential unit can be stated to have acquired the property. There is nothing on record to suggest that the all....
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.... for consideration without notice of the right or obligation nor against such property in his hands. The illustration to section 40 reads, thus: "A, contracts to sell Sultanpur to B. While the contract is still in force he sells Sultanpur to C, who has notice of the contract. B may enforce the contract against C to the same extent as against A." 5. In the case of Ram Baran Prasad v. Ram Mohit Hazra AIR 1967 SC 744, the Supreme Court held that it was manifest that a contract for the sale of immovable property did not create any interest in the immovable property. In Soni Lalji Jetha v. Soni Kalidas Davchand AIR 1967 SC 978, the Supreme Court came to the conclusion that a contract for sale of immovable property, while it did not create interest in immovable property, created a personal obligation of a fiduciary character which could be enforced by a suit for specific performance not only against the vendor but also against a purchaser for consideration with notice. The Madras High Court in Nochat Kizhakke Madathil Venkateswara Aiyar v. Kalloor Illath Raman Nambudhri AIR 1917 Mad. 358, held that an executory contract for the conveyance of land was not a mere right to sue. The ri....
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.... the sum of Rs. 10,000 was returned to the assessee. The assessee claimed before the tax authorities that it had lost the balance of the earnest money that it had paid and that this was a capital loss. This Court was called upon on reference, to decide whether this was correct. It considered the definition of 'capital asset' under the Act and held that the contractual right of the purchaser to obtain title to immovable property for a price, which right was assignable, had to be considered to be 'property' and, therefore, a 'capital asset'. In this behalf reference was made to the judgment in the case of Tata Services Ltd. ( supra). The Court rejected the argument that if the right to purchase was given up and the vendor was relieved of his obligation, there would be no capital gain. The Court approved of what had been said in the case of CIT v. Rasiklal Maneklal (HUF) [1974] 95 ITR 656 (Bom.), in regard to the essential features of a transaction of relinquishment, namely, that the property in which the interest was relinquished continued to exist; it continued to be owned by some person or persons even after the transaction of the relinquishment and the inte....
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....02,500 could be assessed to tax as a capital gain. The Delhi High Court noted the judgment of this Court in the case of Tata Services Ltd. (supra) and distinguished it on facts. The Court said that in the case before it, it had to determine whether the damages received by the assessee were in respect of a capital asset. There was a breach of contract and the assessee received damages in satisfaction thereof. He had a mere right to sue for damages. Assuming the same to be property it could not be transferred under section 6(e) of the Transfer of Property Act. 10. Having regard to the statutory provisions and the authorities which we have cited above, we cannot, with respect, agree that the right acquired under an agreement to purchase immovable property is a mere right to sue. The assessee acquired under the said agreement for sale the right to have the immovable property conveyed to him. He was, under the law, entitled to exercise that right not only against his vendors but also against a transferee with notice or a gratuitous transferee. He could assign that right. What he acquired under the said agreement for sale was, therefore, property within the meaning of the Act and, con....
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....d damages under an agreement to purchase property. In CIT v. Dhanraj Dugar [1982] 137ITR 350, the facts before the Calcutta High Court were unusual. The assessee was a broker of immovable property. He entered into an agreement with three other persons for the purchase of an immovable property which was to be developed and resold. The assessee was not to pay any part of its purchase price. There were disputes between the four persons and the assessee filed a suit claiming partition. Upon a settlement the assessee received Rs. 1 lakh. The question was whether the sum of Rs. 1 lakh was received by the assessee from his normal business as a broker or upon the distribution of a capital asset. The Court held that even if there was any transfer of a capital asset by reason of the settlement, it had not cost the assessee anything in terms of money and so the question of computation of a capital gain could not arise. This decision was rendered upon its own facts. 13. There remains for consideration a decision of the Gujarat High Court in CIT v. Hiralal Manilal Mody [1981] 131 ITR 421, which Mr. Zaveri cited. The question in this case was whether the damages received by the assessee for b....