AI Drafter 
TaxTMI 
TaxTMI 
2020 (7) TMI 714
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....hen receipt is in nature of capital and does not fall in definition of income, then same cannot be taxed u/s 56(2) of the Income Tax Act. 4. On the facts and circumstances of the case, the Ld. CIT(A) failed to consider that capital gain cannot be computed when cost is absent. 5. On the facts and circumstances of the case, the Ld. CIT(A) failed to consider that when receipt was received for passing over the same, then no gain arises under capital gain. 3. Briefly stated, the facts of the case are that the appellant filed her return of income for the assessment year (AY) 2013-14 on 28.09.2013 declaring total income of Rs. 61,82,830/-. During the course of assessment proceedings, the Assessing Officer (AO), on perusal of the capital account of the appellant found that an amount of Rs. 25,00,000/- has been shown as received on account of "Mohit Sahita-Inheritance". On being asked to explain it, the appellant submitted before the AO the following: "Note on MVS inheritance On 15.03.2013 Rs. 25,00,000/- received from Mr. H.M. Enterprises (Plaintiffs) through DD No. 320826 dated 11.03.2013. This was received for out of Court settlement of property dis....
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....ahita did have right on the property, so would the assessee as she had all the legal rights to dispute the subsequent acquisition by M/s. H.M. Enterprises, (iv) for getting the premises vacant, M/s H.M. Enterprises had filed a suit against the occupier of said building and it was only on account of Court settlement, that the amount was paid, (v) it would also be the fact of the case that M/s H.M. Enterprises must have filed suit against all the occupiers and the amount has been paid as out of Court settlement to the occupier as well as to the assessee having right of occupancy in the said flat of the building Ganganagar, (vi) in the facts of the case, it cannot be said that the appellant did not have right of any kind in the said flat, (vii) the appellant is in receipt of money and that is not without reason ; she has received the money as a result of out of Court settlement and as a party who had right in the flat where her other family members stayed as a part of family settlement and which in turn was earlier occupied by the assessee's mother-in-law as a licensee. The Ld. CIT(A) further observed that as per the provisions of section 49(1) of the Act, the cost with reference t....
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....ion of section 48 will not apply. Finally, the Ld. counsel files and relies on the decision in CIT v. Star Chemicals (Bom) Pvt. Ltd. (ITA No. 1110 & 1153 of 2009) dated 14.08.2009 ; Smt. Seetha S. Shetty (ITA No. 807/Mum/2017) ; Sonal A. Zaveri (ITA No. 5968/Mum/2013); Yashod Deora v. ITO (ITA No. 835/Kol/2008 and ITA No. 281/Kol/2013). 6. On the other hand, the Ld. Departmental Representative (DR) submits that in the instant case, the entire amount as mentioned in the consent terms has been paid to the appellant and her relatives for vacating the said premises. The appellant received the amount Rs. 25,00,000/- as the building in which the said flat was located namely Gangasagar was purchased by M/s H.M. Enterprises and for vacating the said premises, M/s H.M. Enterprises had filed suit against occupiers of Gangasagar building. Mrs. Saraswati Vithaldas Sahita occupied a flat at the 2nd floor of the building on license basis. Subsequent to the family settlement, Shri Vidyut Sahita family stayed in the said flat, and as a consequence of the out of Court settlement, M/s H.M. Enterprises paid money to all occupiers as also to the appellant being the daughter-in-law of M/s Sara....
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....sequently, the Shettys entered into a development agreement dated 24.08.2005 with M/s Hekunt Real Estates P. Ltd. and received consideration of Rs. 1.20 crores and a flat of 2000 sq. ft. (carpet area) was further to be given to Shettys within 20 months from the date of grant of commencement certificate. The Stamp Duty Authorities determined the value of the property at Rs. 2,28,45,000/- whereas the registration was done for a value of Rs. 2.30 crores only. The Tribunal held that : "8. Thus, it may be noted that after the amendment of 1995, certain assets like goodwill, tenancy rights etc. have been charged to tax by specifically providing that if there is no cost incurred by the assessee in this respect, the cost shall be taken as nil. However, we find that vide amendment, particular assets like goodwill, tenancy rights, trade mark etc. have been brought into the ambit of charging section. However, the rights obtained by way of adverse possession have not been included in the provision neither in the charging section 45 nor in the section 48 which provides mode of computation. There is no any provision regarding the charging of capital gains tax on an asset tit....
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....er faction of the family did not have adequate cash flow to pay to the assessee, her brother and sister for giving the vacant possession of the property. It was understood between the parties of the family settlement that the assessee, her brother and sister had a charge and an overriding title over the sale consideration of the said flat. The Tribunal, followed the decision of the Hon'ble Kerala High Court in the case of M. Appukutty (supra), the order of the Tribunal in Mrs. Urmila Mahesh Nathani v. ITO (ITA No. 5921/Mum/2012) for AY 2009-10, Smt. Seetha S. Shetty (supra) and allowed the appeal filed by the assessee. In the case of Yashod Deora (supra), there was a residential flat in Mumbai bearing address Flat No. 1 Turf View, Hornby Vellard Estate, Worli, Mumbai (hereinafter) known as disputed flat. The flat was owned by M/s Mahabir Loather Boards Pvt. Ltd. (MLBPL for short) and this disputed flat was occupied by Mrs. Yashod Deora along with her husband Sri Pradeep Kumar Deora who was then Director/employee in MLBPL having address at 67/69 M.K. Mark Dariyanagar, House, marine Lines, Mumbai-400002, M/s Percept Advertising limited. (PAL in short) had purchased the disputed....
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....Mohitkumar Sayta (the original landlord), the immovable property consisting inter alia "Ganga Sagar" (in which the suit premises are located). Then M/s H.M. Enterprises paid Rs. 25,00,000/- to defendant No. 1 (the appellant) ; Rs. 1,15,00,000/- to defendant No. 3 ; Rs. 20,00,000/- to defendant No. 4 in consideration of entering into a settlement and vacating and handing over possession of the suit premises to plaintiff No. 3 (M/s H.M. Enterprises). M/s H.M. Enterprises admits and acknowledges receipt of vacant and peaceful possession of the suit premises from the defendants. The defendants declare and confirm to the Hon'ble Court of Small Causes at Mumbai that they have not created any right, title or interest or parted with possession of the suit premises in favour of any other person. Finally, the "Consent Terms" state : "8. The parties hereto withdraw all other claims and allegations made against each other either in the above Suit or otherwise in respect of the Suit Premises as also in respect of any other premises in the building known as "Ganga Sagar" where the Suit premises is situated. The above Suit shall stand disposed of in terms hereto." 7.2 Let us recapitul....
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....e licensee is permitted to make use of the premises for a particular purpose. But for the permission, his occupation would be unlawful. It does not create in his favour any estate or interest n the property. There is, therefore, cleat distinction between the two concepts. The dividing line is clear though sometimes it becomes very thin or even blurred. At one time it was thought that the test of exclusive possession was infalliable and if a person was given exclusive possession of a premises, it would conclusively establish that he was a lessee. But there was a change and the recent trend of judicial opinion is reflected in Errington v. Errington [1952] 1 All E.R. 149, wherein Lord Denning reviewing the case law on the subject summarizes the result of his discussion thus at p. 155: 'The result of all these cases is that, although a person who is let into exclusive possession is prima facie, to be considered to be tenant, nevertheless he will not be held to be so if the circumstances negative any intention to create a tenancy.' The Court of Appeal again in Cobb v. Lane [1952] 1 All E.R. 1199.considered the legal position and laid down that the intention of the part....
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....n well summarised in Haisbury's Laws of England, Fourth Edition, Volume 27 page 13. In determining whether an agreement creates between the parties the relationship of landlord and tenant or merely that of licensor and licensee the decisive consideration is the intention of the parties." In P.N.Amersey-HUF vrs. ITO [2012] 20 taxmann.com 704 (Mum.), the Tribunal has summarized the legal position as under: "(A) A lease is therefore a transfer of an interest in land. The interest transferred is called the leasehold interest. The lessor parts with his right to enjoy the property during the term of the lease, and it follows from it that the lessee gets that right to the exclusion of the lessor. (B) If a document gives only a right to use the property in a particular way or under certain terms while it remains in possession and control of the owner thereof, it will be a licence. The legal possession, therefore, continues to be with the owner of the property, but the licensee is permitted to make use of the premises for a particular purpose. But for the permission, his occupation would be unlawful. It does not create in his favour any estate or interest in the pro....