TaxTMI 
TaxTMI 
2022 (6) TMI 794
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.... has failed to appreciate that the MOU stamp paper was purchased from the stamp vendor at Chennai but as per the treasury seal it was issued from Thanjavur treasury office thereby the genuineness of MOU instrument is questionable. 4. The learned CIT(A) has failed to appreciate that the MOU document lacks credibility since the same was unsigned by the assessee and was not witnessed at the first instance. 5. The learned CIT(A) has failed to appreciate that the MOU and the relinquishment of rights thereof was a sham just to give the colour of long term capital gain transaction. 6. The learned CIT(A) has failed to appreciate even assuming but not conceding MOU was genuine as per clause 5 of the MOU another agreement will be entered elaborating the terms and conditions which was never entered into and accordingly the MOU was an incomplete contract which does not confer any right to specific performance and relinquishment thereof. 7. The learned CIT(A) has failed to appreciate that the preliminary MOU was a precursor to a more definitive agreement consequent to statutory approvals and in the absence of statutory approval for the project, preliminary MO....
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....ssee in support of his claim. The MOU submitted on 29.11.2018, is an unregistered one and there are no witnesses signature on it. However, when the assessee's representative was asked about it, he submitted another copy on 12.12.2018 which is also not registered, wherein the signature of the witnesses were there. So, there arises a question of reliability on the MOU submitted. Assessee has claimed deduction of Rs.10,25,000/- paid towards advance for the above deal was not supported by any documents / proofs. However, on 24.12.2018, in response to show cause the assessee has submitted a letter dated 03.042012 issued by M/s. Landmark Construction, stating that Rs.10,25,000/- has been received as advance. For an MOU entered on 28.11.2006 by the assessee the other party has given a receipt by way of letter dated 0304.2012, stating that Rs.10,25,000/- has been received as advance towards the saleable area of 20,000 sq. ft. This casts a shadow of doubt on the transaction. The MOU speaks about completion of project within three years of time from the MOU execution date. However, as per the details submitted, assesse had never made any efforts to question the delay until ....
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....led / taken steps towards the arbitration process. So, on this point also the assessee's claim of capital right falls flat. Even if we buy the argument of the assessee that the project was not taking off and there was no sign of any progression on the MOU, the assessee did not submit any proof towards going ahead with the distress sale of capital rights. So, from the above observations, it would be clear that the entire transaction is a sham, just to give the colour of Long Term Capital Gain transaction. Hence, the assessee was show caused as to why the entire transaction should be treated as Capital Gain, but the assessee could not substantiate with any concrete material to convince the undersigned to treat the above transaction as relinquishment of capital right, and accept the assessee's claim to treat the transaction as LTCG and allow the deduction under 54F. Hence, based on the above discussions the assessment is completed u/s 143(3) as per Income-tax Act, 1961, treating the entire amount of Rs.4,84,75,000/- [4,95,00,000 - 10,25,000 (Though assessee has not substantiated how the advance was paid, the same is considered as deduction)], as income from ....
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....f his choice and in consideration of the same the assessee received a sum of Rs. 6 lakhs along with the amount advanced to the owner. The assessee filed return for the relevant assessment year declaring n total income including capital gains. The Tribunal confirmed the view taken by the Commissioner of Income-tax, who held that the sum of Rs. 6,00,000 received by the assessee was subject to capital gains tax. On appeal, jurisdictional High Court declared as follows: The assessee had a right 10 insist on specific performance, gave up the right readily and received a sum in question. By termination of the earlier agreement and by allowing the vendor to sell the said property to any person at any price, the assessee had given up or relinquished his right of specific performance and as consideration for relinquishing that right the assessee was paid the sum in question. The right, title and interest acquired under the agreement of sale dearly fell within the definition of Capital asset Instead of assigning the right to third party/ parties, the assessee relinquished those rights. The definition of 'transfer' in section 2(47) is wide enough to include relinquishment of....
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....t, Tamil Nadu, wherein it is noted as follows: Thiru. T. Udayakumar has applied the Planning Permission Application for the proposed construction of Multistoried Group Development Building comprises of Block -1: Stilt Floor + First floor + Second floor (pt) to 91 floor (pt) (Tower A to Tower G) Residential building with 440 dwelling units and Block -2: Club house - Ground floor + 2 floors and Swimming pool in Old S.No.184/l, 184/2, 184/3, 185/2, New S.No.184/2A, 18412B, 185/4 of Pammal village, Thiruneermalai Main Road, Pallavaram Taluk, Pammal Municipal Limit, Kancheepuram District (As per the revised plan FST area: 411 18.84 Sq.m.). 2. Thiru. T.Udayakumar had obtained reclassification of site bearing Old S.No.184/l,2,3 & 185/2 and New S.No. 184/1A7A1P, 2A, 2B & 185/4 of Pammal village from special and hazardous use zone into Industrial use zone vide A.R. No.104/2009 dated: 23.12.2009 for the purpose of manufacturing pre-cast beams and slabs. Subsequently, applied for reclassification from Industrial use Zone to Primary Residential use zone for the construction of multi-storied residential apartments, the proposal was placed before the Authority in its meeting he....
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....ther MOU. As regards the doubt expressed by the Assessing Officer in connection with date of the receipt given by the builder for the advance of Rs.10,25,000/- being 03.04.2012 the appellant explains that the advance was not given as a lump sum amount but on multiple occasions. The Assessing Officer does not support by any concrete evidence his view that the transaction could be an afterthought. Last but not least, the observations of the Assessing Officer that the appellant has gone for a lower rate of compensation than that was agreed upon 9 years earlier, in fact, supports the argument of the appellant in my opinion. Therefore, I agree with the appellant's contention that the Assessing Officer drew conclusions based on mere surmises and denied the benefit of Section 54F to the appellant unfairly. In view of the above, I hold that the Assessing Officer erred in denying the benefit of Section 54F to the appellant and bringing an amount of Rs.4,84,75,000/- as 'income from other sources'. Therefore, the addition of Rs.4,84,75,000/- made by the Assessing Officer is deleted. The appellant succeeds on this ground." 6. The learned D.R. submitted that the learned CIT(A) erred....
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.... available on record and gone through orders of the authorities below. The facts borne out from records indicate that the assessee has entered into MoU with M/s. Landmark Construction on 28.11.2006 for purchase of 20,000 sq.ft of saleable area together with proportionate undivided share. As per said MoU, the assessee should get rights over the property to be constructed by M/s. Landmark Construction. Further, the builder M/s. Landmark Construction could not take up project for various reasons, including delay in getting approval from CMDA. Therefore, the assessee had extinguished his right in the property in favour of the builder by entering into MOU dated 28.11.2006 and has received compensation of Rs.5 crores in lieu of surrender of his right in the property. The builder has paid compensation in cheque after deducting TDS applicable as per law. The assessee claims that since he had acquired right in property by virtue of MOU dated 28.11.2006, extinguishment of right in property by another MOU amounts to transfer within the meaning of section 2(47) of the Income Tax Act, 1961. 9. We have given our thoughtful consideration to the reasons given by the Assessing Officer to assess ....
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....t, because if at all, the Assessing Officer is having any doubt on authenticity of stamp paper, the A.O. should have conducted necessary inquiries to ascertain facts whether stamp paper purchased by the assessee is genuine or fake one. In absence of any inquiry, the Assessing Officer cannot come to a conclusion that stamp paper purchased is not genuine one and consequently, on that basis the transaction between the parties cannot be questioned, more particularly, when other evidences filed by the assessee, including confirmation from buyer reveals that transaction took place between the parties. 11. As regards, whether extinguishment of rights in a property comes under definition of transfer or not has been considered by various High Courts, including Hon'ble Bombay High Court in the case of TATA Tele Services Ltd. (1980) 122 ITR 594 (Bom). The Hon'ble Bombay High Court in the said case had considered the issue and held that word 'property' used in section 2(14) was a word of widest amplitude and the definition of this was re-emphasized by the use of words 'of any kind' and thus, any right which could be called property would be included in the definition of 'capital asset'. The....