AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1156
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....tances of the case and in law, the AO and DRP failed to appreciate and ought to have held that there was no capital asset which could be said have been transferred by the Appellant. 3. On the facts and circumstances of the case and in law, the AO and DRP erred in holding that there is a transfer of capital asset which gave rise to a chargeable capital gain. 4. Without prejudice, on the facts and circumstances of the case and in law, the AO and DRP failed to appreciate and ought to have held that there was no cost of acquisition/ cost of improvement of the so-called capital asset and therefore, in any event, no capital gains could be charged. 5. On the facts and circumstances of the case and in law, the AO and DRP has erred in not granting deduction of expenditure of Rs. 25,58,775/- is incurred wholly and exclusively in connection with the transfer while computing income under the head capital gains. 6. In event the finding of the lower authorities that what is transferred is my interest in immovable property and/or interest in this estate, is upheld, then, as a consequence thereof, this cost of acquisition of the asset transferred must be determi....
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....ivil suit was settled and amount was received by the assessee. Relevant extracts from the said submission are reproduced below for ready reference: 2. I am one of the legal heirs to my grandmother Late Smt. Amba Wadia who expired on February 2, 1946. By her will, she appointed executors and trustees to administer her estate. One of the properties willed by her is a property known as "The Mount" located at Little Gibbs Road, Malabar Hill, Mumbai 400 006. The Trustees to the will were in the process of selling the said property. I, along with my other sisters, put up a claim to my right to inheritance in the said property. 3. One M/s Sanjay Infraspace Private Limited (hereinafter referred to as the purchaser) was in negotiations with the Trustees and Executors to the will of late Smt. Amba Wadia to axcquire the property as mentioned above. 4. The purchaser approached me to withdraw all claims with respect to the said property. In consideration of my withdrawing all claims against the said property, the purchasers of the said property, M/s Sanjay Infraspace Private Limited, have paid me a sum of Rupees Crores during the previous year. There is no transfer of....
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.... her right in the property of the deceased grandmother. Since the said property went into sale by the trustees and executors of the will of the deceased with Sanjay Infraspace Pvt. Ltd., assessee was in receipt of the amount of Rs. 15 Crores directly from the purchaser for concluding the legal proceedings in the civil suit by way of settlement for which the said amount was paid. According to the ld. Assessing Officer, the sum so received by the assessee is nothing but receipts as covered within the meaning of "transfer" in section 2(47) arising out of extinguishment of rights in the asset. 4.4. Ld. Assessing Officer further took a view that money received by the assessee from the purchaser is nothing but part of consideration paid for purchase of immovable property "The Mount". He further noted that this amount is nothing but share of consideration received on sale of immovable property through the process of settlement of civil suit filed by the assessee for which the purchaser had issued a receipt and assessee had also issued a full discharge receipt to the heir having discharged to her right, claim for whatsoever manner in respect of the entire estate of her deceased grandmot....
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....isted a valid and justifiable consideration for making the said payment by the purchaser of the immovable property and therefore, it is not liable to tax u/s. 56(2)(x). But ld. DRP did not deal with this aspect while giving its direction to the ld. Assessing Officer for passing the final assessment and categorically held that the money received by the assessee is taxable under the head long term capital gain. 5. Before us, ld. Counsel for the assessee vehemently argued and elaborately took the Bench through the family tree of late Ms. Amba Wadia as well as explained the chronology of events which took place vis-à-vis immovable property which she assigned through her will and codicil. He explained from the documents as to who were the heirs of certain assets of late Ms. Amba Wadia and litigations which arose on the interpretation of the will under which assessee had filed her civil suit before the Hon'ble High Court of Bombay to claim her right in the said immovable property by way of inheritance. Having gone through the detailed submissions, we are of the view that the said details are relevant for the purpose of determining whether the assessee had a right by way of ....
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....hdraw the civil suit filed by her and sign such documents as may be reasonably required to enable it to acquire the said immovable property free of encumbrances. 6.1. Assessee agreed to the offer made by the purchaser to not to pursue the civil suit for a sum of Rs. 15 Crores and thus, executed various documents including minutes of order withdrawing the civil suit no. 219 of 2016 and declared that trustees have full power and responsibility to dispose the impugned immovable property. Mr. Jehangir Wadia also withdrew his civil suit no.1932 of 2008 for which minutes of order were signed off. It was also pointed out from the documentary evidences placed in the paper book to demonstrate that assessee is not a party to the sale transaction of the immovable property either as seller or in her capacity as confirming party. The deed of conveyance, dated 04.09.2017 for the sale of the impugned immovable property is executed between the trustees of the trust created by late Ms. Amba Wadia as party of the first part and the beneficial vendors being party of the second part and these together with the purchaser i.e., Sanjay Infraspace Pvt. Ltd. Thus, it was evidently demonstrated that the ....
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.... is that there is no transfer of capital asset between the assessee and the purchaser except for accepting the offer of the purchaser of withdrawing her civil suit so as to enable it to have the acquisition of the said property free of encumbrances and without assessee being a clog on the title of the said property. As per the definition of "transfer" u/s. 2(47)(ii) of the Act, the extinguishment of any rights in the capital asset will amount to transfer. Thus, at the first instance, there must be a legally enforceable right over the capital asset available to the transferor, which is capable of being extinguished either through consideration or otherwise. The assessee could have acquired a legally enforceable right over the capital asset had a court of law declared so in her favour. 7. In this context, we refer to the decision of Hon'ble Jurisdictional High Court of Bombay in the case of CIT vs. Abbasbhoy A. Dehgamwalla [1992] 195 ITR 28 (Bom). In this judgement, Hon'ble Court noted that it is a trite law that income can be held to accrue only when the assessee acquires the right to receive the income. For the purpose of invoking chargeability for capital gains arising ....
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....ing the said receipt as income from other sources u/s. 56(1) which was put up in draft order and went before the ld. DRP before whom assessee made her detailed submission as to why it is not taxable even under the head "income from other sources" u/s. 56(2)(x). Unfortunately, ld. DRP did not delve into this aspect of bringing it to charge this amount as income from other sources and categorically held it to be taxable under the head "capital gain". Since Revenue omitted to deal with the issue of alternative stance taken by the ld. Assessing Officer of treating the receipt as income from other sources u/s. 56(2)(x), the only issue for our consideration is in respect of taxability of the receipt under the head "capital gain", to which we have already adverted upon, holding in favour of the assessee, though Revenue could have built up a good case to bring it to charge under the head "income from other sources" u/s. 56(2)(x). Since, we have a limited scope to deal with on the issue before us, we refrain ourselves from expressing our views on the alternative stance which was raised by the ld. Assessing Officer through the draft assessment order but was omitted by the ld. DRP while givin....