TaxTMI 
TaxTMI 
2026 (2) TMI 60
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.... the impugned order or otherwise. 3. The FAA Ld. CIT(A) erred in denying exemption u/s 54 of the Act as proposed by the appellant, for reasons mentioned in the impugned order or otherwise. 4. That the Appeal is not in time and delay in filing the appeal is neither intentional nor due to negligence, but solely due to the genuine and bonafide reason of being unaware about the outcome of the CIT(A) Order." 2. Brief facts of the case, the assessee had not filed its return of income for the AY 2015-16. Whereas, have entered into a transaction of sale of immovable property for an amount of Rs. 86,00,000/-. Such information was received by the Assessing Officer (AO), therefore, the case of assessee has been selected for scrutiny under section 147 of the Act. Order under section 148A(d) of the Act was issued on 09.04.2022. Further notice under section 148 was issued and served to assessee on 09.04.2022, in compliance of which the assessee filed ITR under section 148 of the Act on 14.02.2023. In due course, notice under section 143(2) was issued and thereafter notices under section 142(1) were issued along with questionnaire to furnish specific information. In response ....
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....Accordingly, the claim of assessee under section 48 for deduction on account of cost of acquisition with indexation was denied, treating the same as NIL. The AO further rejected the claim of assessee for deduction under section 54/54F of the Act on account of failure of assessee to submit relevant documents like valid registered sale agreement / contract in support of his claim. A notice under section 133(6) of the Act was also issued to Hozaifa S. Contractor, the seller as claimed by the assessee, to furnish registered sale agreement / contract in respect of sale of property to the assessee but he also failed to furnish the same, however a certificate (page 16 of the assessment order) was issued by him that flat No. 33B, 4th Floor, B Block, Adam Mahal, 143/147, Wadia Street, Tardeo, Mumbai-400034 was handed over to Murtuza Taher Kothari on rent and he is enjoying the said property as owner till date. On the aforesaid reply from Hozaifa S. Contractor shows that the property is on rent for which the assessee is paying rent regularly, the amount of Rs. 86,00,000/- deposited with Hozaifa S. Contractor was therefore not for the purpose of purchase of property / transfer of property as ....
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....nt filed the appeal with the abovementioned grounds. The appellant's grounds relate to the claim of benefit of indexation in relation to the cost incurred for acquiring the tenancy rights in the form of deposit advanced long time ago and therefore the same requires to be deducted from the sale consideration. In appellant's words, "since for obtaining a property on pagdi system one has to give deposit, which Appellant has given long back ie, around 50 years back, now pagdi amount becomes the original cost and that is replaced as per indexation i.e, Fair Market Value as on year 2001. It is to be held that originally when the appellant occupied the premises, what were the understanding with the owner and what was the amount given as deposit and whether only nominal rent was charged were questions of fact which the appellant could not substantiate. Therefore, the claim that the tenancy rights require to be assigned a cost and the FMV of the same as on 1.4.2001 was rightly not entertained by the AO treating the tenancy rights as having been acquired without incurring any cost. The appellant's alternate claim of investment in another property eligible for ex....
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....at 7th floor in lieu of his share in aforesaid ancestral property having tenancy rights, subsequently vide rectification deed executed by developer and appellant dt.20/11/2013, the unit number of the said property rectified from unit no-3 & 4 to flat no-703. The appellant subsequently sold the aforesaid ownership flat vide agreement dt. 21/05/2014, named: Flat No-703, ORION Building, Rajaram Mohan Roy Road, C.S. No-1150, Off. Girgaon Road, Grant Road, Mumbai-400 007, acquired under the redevelopment agreement, which represented his share in the ancestral tenancy property held by his late parents. The sale consideration for the aforesaid property at Rs. 86,00,000/- and market value at Rs. 85,68,500/- as on date of sale dt.21/05/2014. Return of Income was not filed by the appellant, since the total income as per computation was less than the maximum marginal limit for threshold. The appellant received notice dt. 15/02/2018 for non-filing of income tax return along with compliance of the information generated on his PAN through AIR Information code-AIR-007 consisting "Sold Immovable Property Valued at Rs. 30,00,000/- of more during F.Y.2014-15". The....
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....acts and documents furnished during, assessment proceedings, appellate proceedings as well as before this hon'ble ITAT Bench, the appellant humbly prays to grant relief in the form of: - * Cost of acquisition to be allowed at Rs. 83,62,976/- from the sale consideration amounting Rs. 86,00,000/-. * The amount of Rs. 2,37,024/- to be allowed as long-term capital gain as per computation of total income. * Any other relief considering the facts and merits of the case may be granted by this Hon'ble ITAT Forum to the appellant." 6. Based on aforesaid submissions, it was the prayer that the tenancy rights got converted into acquisition of flat, when the assessee must have got the possession of flat constructed by the Builder, the market value of the said flat as on the date of its possession would be the cost of acquisition. In present case, the original tenanted property held by assessee's father Late Shri Taherf Kothari under pagdi tenancy system, which upon demise of the father of assessee was transferred to his mother Nafisa Taher Kothari, subsequently after her demise on 20.08.2022 the same tenancy rights devolved upon the legal heirs which inclu....
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....O in this regard. 10.1 In order to ascertain whether or not sec. 49(1) is applicable to the facts of the instant case, it is imperative to have a look at the language of the section, which is reproduced as under : "49(1) Where the capital asset became the property of the assessee - (i) on any distribution of assets on the total or partial partition of a Hindu undivided family; (ii) under a gift or will; (iii) (a)by succession, inheritance or devolution, or (b) on any distribution of assets on the dissolution of a firm, body of individuals, or other association of persons, where such dissolution had taken place at any time before the 1st day of April, 1987, or (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) of section 47; (iv) such assessee being a Hindu undivided family, by the mode referred to in sub- (2) of section 64at any time after the 31st day of De....
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....ribed in clauses (i) to (iv) should become the subject matter of transfer and only in such a situation where such capital asset is subsequently transferred, the cost to the previous owner is deemed as the cost of acquisition of the asset. It is apparent from the language of sub-sec. (1) itself which opens with the words: "Where the capital asset became the property of the assessee" and after enumerating certain situations, provides that "the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it." The phrase `the asset' used in the later part of the provision relates to the capital asset which became the property of the assessee in the given circumstances. The natural corollary which, therefore, follows is that the cost to the previous owner is considered as the cost of acquisition only of the capital asset, which becomes the property of the assessee in the modes given in clauses (i) to (iv). But once such capital asset is transferred and another capital asset is acquired, there is no applicability of sec. 49(1) to such converted asset. 10.4 Coming back to the facts of the instant case, the view point of the....
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....saction with the Government, the question of any under-hand payment also stands ruled out. Sec. 48 deals with the mode of computation of income chargeable under the head 'Capital gains'. It provides that such income shall be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset, the cost of acquisition of the asset and the cost of improvement, if any, along with the expenditure incurred wholly and exclusively in connection such transfer. The full value of the consideration received or accruing as a result of the acquisition by the Govt. is the amount given as consideration for such acquisition or in the alternative the market value of any other capital asset given to the assessee against such acquisition. As in the instant case the Govt. has allotted rights in the Plot as the full value of consideration on the acquisition of lands by it in the years 1970/72, the market value of such right is to be considered as full value of consideration at the time of computing capital gain on the first transaction in the preceding year. Once a particular amount is considered as full value of consideration at the time ....
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....rship basis in lieu of surrender of tenancy right and, therefore, the market value of the acquired flat should be taken as on the date of 16th May 1982. For the purpose of ascertaining the cost, the assessee has taken the instance of sale of similar kind of premise in the same month with the builder which was sold for Rs. 3,64,000. It is now quite settled that for the purpose of cost of acquisition under section 48 and 49, the tenancy rights is to be taken into consideration. This is evident from sub-section (2) of section 55. The builder has given the alternate flat to the assessee only by virtue of surrender of tenancy rights by the assessee. Had there been no tenancy right, the builder would have not offered any flat to the assessee, on ownership basis. Thus, it is a valuable right on which cost of acquisition has to be determined. It is not a case that the cost of acquisition cannot be determined in lieu of the surrender of tenancy right at all. Once the cost of acquisition is determinable, the benefit of such acquisition has to be given while computing the tax on capital gain. In the present case, the tenancy right got converted into acquisition of a flat, when the assessee mu....