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Income Tax Appellate Tribunal, MUMBAI BENCH “G” MUMBAI
Before: SHRI C.N. PRASAD & SHRI N.K. PRADHAN
ORDER
PER N.K. PRADHAN, AM
This is an appeal filed by the Revenue. The relevant assessment year is 2013-14. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-9, Mumbai [in short ‘CIT(A)’] and arises out of the assessment completed u/s 143(3) of the Income Tax Act 1961, (the ‘Act’).
The grounds of appeal
filed by the Revenue read as under:
1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the AO to assess premium of Rs.5,23,50,000/- as capital gain instead of assessing it as the income from other sources when the ownership of the property does not change from the hands of the assessee.
2. The Ld. CIT(A) erred in relying upon that merely giving consent to change in the possession of rented permission from old tenant to the new tenant does not constitute the change of ownership in the hands of the assessee and therefore premium received on property is not a capital gain.
3. Briefly stated, the facts of the case are that the assessee filed its return of income for the assessment year (AY) 2013-14 on 28.09.2013 declaring total income of Rs.5,20,16,940/-. The assessee is an owner and the landlord of Sheth Mulji Jetha Cloth Market, Mumbai. The shops in the said market have been given on rent to various tenants. The Assessing Officer (AO) observed that during the financial year (FY) 2011-12, there was a change in tenancy of 17 shops, wherein some new tenants were introduced in place of old ones. The assessee received a premium of Rs.5,23,50,000/- on such transfers. The assessee reflected this premium amount as Long Term Capital Gains (LTCG) chargeable @ 20% in its return of income. Further, it claimed an exemption of Rs.50,00,000/- u/s 54 EC and disclosed taxable gain at Rs.4,73,50,000/-. However, the AO made an addition of Rs.5,23,50,000/- on account of premium received on tenancy transfer as “Income from Other Sources”.
4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A) followed the order of the Tribunal in assessee’s own case for the AY 2009-10 and directed the AO to treat the premium received on tenancy transfer as LTCG.