ACIT 4(3)(1), MUMBAI vs. THE NEW PIECE GOODS BAZAR CO. LTD, MUMBAI

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ITA 5807/MUM/2016Status: DisposedITAT Mumbai26 April 2018AY 2013-144 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the tenancy rights constitute a capital asset, and the premium received on their transfer is assessable as capital gains, following its own previous decisions.

What were the facts?

The assessee, owner of a market, received a premium of Rs. 5,23,50,000/- on the transfer of tenancy rights for 17 shops. The assessee treated this as Long Term Capital Gains, but the AO assessed it as income from other sources.

What were the issues?

Whether premium received on transfer of tenancy rights is to be treated as capital gains or income from other sources.

Which sections of the Income-tax Act were involved?

Section 2(14),Section 54EC

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “G” MUMBAI

Before: SHRI C.N. PRASAD & SHRI N.K. PRADHAN

For Appellant: Mr. S. Sriram, AR
For Respondent: Mr. V. Vidhyadhar, DR, Mr. S. Sriram, AR
Hearing: 04/04/2018Pronounced: 26/04/2018

ORDER

PER N.K. PRADHAN, AM

1.

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’).

2.

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.

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