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“extinguishment of rights”

Capital GainsSection 2(47)Section 2(47)59 judgments

The decision most relied on for extinguishment of rights is CIT v. Tata Services Ltd. (122 ITR 594), cited in 76 judgments on BharatTax.

Leading authorities on extinguishment of rights

CIT v. Tata Services Ltd.
122 ITR 594 · 1980 · High Court
76
citing judgments

A right to purchase property under an agreement to sell is a capital asset as defined under Section 2(14) of the Income-tax Act. The relinquishment or extinguishment of such a right constitutes a transfer of a capital asset, the consideration for which is taxable as capital gains.

CIT v. Grace Collis
248 ITR 323 · 2001 · Supreme Court
58
citing judgments

The term 'transfer' under Section 2(47) includes the relinquishment of a right to property that creates an interest in the property. However, the extinguishment of rights in shares, when occurring without a formal conveyance, does not attract capital gains.

Vania Silk Mills (P.) Ltd. v. CIT
191 ITR 647 · 1991 · Supreme Court
38
citing judgments

Extinguishment of rights in a capital asset includes transfer and attracts capital gains computation provisions. Demolition and conversion of a building into scrap constitutes a form of transfer.

CIT v. Mohanbhai Pamabhai
91 ITR 393 · 1973 · High Court
31
citing judgments

The distribution of capital assets to a partner upon the dissolution of a partnership firm does not constitute a 'transfer' and is therefore not taxable as capital gains.

Kartikeya v. Sarabhai vs. CIT
228 ITR 163 · 1997 · Supreme Court
25
citing judgments

Extinguishment of substantial rights of a shareholder in an investee company due to reduction of share capital is considered an "extinguishment" within the meaning of 'transfer' under Section 2(47) of the Income Tax Act, even if a third party is not involved.

Malabar Fisheries Co. v. CIT
120 ITR 49 · 1979 · Supreme Court
22
citing judgments

Distribution, division, or allotment of assets to partners upon dissolution of a firm is a mutual adjustment of rights and not a transfer of assets by the firm, as the firm does not hold separate rights in partnership assets.

Anarkali Sarabhai v. CIT
224 ITR 422 · 1997 · Supreme Court
22
citing judgments

Redemption of preference shares by a company constitutes a 'transfer' under Section 2(47) of the Income Tax Act, making it subject to capital gains tax under Section 45 for the shareholder.

DCIT v. BPL Sanyo Finance Ltd.
312 ITR 63 · 2009 · High Court
20
citing judgments

The extinguishment of rights in a capital asset, independent of and otherwise than on account of a transfer, amounts to a short-term capital loss. This includes the forfeiture of share application money or convertible warrants.

Judgments citing extinguishment of rights

Yerragudi Venkata Siva Reddy, Anantapur vs. ACIT., Circle-1, Kurnool

In the result, appeal of the Assessee is allowed for statistical purposes

ITA 1294/HYD/2025[2017-18]Status: DisposedITAT Hyderabad20 Feb 2026AY 2017-18

Bench: Shri Vijay Pal Rao & Shri Manjunatha G.आ.अपी.सं /Ita No.1294/Hyd/2025 Assessment Year 2017-2018 Yerragudi Venkata Siva Reddy, Ananthapur The Acit, Vs. Pin – 515 001. Circle-1, Pan Aampy0365L Kurnool. Andhra Pradesh (Appellant) (Respondent) िनधा"रती "ारा /Assessee By: -None- राज" व "ारा /Revenue By: Dr. Narendra Kumar Naik, Cit-Dr सुनवाई की तारीख/Date Of Hearing: 17.02.2026 घोषणा की तारीख/Pronouncement: 20.02.2026 आदेश/Order

For Appellant: -None-For Respondent: Dr. Narendra Kumar Naik, CIT-DR
Section 2(47)(ii)Section 48

cost of the demolished structure bears a direct and proximate connection with the transfer consideration and is fully deductible under Section 48. 3. Extinguishment of rights amounts to transfer under Section 2(47)(ii) The learned CIT(A) has overlooked that the demolition resulted in the extinguishment of the assessee ... irrelevant for determining the allowability of its cost. It is respectfully submitted that the material is the occurrence of a transfer (extinguishment of rights) in the building, which indisputably took place, thereby entitling the assessee to the benefit of indexed cost under Section 48. 6. Inapplicability of Goetze ruling

Ascendas Panvel Ftwz Private Limited, Mumbai vs. Deputy Commissioner of Income Tax, Ward 14(1)(1), Mumbai

In the result, the appeals filed by the assessee are allowed in the above terms

ITA 712/MUM/2025[2021-22]Status: DisposedITAT Mumbai10 Feb 2026AY 2021-22

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI MAKARAND VASANT MAHADEOKAR (Accountant Member)

Section 3(12)Section 80

that the entire SEZ must be fully developed before any transfer of operation and maintenance could occur, and that there must be absolute extinguishment of rights by the original developer. It was submitted that none of these conditions find place in the statutory language and that the CIT(A) effectively ... profits derived from authorised SEZ operations. 29. The second limb of the learned CIT(A)’s reasoning, namely the requirement of “absolute extinguishment” of rights by the original developer, fares no better. The proviso speaks of “transfer of operation and maintenance”; it does not employ the language of transfer

Mrs Shireen J. Dastur, Mumbai vs. ITO Int Taxation Ward 2(1)(1), Mumbai

In the result, appeal of the assessee is allowed

ITA 2204/MUM/2022[2018-19]Status: DisposedITAT Mumbai04 Nov 2025AY 2018-19

Bench: Shri Saktijit Dey, Hon'Ble & Shri Girish Agrawalassessment Year: 2018-19 Shireen J. Dastur Income Tax Officer, 330, Coral Avenue, (International Taxation), New Port Beach, Ward 2(1)(1), California Vs. Mumbai 92662 Usa (Pan : Ctlpd0257N) (Appellant) (Respondent) Present For: Assessee : Shri P.J. Pardiwala, Sr. Advocate & Ms. Gunjan Kakkad, Advocate Revenue : Shri Krishna Kumar, Sr. Dr Date Of Hearing : 11.08.2025 Date Of Pronouncement : 04.11.2025 O R D E R

For Appellant: Shri P.J. Pardiwala, Sr. Advocate and Ms. Gunjan Kakkad, AdvocateFor Respondent: Shri Krishna Kumar, Sr. DR
Section 144C(5)Section 234B

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

Hemant Naresh Agarwal, Surat vs. Assistant Commissioner of Income Tax, Central Cir. 4, Surat

In the result, appeal of assessee is dismissed

ITA 170/SRT/2023[2020-21]Status: DisposedITAT Surat24 Oct 2025AY 2020-21

Bench: Shri Dinesh Mohan Sinha & Shri Bijayananda Prusethआ.(खो और ज).सं /It(Ss)A No.68 & 70/Srt/2023 Assessment Years: 2015-16 & 2018-19 (Physical Court Hearing) Deputy Commissioner Of Hemant Naresh Agarwal बनाम/ Income-Tax, Central Circle-4, 701, Shree Shyam Awas, Bhatar Vs. Surat Room No.508, 5Th Floor, Road, Near Vidhya Bharti School, Aayakar Bhawan, Majura Surat-395 010 Gate, Surat-395 001 "थायीलेखासं./जीआइआरसं./Pan/Gir No: Auppa 9003 J (अपीलाथ"/Appellant) (""थ" /Respondent) आयकर अपील सं./Ita.No.170/Srt/2023 Assessment Year: 2020-21 Hemant Naresh Agarwal Assistant Commissioner Of बनाम/ 701, Shree Shyam Awas, Bhatar Income-Tax, Central Circle-4, Vs. Road, Near Vidhya Bharti School, Surat, Aaykar Bhawan, Surat-395 010 Majura Gate, Surat-395 001 "थायीलेखासं./जीआइआरसं./Pan/Gir No: Auppa 9003 J (अपीलाथ"/Appellant) (""थ" /Respondent) िनधा"रती की ओर से /Assessee By Shri Kiran K. Shah राज" की ओर से /Revenue By Shri Mukesh Jain, Cit-Dr & Shri Kevin Langaliya, Ca सुनवाई की तारीख/Date Of Hearing 18/09/2025 उद्घोषणा की तारीख/Date Of Pronouncement 24/10/2025

Section 143(3)Section 250Section 292CSection 69

Further in Malabar Fisheries Co. vs. CIT [1979] 120 ITR 49 (SC), it was held that there was no transfer in terms of extinguishment of rights of the Firm in the Capital asset when the capital asset is distributed to the partner on dissolution. In Addl. CIT vs. Mohanbhai Pamabhai

DCIT, Central Circle-8(1), Mumbai vs. The Estate Investment Company Pvt Ltd, Mumbai

3012/Mum/2025

ITA 3936/MUM/2025[2017-18]Status: DisposedITAT Mumbai17 Oct 2025AY 2017-18
Section 132Section 132(4)Section 69A

situated in Mira-Bhayandar and adjoining areas. On this premise, the Assessing Officer held that the said receipts represented unaccounted consideration received for extinguishment of rights, which was assessable as capital gains in the hands of the assessee. As regards the other entries not bearing the marking “KB,” the Assessing

DCIT, Central Circle-8(1), Mumbai vs. The Estate Investment Company Pvt Ltd, Mumbai

ITA 3928/MUM/2025[2015-16]Status: DisposedITAT Mumbai17 Oct 2025AY 2015-16
Section 132Section 132(4)Section 69A

situated in Mira-Bhayandar and adjoining areas. On this premise, the Assessing Officer held that the said receipts represented unaccounted consideration received for extinguishment of rights, which was assessable as capital gains in the hands of the assessee. As regards the other entries not bearing the marking “KB,” the Assessing

The Estate Investment Company Private Limited, Mumbai vs. DCIT Central Circle 8(1), Mumbai

ITA 3228/MUM/2025[2015-16]Status: DisposedITAT Mumbai17 Oct 2025AY 2015-16
Section 132Section 132(4)Section 69A

others and adjoining areas. On this premise, the Assessing Officer held that the said receipts represented unaccounted consideration received for extinguishment of rights, which was assessable as capital gains in the hands of the assessee. As regards the other entries not bearing the marking “KB,” the Assessing Officer assumed them

The Estate Investment Company Private Limited, Mumbai vs. DCIT Central Circle 8(1), Mumbai

3012/Mum/2025

ITA 3227/MUM/2025[2017-18]Status: DisposedITAT Mumbai17 Oct 2025AY 2017-18

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI ARUN KHODPIA (Accountant Member)

Section 132Section 132(4)Section 69A

others and adjoining areas. On this premise, the Assessing Officer held that the said receipts represented unaccounted consideration received for extinguishment of rights, which was assessable as capital gains in the hands of the assessee. As regards the other entries not bearing the marking ―KB,‖ the Assessing Officer assumed them

The Estate Investment Company Private Limited, Mumbai vs. DCIT Central Circle 8(1), Mumbai

ITA 3225/MUM/2025[2019-20]Status: DisposedITAT Mumbai17 Oct 2025AY 2019-20
Section 132Section 132(4)Section 69A

others and adjoining areas. On this premise, the Assessing Officer held that the said receipts represented unaccounted consideration received for extinguishment of rights, which was assessable as capital gains in the hands of the assessee. As regards the other entries not bearing the marking “KB,” the Assessing Officer assumed them

The Estate Investment Company Private Limited, Mumbai vs. DCIT Central Circle 8(1), Mumbai

3012/Mum/2025

ITA 3224/MUM/2025[2020-21]Status: DisposedITAT Mumbai17 Oct 2025AY 2020-21
Section 132Section 132(4)Section 69A

others and adjoining areas. On this premise, the Assessing Officer held that the said receipts represented unaccounted consideration received for extinguishment of rights, which was assessable as capital gains in the hands of the assessee. As regards the other entries not bearing the marking “KB,” the Assessing Officer assumed them

The Estate Investment Company Private Limited, Mumbai vs. Deputy Commissioner of Income Tax Central Circle -8(1), Mumbai

3012/Mum/2025

ITA 3223/MUM/2025[2021-22]Status: DisposedITAT Mumbai17 Oct 2025AY 2021-22
Section 132Section 132(4)Section 69A

others and adjoining areas. On this premise, the Assessing Officer held that the said receipts represented unaccounted consideration received for extinguishment of rights, which was assessable as capital gains in the hands of the assessee. As regards the other entries not bearing the marking “KB,” the Assessing Officer assumed them

The Estate Investment Company Private Limited, Mumbai vs. Deputy Commissioner of Income Tax Central Circle -8(1), Mumbai

3012/Mum/2025

ITA 3222/MUM/2025[2022-23]Status: DisposedITAT Mumbai17 Oct 2025AY 2022-23
Section 132Section 132(4)Section 69A

situated in Mira-Bhayandar and adjoining areas. On this premise, the Assessing Officer held that the said receipts represented unaccounted consideration received for extinguishment of rights, which was assessable as capital gains in the hands of the assessee. As regards the other entries not bearing the marking “KB,” the Assessing

DCIT Central Circle-8(1), Mumbai vs. The Estate Investment Company Private Limited, Mumbai

3012/Mum/2025

ITA 3087/MUM/2025[2016-17]Status: DisposedITAT Mumbai17 Oct 2025AY 2016-17
Section 132Section 132(4)Section 69A

situated in Mira-Bhayandar and adjoining areas. On this premise, the Assessing Officer held that the said receipts represented unaccounted consideration received for extinguishment of rights, which was assessable as capital gains in the hands of the assessee. As regards the other entries not bearing the marking “KB,” the Assessing

The Estate Investment Company Private Limited, Mumbai vs. Deputy Commissioner of Income Tax Central Circle -8(1), Mumbai

ITA 3012/MUM/2025[2014-15]Status: DisposedITAT Mumbai17 Oct 2025AY 2014-15
Section 132Section 132(4)Section 69A

others and adjoining areas. On this premise, the Assessing Officer held that the said receipts represented unaccounted consideration received for extinguishment of rights, which was assessable as capital gains in the hands of the assessee. As regards the other entries not bearing the marking “KB,” the Assessing Officer assumed them

Shardindu Prasad Singh, Patna vs. ITO, Ward-6(4), Patna

In the result, the appeal filed by the assessee is partly allowed for statistical purposes

ITA 630/PAT/2024[2016-17]Status: DisposedITAT Patna15 Oct 2025AY 2016-17

Bench: Shri Sonjoy Sarma & Shri Rakesh Mishra

Section 144Section 147Section 250Section 271(1)(c)

condoned. 7.2. As per definition of 'transfer in relation to a capital asset, not only sale or exchange or relinquishment of asset or extinguishment of rights etc, but allowing of possession of any immovable property as referred to in Sec.53A of Transfer of Property Act, 1882 is also included

Aparna Sandeep Kulkarani, Mumbai vs. Income Tax Officer Int Tax Ward 3(1)(1), Mumbai

In the result, the appeal of the assessee is partly allowed for statistical purposes

ITA 909/MUM/2025[2015-16]Status: DisposedITAT Mumbai03 Oct 2025AY 2015-16

Bench: Shri Vikram Singh Yadav & Shri Sandeep Singh Karhailassessment Year : 2015-16 Aparna Sandeep Kulkarni, Income Tax Officer, 201A, Kanchanjanga, Int. Tax. Ward-3(1)(1), Sector 12-A, Plot No.12, Vs. Kautilya Bhavan, Koparkhairane, Bandra Kurla Complex, Navi Mumbai-400709. Bandra (East), Pan : Axfpk0077M Mumbai-400051. (Appellant) (Respondent) For Assessee : Shri Ketan L. Vajani For Revenue : Shri Krishna Kumar, Sr.Dr Date Of Hearing : 17-07-2025 Date Of Pronouncement : 03-10-2025 O R D E R Per Vikram Singh Yadav, A.M :

For Appellant: Shri Ketan L. VajaniFor Respondent: Shri Krishna Kumar, Sr.DR
Section 143(2)Section 147Section 148Section 56(2)(vii)

ordinate Bench of the Tribunal are equally applicable in the instant case of the assessee. In the present case also there is an extinguishment of rights in the old flat and the new flat is received in lieu of the right to acquire the old flat and prayed that

Vinay Tarachand Chawla, Mumbai vs. Principal Commissioner of Income Tax - 6, Mumbai

In the result, the appeal of the assessee is allowed

ITA 3371/MUM/2025[2020-21]Status: DisposedITAT Mumbai26 Sept 2025AY 2020-21

Bench: Shri Om Prakash Kant () & Ms. Kavitha Rajagopal ()

For Appellant: Mr. Ravikant PathakFor Respondent: Mr. Vivek Perampurna, CIT-DR
Section 143(3)Section 2(47)Section 263Section 36(1)(vii)

attract capital gain/loss. The Hon'ble Supreme Court in the case of CIT vs. Grace Collis [248 ITR 323] has clarified that extinguishment of rights in shares, without a conveyance, does not attract capital gains/loss. Consequently, the loss of Rs.12,12,27,550/- claimed under Section 45 is inadmissible. Settlement

Deputy Commissioner of Income Tax, Nungambakkam vs. Sathyabama Ramachandran, Alwarthirunagar

The appeal of the revenue is dismissed

ITA 821/CHNY/2025[2017-18]Status: DisposedITAT Chennai23 Sept 2025AY 2017-18

Bench: SHRI MANU KUMAR GIRI (Judicial Member), SHRI S.R. RAGHUNATHA (Accountant Member)

For Appellant: Shri A. Raghava Simhan, C.AFor Respondent: Ms. Gouthami Manivasam, JCIT
Section 147Section 148

made for the first time before the Ld. CIT(A). 3. The Ld. CIT(A) failed to appreciate that "transfer" includes relinquishment or extinguishment of rights and therefore reduction in the assessee's share of profits in M/s CRCL LLP amounted to transfer and accordingly the amount received on this

Assistant Commissioner of Income Tax, Circle-2, Kota vs. Chambal Fertilizers and Chemicals Ltd., Kota

56. As a result, as regards the issue of allowance/disallowance of

ITA 1099/JPR/2024[2016-17]Status: DisposedITAT Jaipur27 Aug 2025AY 2016-17
For Appellant: Shri P.J. Pardiwala, AdvFor Respondent: Shri Rajesh Ojha, CIT &
Section 14ASection 36(1)Section 36(1)(iii)

case, following transfer will happen on merger of CFCL Technologies and CFCL Ventures: • Transfer in the hands of Chambal pursuant to extinguishment of rights in shares of CFCL Technologies. Further, under the provisions of the Act, merger of amalgamating company into amalgamated company typically involves the following capital gains implications ... transfer of capital asset(s) to the amalgamated company. • Capital gains tax in the hands of shareholders of the amalgamating company on extinguishment of right in shares of amalgamating Company. Thus, it is clearly evident that the transaction is a transfer of a capital asset under the Act and hence

Assistant Commissioner of Income Tax, Circle-2, Kota vs. Chambal Fertilizers and Chemicals Ltd, Kota

56. As a result, as regards the issue of allowance/disallowance of

ITA 1098/JPR/2024[2015-16]Status: DisposedITAT Jaipur27 Aug 2025AY 2015-16
Section 14ASection 36(1)Section 36(1)(iii)

case, following transfer will happen on merger of CFCL Technologies and CFCL Ventures: • Transfer in the hands of Chambal pursuant to extinguishment of rights in shares of CFCL Technologies. Further, under the provisions of the Act, merger of amalgamating company into amalgamated company typically involves the following capital gains implications ... transfer of capital asset(s) to the amalgamated company. • Capital gains tax in the hands of shareholders of the amalgamating company on extinguishment of right in shares of amalgamating Company. Thus, it is clearly evident that the transaction is a transfer of a capital asset under the Act and hence