“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

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

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

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

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

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

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

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

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

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

ITA 1097/JPR/2024[2011-12]Status: DisposedITAT Jaipur27 Aug 2025AY 2011-12

Bench: SHRI GAGAN GOYAL (Accountant Member), SHRI NARINDER KUMAR (Judicial Member)

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

ITA 1091/JPR/2024[2017-18]Status: DisposedITAT Jaipur27 Aug 2025AY 2017-18

Bench: SHRI GAGAN GOYAL (Accountant Member), SHRI NARINDER KUMAR (Judicial Member)

For Appellant: Shri P.J. Pardiwala, AdvFor Respondent: Shri Rajesh Ojha, CIT &

Section 14ASection 36(1)Section 36(1)(iii)

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

ITA 1090/JPR/2024[2010-11]Status: DisposedITAT Jaipur27 Aug 2025AY 2010-11

Bench: SHRI GAGAN GOYAL (Accountant Member), SHRI NARINDER KUMAR (Judicial Member)

For Appellant: Shri P.J. Pardiwala, AdvFor Respondent: Shri Rajesh Ojha, CIT &

Section 14ASection 36(1)Section 36(1)(iii)

Sai Samarpan Realtors Pvt Ltd, Delhi vs. JCIT Central Range-1, New Delhi

In the result, both the appeals filed by the assessee are allowed

ITA 5866/DEL/2024[2020-21]Status: DisposedITAT Delhi22 Aug 2025AY 2020-21

Bench: Ms. Madhumita Roy & Shri Naveen Chandraita No.5866/Del/2024 (Assessment Year 2020-21) Sai Samarpan Realtors Pvt. Ltd. Jcit, C/O C.S. Anand, Adv. Central Circle-1, B-81, First Floor (Part B), Vs. Delhi. Defence Colony, Bhishma Pitamah Marg, New Delhi-110024. Pan-Aakcs6743D (Appellant) (Respondent) Assessee By Shric.S. Anand & Ms. Vaishnavi Yadav, Advs. Department By Shrimanish Gupta, Sr. Dr Date Of Hearing 11.08.2025 Date Of Pronouncement 22.08.2025

Section 153CSection 269SSection 271D

transfer of immovable property’ and that is broad enough to encompass not only vanilla transaction of buy & sell of immovable property, but even extinguishment of rights in immovable property viz., where occupier or tenant is vacated therefrom, or where there is a long-term lease in the nature of ‘transfer

Sai Samarpan Realtors Pvt Ltd, Delhi vs. JCIT Central Range-1, Delhi

In the result, both the appeals filed by the assessee are allowed

ITA 5865/DEL/2024[2019-20]Status: DisposedITAT Delhi22 Aug 2025AY 2019-20

Section 153CSection 269SSection 271D

Gautam Chand Jain (HUF), Secunderabad vs. DCIT., Circle - 6(1), Hyderabad

In the result, appeal of the assessee is dismissed

ITA 409/HYD/2025[2020-21]Status: DisposedITAT Hyderabad08 Aug 2025AY 2020-21

Bench: Shri Vijay Pal Rao & Shri Madhusudan Sawdiaआ.अपी.सं /Ita No.409/Hyd/2025 (निर्धारण वर्ा/Assessment Year: 2020-21) Gautam Chand Jain(Huf) Vs. Deputy Commissioner Secunderabad Of Income Tax Pan : Aabhg7699J Circle-6(1) Hyderabad (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee By: Shri K.Sai Prasad, Ar रधजस् व द्वधरध/Revenue By: Shri Narender Kumar Naik, Cit-Dr सुिवधई की तधरीख/Date Of Hearing: 17/07/2025 घोर्णध की तधरीख/ 08/08/2025 Date Of Pronouncement: आदेश / Order

For Appellant: Shri K.Sai Prasad, ARFor Respondent: Shri Narender Kumar Naik

Section 142(1)Section 143(3)Section 2(47)Section 263

Learned AO in response to notices u/s 142(1). 4. The Learned PCIT failed to appreciate that cancellation of sale deed results in extinguishment of rights in the property which is covered under the definition of transfer u/s 2(47) of the Act and is not justified in holding that ... extinguishment of the right in property, thereby attracting the rigor of s.2(14) r.w.s.2(47)”. The Ld.AR has thus submitted that the extinguishment of right in the immovable property is transfer of the capital asset and therefore, the consideration received by the assessee would constitute capital gain exigible

Pankaj Agarwal, Kanpur vs. Jt.CIT Circle-1(1)(1), Kanpur

In the result, the appeal of the assessee is partly allowed

ITA 267/LKW/2023[2012-13]Status: DisposedITAT Lucknow22 Apr 2025AY 2012-13

Bench: Sh. Sudhanshu Srivastava & Sh. Nikhil Choudharya.Y. 2012-13 Pankaj Agarwal, 7/151, Ratan Vs. The Jt. Commissioner Of Majestic, Opp. Sony World, Income Tax, Circle 1(1)(1), Swaroop Nagar, Kanpur-208002 Kanpur-208001 Pan:Abjfs4912R (Appellant) (Respondent) Assessee By: Sh. Rakesh Garg, Adv Revenue By: Sh. Sanjeev Krishna Sharma Sr Dr & Sh Sunil Kumar Rajwanshi, Addl Cit Dr Date Of Hearing: 10.02.2025 Date Of Pronouncement: 22.04.2025 O R D E R Per Nikhil Choudhary, A.M.: This Is An Appeal Filed By The Assessee Against The Order Passed By The Ld. Cit(A), Nfac Under Section 250 Of The Income Tax Act, 1961 On 21.08.2023. The Grounds Of Appeal Are As Under:- “1. Because The Cit (A) Has The Erred On Facts & In Law In Upholding The Disallowance Of Rs.2,47,02,865/- On Account Of Loss In Trading In Derivatives Business Treating The Same As Capital Loss, As Against Assessee'S Claim Of Business Loss, To Be Set Off Against Other Business Income, Which Order Is Contrary To Facts, Bad In Law, The Disallowance Made By The Ao & Upheld Be Deleted. 2. Because On A Proper Consideration Of The Facts & Circumstances Of The Case & Also On The Interpretation Of The Provisions Of Sec 43(5), It Would Be Found The Loss Of Rs.2,47,02,865/- On Account Of Trading In Derivative Is Neither A Speculative Loss Nor A Capital Loss, The Same Should Ought To Be Set Off Against Other Business Income, The Cit (A) Has Erred, In Treating The Same As Short Term Capital Loss.

For Appellant: Sh. Rakesh Garg, AdvFor Respondent: Sh. Sanjeev Krishna Sharma Sr DR & Sh

Section 14ASection 250Section 43(5)Section 72

squared by an opposite corresponding transaction and similarly when squaring up was on expiry of the contract, it should be treated as extinguishment of rights in capital asset as per section 2(47) of the Income Tax Act, 1961. She pointed out that the Hon’ble Supreme Court

Late S. Yogarathinam, Rep. by L/H Y. Shanmuga Durai, Chennai vs. ACIT, Circle-1(2), Chennai

In the result the appeal of the assessee is allowed

ITA 626/CHNY/2024[2010-11]Status: DisposedITAT Chennai17 Mar 2025AY 2010-11

Bench: Shri George George Kand Shri S.R. Raghunathaआयकर अपील सं./Ita No.:626/Chny/2024 िनधा"रण वष"/Assessment Year:2010-11 Shri Y. Shanmuga Durai, L/H Of Acit Late S.Yogarathinam Vs. Circle -1(2) Old No.24, No.14, Chennai. 17/24, Ramanathan Street, T.Nagar, Chennai-600 017. Pan: Aakpy-9845-P (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ"क"ओरसे/Appellant By : Mr. N. Arjun Raj, Advocate ""यथ"क"ओरसे/Respondent By : Mr. Ar.V. Sreenivasan, Cit सुनवाई क" तारीख/Date Of Hearing : 06.03.2025 घोषणा क" तारीख/Date Of Pronouncement : 17.03.2025

For Appellant: Mr. N. Arjun Raj, AdvocateFor Respondent: Mr. AR.V. Sreenivasan, CIT

Section 122Section 2(47)Section 250Section 45Section 47

appellant and his brother, Mr. Rajarathinam for the mutual exchange of 30 properties for 55 properties respectively wrongly construed as transfer of property / extinguishment of rights on such immovable properties for the purpose of computing Capital Gains on such transfer, the consequential computation of LTCG & STCG on various facets

R. Anbuvel Rajan, Chennai vs. ACIT, Central Range 1, Chennai

In the result, both the appeals of the assessee stand allowed

ITA 2166/CHNY/2024[2018-19]Status: DisposedITAT Chennai29 Jan 2025AY 2018-19

Bench: Shri Aby T. Varkey & Shri Jagadish

Section 132Section 269SSection 271D

encompass not only vanilla transaction of buy & sell of immovable encompass not only vanilla transaction of buy & sell of immovable property, but even extinguishment of rights in immovable property viz., property, but even extinguishment of rights in immovable property viz., property, but even extinguishment of rights in immovable property

R. Anbuvel Rajan, Chennai vs. ACIT, Central Rangel, Chennai

In the result, both the appeals of the assessee stand allowed

ITA 2165/CHNY/2024[2017-18]Status: DisposedITAT Chennai29 Jan 2025AY 2017-18

Bench: Shri Aby T. Varkey & Shri Jagadish

Section 132Section 269SSection 271D

Assistant Commissioner of Income Tax Ncc3(1) Chennai, Nungambakkam vs. Shri Venkatesh Meghraj Kathare, Alwarpet

In the result, the appeal filed by the Revenue is dismissed

ITA 974/CHNY/2024[2014-15]Status: DisposedITAT Chennai20 Sept 2024AY 2014-15

Bench: Shri Mahavir Singhand Shri Manoj Kumar Aggarwalआयकर अपील सं./Ita No.:974/Chny/2024 िनधा"रण वष"/Assessment Year:2014-15 The Assistant Commissioner Shri Venkatesh Meghraj Kathare, Of Income Tax, Vs. New No.205, Old No.128, Non-Corporate Circle 3(1), St. Mary Road, Chennai. Chennai – 600 018. Pan: Aadpk 5251E (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ" क" ओर से/Appellant By : Ms. R. Anita, Addl.Cit ""यथ" क" ओर से/Respondent By : Shri G. Seetharaman, C.A. सुनवाई क" तारीख/Date Of Hearing : 18.09.2024 घोषणा क" तारीख/Date Of Pronouncement : 20.09.2024 आदेश /O R D E R Per Mahavir Singh: This Appeal By The Revenue Is Arising Out Of The Order Of The Commissioner Of Income Tax (Appeals), National Faceless Appeal Centre In Order No.Itba/Nfac/S/250/2023-24/1061041943(1) Dated 16.02.2024. The Assessment Was Framed By The Assistant Commissioner Of Income-Tax, Non-Corporate Circle 3, Chennai For The Assessment Year 2014-15 U/S. 143(3) Of The Income Tax Act, 1961 (Hereinafter The ‘Act’) Vide Order Dated 30.12.2016. 2. The First Issue In This Appeal Of Revenue Is Against The Order Of Cit(A) Treating The Sale Of Land At Tiruvottiyur High Road As Long Term Capital Gain As Against Assessed By Ao As Short Term Capital Gain. For This, Revenue Has Raised The Following Grounds:- 1) The Cit(A) Has Erred On The Facts Of The Case In Treating The Capital Gains On Sale Of Land At Tiruvottiyur High Road As Long Term Capital Gain Instead Of Short Term Capital Gain Without Appreciating That :

For Appellant: Ms. R. Anita, Addl.CITFor Respondent: Shri G. Seetharaman, C.A

Section 143(3)Section 2Section 2(47)Section 46(2)

transfer. But the AO was of the view that when the assets of the company are distributed on liquidation amongst its shareholders on extinguishment of rights in shares, transfer happens. The AO noted the provisions of section 46 of the Act, which does not say when the assets

M/S. Mahindra Residential Developers Ltd., Kanchipuram vs. ITO, Corporate Ward - 4 (1), Chennai

In the result, the appeals of the assessee for AYs 2012-13, 2013-14

ITA 338/CHNY/2020[2013-14]Status: DisposedITAT Chennai06 Sept 2024AY 2013-14

Bench: Shri Aby T. Varkey & Shri Jagadishआयकर अपील सं./Ita No.870/Chny/2017 िनधा"रणवष"/Assessment Year: 2012-13 & आयकर अपील सं./Ita Nos.338 & 339/Chny/2020 िनधा"रणवष"/Assessment Years: 2013-14 & 2014-15

For Appellant: Mr.Raghavan-For Respondent: Shri A. Sasikumar, CIT

Section 10ASection 143(2)Section 143(3)Section 80

there could be no doubt that sale and exchange are "transfers". There are decisions holding that compulsory acquisition are also transfers. Relinquishment and extinguishment of rights are also certain special types of transfers and in these circumstances, when the Legislature specifically mentioned only these items after the word "includes

Sanjiv Atmaram Sawant, Mumbai vs. Jurisdictional AO-Deputy Commissioner of Income Tax-16(3), Aayakar Bhavan., Mumbai

ITA 4009/MUM/2023[2020-21]Status: DisposedITAT Mumbai28 Aug 2024AY 2020-21

Bench: Shri Narender Kumar Choudhry & Shri Ratnesh Nandan Sahay

Section 250Section 56(2)(x)

respectively, following the judgment of Hon'ble Supreme Court in Sanjeev Lal Vs, CIT (2014)365 ITR 389(SC) it is held that extinguishment of rights took place by this agreement only and not by the allotment letter and accordingly the transfer took place on 06.11.2019 only

Raoul Thackersey, Mumbai vs. DCIT 12(1), Mumbai

Appeal is partly allowed in above terms

ITA 1262/MUM/2017[2011-12]Status: DisposedITAT Mumbai22 Jul 2024AY 2011-12

Bench: Shri Satbeer Singh Godara & Shri Girish Agrawal

For Appellant: Shri K. GopalFor Respondent: Smt. Mahita Nair, Sr. DR

Section 143(3)Section 14A

October, 2009. 14. The case of the assessee is that the "debenture" is a capital asset. Further its redemption is results in extinguishment of rights therein. However, the Ld CIT(A) has taken the view that the redemption will not fall under the definition of "transfer" given under ... ITA.No.1262/MUM./2017 this regard, the Ld A.R submitted that the expression "transfer" includes "sale, exchange or relinquishment of asset or extinguishment of rights" as stated in sec.2(47)(i) of the Act. The Ld A.R submitted that the extinguishment of rights in preference shares has been held

ACIT 17(1), Mumbai vs. Gupta C K, Mumbai

In the result, the appeal filed by the Revenue is dismissed

ITA 123/MUM/2022[2016-17]Status: DisposedITAT Mumbai01 Jul 2024AY 2016-17

Bench: Shri Om Prakash Kant, Am & Ms. Kavitha Rajagopal, Jm Acit-17(1) Gupta C K O/O The Government Of India 21, K. T. Building, O/O The Dy. Cit Cirr 17(1), Devji Ratansey Marg, Masjid Vs. Kautilya Bhavan, Room No. 117, Bunder, Mumbai-400 009 Bkc, Bandra (E), Mumbai-400 051

For Appellant: Shri Rajen DamaniFor Respondent: Dr. Kishor Dhule

Section 250Section 50DSection 50ESection 54E

possession and control of the property until the receipt of commencement certificates in 2011-12, implying that there was no extinguishment of rights by the assessee. The assessee contends that as per the JDA, there was no role on the part of the assessee in the development and the construction

R.C. Nirula & Sons HUF, New Delhi vs. ACIT, New Delhi

In the result, the appeal of the assessee is allowed

ITA 6093/DEL/2015[2008-09]Status: DisposedITAT Delhi12 Jun 2024AY 2008-09

Bench: Shri Saktijit Dey, Hon’Ble & Shri M. Balaganeshr.C. Nirula & Sons Huf, Vs. Asst. Commissioner A-2, Anand Niketan, Of Income Tax, New Delhi Circle-52(1), New Delhi (Appellant) (Respondent) Pan: Aaahr6050F Assessee By : Shri Gaurav Jain, Adv Shri Praveen Kumar, Ca Revenue By: Shri Manish Kumar Davas, Sr. Dr Date Of Hearing 10/06/2024 Date Of Pronouncement 12/06/2024

For Appellant: Shri Gaurav Jain, AdvFor Respondent: Shri Manish Kumar Davas, Sr. DR

Section 143(3)

transfer" in relation to a capital asset includes the sale, exchange or relinquishment of the asset or the extinguishment of rights therein. It speaks about transfer which has the effect of transferring or R.C. Nirula & Sons HUF enabling the enjoyment of any immovable property. The capital asset here being ‘booking ... held that mere agreement to sell amounts to transfer in absence of any transfer or extinguishment of rights in the property. 14. The Ld. AR argued that the Ld. CIT(A) erred in applying the provisions of section 2(47)(vi) of the Act. In support of this, he placed

Khushaal C. Thackersey, Mumbai vs. Asst CIT 12(1), Mumbai

In the result, the appeal filed by the assessee is partly allowed

ITA 3679/MUM/2015[2010-11]Status: DisposedITAT Mumbai15 Apr 2024AY 2010-11

Bench: Justice (Rtd.) C.V. Bhadang () & Shri B.R. Baskaran (Am)

Section 54ESection 54F

October, 2009. 14. The case of the assessee is that the “debenture” is a capital asset. Further its redemption is results in extinguishment of rights therein. However, the Ld CIT(A) has taken the view that the redemption will not fall under the definition of “transfer” given under ... this regard, the Ld A.R submitted that the expression “transfer” includes “sale, exchange or relinquishment of asset or extinguishment of rights” as stated in sec.2(47)(i) of the Act. The Ld A.R submitted that the extinguishment of rights in preference shares has been held to be a case

Raoul S. Thackersey, Mumbai vs. Asst CIT 12(1), Mumbai

In the result, the appeal filed by the assessee is partly allowed

ITA 3678/MUM/2015[2010-11]Status: DisposedITAT Mumbai15 Apr 2024AY 2010-11

Bench: Justice (Rtd.) C.V. Bhadang () & Shri B.R. Baskaran (Am)

Section 54ESection 54F

Mayank Kishor Tejura, Mumbai vs. ITO Ward-19(2)(2), Mumbai

In the result, appeal of the assessee is allowed in the manner indicated above

ITA 3777/MUM/2023[2013-14]Status: DisposedITAT Mumbai11 Mar 2024AY 2013-14

Bench: Us In The Following Manner:- 1.Overseas Impex Pvt. Ltd (Oipl) Was A Tenant Of A Residential Flat Being Flat No. 15, 4Th Floor, Park View Building, Little Gibbs Road, Malabar Hill, Mumbai - 400 006 Since 1965. The Company Had Been The Tenant By Way Of Leave & License Agreement Dated 1-5-1965 Between Mr. Amrit Sagar Puri (Landlord) & The Company (Tenant).

Section 143(3)Section 54F

years and therefore, it is a transfer of a capital asset liable to be taxed under the head ‘capital gains’ because its extinguishment of rights result in capital gains. 7. On the other hand, ld. DR after relying to the various observations

Upinder Kaur Khalsa Rao, Mumbai vs. Income Tax Officer 35(3)(1), Mumbai

In the result, the appeal of the assessee is allowed

ITA 3670/MUM/2023[2011-12]Status: DisposedITAT Mumbai04 Mar 2024AY 2011-12

Bench: Shri Vikas Awasthy, Jm & Ms Padmavathy S, Am

For Appellant: Shri Haridas Bhat, CAFor Respondent: 27.02.2024

Section 148Section 2(24)

towards hardship and inconvenience caused to them. Also whether the contention of the appellant is correct that there was no transfer of asset, extinguishment of right and title and there was no cost of acquisition requiring chargeability as capital gains. As already stated above, the payment was made ... found correct in saying that there was no transfer of any asset or extinguishment of any right. There is clearly an extinguishment of rights of the assessee and exchange/transfer of the flat. Clearly. Section 2 (47) of the Act is attracted to the case of the appellant. The terms