SHRI GIRISH P. RUPANI, MUMBAI V. ACIT 23(1), MUMBAI

ITA 1028/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7183 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 22-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MISHRA
• Assessee Lawyers: S M MAKHIJA
• Keywords: Capital asset; Question of law; Cost of acquisition
• Section: 143(3); 54F; 2(14); 54

Judgement Text

1 IN THE INCOME-TAX APPELLATE TRIBUNAL G BENCH MUMB AI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO. 1028/MUM/2018 (ASSESSMENT YEAR 2012-13 ) SHRI GIRISH P. RUPANI MAKHIJA CHAMBERS, 196, TURNER ROAD, BANDRA (W), MUMBAI-400050 . PAN: AAAPR6723P VS. ACIT-23(1) ROOM NO. 122, 1 ST FLOOR, MATRU MANDIR, GRANT ROAD, MUMBAI-400007. APPELLANT RESPONDE NT APPELLANT BY : SHRI S.M. MAKHIJA (C.A.) RESPONDENT BY : SHRI S.K. MISHRA (SR. DR) DATE OF HEARING : 05.04.2019 DATE OF PRONOUNCEMEN T : 10.04.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-32, HEREINAFTER REFERRED AS LD CIT (A), MUMBAI DATED 15.06.2017 FOR ASSESSMENT YEAR 2012-13, WHICH IN TURN ARISES FROM THE ASSESSMENT ORDER DATED 13.03.2015 PASSED U NDER SECTION 143(3) OF THE INCOME-TAX ACT (FOR SHORT THE ACT). THE AS SESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW BOTH LEARNED ASSESSING OFFICER AS WELL CIT APPEALS HAVE SERIOUSL Y ERRED IN TREATING THE COMPENSATION RECEIVED BY ASSESSEE FOR RELINQUISHMEN T OF HIS RIGHTS IN A PROPERTY AS INTEREST AGAINST ASSESSEE HAVING DECLAR ED THE SAME TO BE LONG TERM CAPITAL GAIN EARNED ON SURRENDER OF RIGHTS IN A PROPERTY ACQUIRED AND HELD FOR MORE THAN 3 YEARS. ITA NO . 1028 MUM 2018-SHRI GIRISH P. RUPANI. 2 2. WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANT SU BMITS THAT LEARNED CIT(A) HAS SERIOUSLY ERRED IN TREATING THE AMOUNT R ECEIVED ON RELINQUISHMENT OF ASSESSEE'S RIGHT IN A PROPERTY AS INTEREST MERELY BECAUSE NO CALCULATIONS / ARITHMETICAL BASIS FOR THE SUM GIVEN BY THE BUILDERS TO THE ASSESSEE WERE PROVIDED. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER AND/OR VARY ANY OF THE GROUNDS AT THE TIME OR BEFORE THE HEARING OF THIS A PPEAL. 4. THE APPELLANT THEREFORE PRAYS THAT ASSESSING OFF ICER MAY PLEASE BE DIRECTED TO TREAT THE AMOUNT RECEIVED ON RELINQUISH MENT OF HIS RIGHTS ON LONG TERM CAPITAL GAIN AS WELL GRANT CONSEQUENTIAL BENEFIT OF DEDUCTION OF THE SAME U/S. 54 /54F OF THE LT. ACT, 1961. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FOR A SSESSMENT YEAR 2012-13, THE FILED HIS RETURN OF INCOME ON 31.10.2012 DECLAR ING TOTAL INCOME OF RS. 84,21,100/-. THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY. IN THE RETURN OF INCOME, THE ASSESSEE HAS SHOWN THE CAPITA L GAIN OF RS. 2,68,122/- ON SALE OF FLAT AND ALSO CLAIMED EXEMPTI ON UNDER SECTION 54 OF THE ACT ON THE GROUND THAT SALE PROCEED WERE INV ESTED IN PURCHASE OF ANOTHER RESIDENTIAL FLAT. THE ASSESSEE CLAIMED THAT HE HAD BOOKED A FLAT WITH BUILDER ON 10.04.2007 AT A TOTAL COST OF RS. 20,88,515/- AND PAID A SUM OF RS. 2,51,000/- ON 02.04.2007 AND FURTHER RS. 13,00,000/- ON 05.05.2007. THE ASSESSEE CANCELLED THE BOOKING OF S AID FLAT ON 25.07.2011AND RECEIVED RS. 24,77,804/- FROM BUILDER , THEREBY THE ASSESSEE RECEIVED ADDITIONAL AMOUNT OF RS. 9,26,804 /- OVER AND ABOVE THE PAYMENT MADE BY HIM. THE ASSESSEE TREATED THE BOOKI NG OF SAID FLAT AS CAPITAL ASSET AND AFTER CLAIMING BENEFIT OF INDEXAT ION ON THE INVESTMENT THE ASSESSEE CLAIMED CAPITAL GAIN AND ALSO CLAIMED EXEMPTION UNDER ITA NO . 1028 MUM 2018-SHRI GIRISH P. RUPANI. 3 SECTION 54 ON ACCOUNT OF INVESTMENT IN PURCHASE OF NEW RESIDENTIAL FLAT. DURING THE ASSESSMENT, THE ASSESSING OFFICER ISSUED SHOW-CAUSE NOTICE TO THE ASSESSEE AND ASKED TO SUBSTANTIATE AS TO HOW THE CANCELLATION OF BOOKING OF FLAT IS TREATED AS LONG TERM CAPITAL GAI N (LTCG) AND HOW THE DEDUCTION IS CLAIMED UNDER SECTION 54 OF THE AC T AND WHY THE AMOUNT MAY NOT BE TAXED AS INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES, AS THE ASSESSING OFFICER TOOK HIS VIEW TH AT THE FLAT WAS NEVER TRANSFERRED IN THE NAME OF ASSESSEE. THE ASSESSEE FILED HIS REPLY VIDE REPLY DATED 10.10.2014. AND RELIED UPON THE DECISI ON OF HONBLE BOMBAY HIGH COURT IN CIT VS. TATA SERVICES LTD. [12 2 ITR 594] AND CIT VS. VIJAY FLEXIBLE CONTAINER [186 ITR 693]. THE ASSESSEE ALSO MADE ALTERNATIVE CLAIM VIDE HIS APPLICATION DATED 28.01. 2015 THAT HE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 54 OF THE ACT EVEN IF T HE RIGHT OF ANY PROPERTY (CANCELLED PROPERTY) IS NOT CONSIDERED AS RESIDENTIAL PROPERTY, HE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 54F. THE RE PLY OF ASSESSEE WAS NOT ACCEPTED BY ASSESSING OFFICER. THE ASSESSING OF FICER CONCLUDED THAT THERE WAS NO TRANSFER OF ANY ASSET NOR THERE IS PUR CHASE IN 2007 NOR SOLD IN 2011. AS PER LETTER OF CANCELLATION DATED 25.07. 2011, FILED BY ASSESSEE ONLY PROVISIONAL BOOKING WAS MADE WHICH WAS CANCELL ED VIDE THE CANCELLATION LETTER DATED 25.07.2011. THUS, THE COM PENSATION PAID BY BUILDER IS NOTHING BUT AN INTEREST AS FLAT WAS NEVE R PURCHASED OR SOLD, THERE WAS NO TRANSFER OF CAPITAL ASSET. MONEY WAS G IVEN TO BUILDER AS ITA NO . 1028 MUM 2018-SHRI GIRISH P. RUPANI. 4 ADVANCE ONLY RS. 15,51,000/- AGAINST THE TOTAL COST OF RS. 20,88,515/- WHICH REMAINED AS ADVANCE FOR FOUR YEARS WITHOUT CO NVERSION INTO SALE. THE CLAIM OF EXEMPTION UNDER SECTION 54 WAS ALSO NO T ACCEPTED HOLDING THAT THE WHOLE MODUS OPERANDI IS ONLY AN ARRANGEMENT OF LENDING MONEY TO BUILDER AND CONSIDERATION RECEIVED IS NOTHING BU T AN INTEREST. THE ASSESSING OFFICER TREATED THE COMPENSATION AS INCO ME FROM OTHER SOURCES. ON APPEAL BEFORE THE LD. CIT(A), THE ACTI ON OF ASSESSING OFFICER WAS UPHELD. THE LD. CIT(A) WHILE UPHOLDING THAT ORDER OF ASSESSING OFFICER CONCLUDED THAT NO CONVEYANCE DEED WAS EXECUTED NOR THE POSSESSION OF FLAT WAS TAKEN. IT WAS ONLY A PRO VISIONAL BOOKING AS PER CANCELLATION LETTER DATED 25.07.2011. THE BUILDER H AS MENTIONED THAT HE HAS AGREED TO GIVE THE ASSESSEE A SUM OF RS. 9,26,8 04/- OVER AND ABOVE THE AMOUNT PAID BY THE ASSESSEE AS A COMPENSATION. THUS, FURTHER AGGRIEVED AGAINST THE ORDER OF LD CIT(A) THE ASSESS EE HAS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE SUBMISSIONS OF THE LD. AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENT ATIVE (DR) FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. WE HAVE ALSO DELIBERATED ON THE VARIOUS CASE LAWS RELIED BY THE LOWER AUTHORITIES. 4. GROUND NO.1 RELATES TO TREATING THE COMPENSATION RE CEIVED BY ASSESSEE FOR RELINQUISHMENT OF RIGHT AS INTEREST AND TAXED T HE SAME UNDER THE HEAD INCOME FROM OTHER SOURCES AGAINST THE LTCG CLAIME D BY ASSESSEE. THE ITA NO . 1028 MUM 2018-SHRI GIRISH P. RUPANI. 5 LD. AR OF THE ASSESSEE SUBMITS THAT THE GROUNDS OF APPEAL RAISED BY ASSESSEE IS COVERED BY THE LATEST DECISION OF HONB LE JURISDICTIONAL HIGH COURT IN PCIT VS. VEMBU VAIDYANATHAN IN ITA NO. 145 9 OF 2016 DATED 22.01.2019. THE LD. AR OF THE ASSESSEE ALSO FILED A COPY OF DECISION OF TRIBUNAL IN THE SAID CASE IN ITA NO. 5749/MUM/2013 DATED 28.10.2015. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT OF HIS CASE IS ALMOST SIMILAR FACT IN CASE OF VEMBU VAIDYANATHAN (SUPRA). 5. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF AUTHORITIES BELOW. THE LD. DR FOR THE REVENUE FURTH ER SUBMITS THAT MERE BOOKING OF FLAT DOES NOT GIVE RISE TO ACQUISITION O F ASSET. THE ASSESSEE MERELY MADE A BOOKING AND CANCELLED IT SUBSEQUENTLY , THEREFORE THE ASSESSEE IS NOT ENTITLED TO CLAIM LTCG IN RESPECT O F AMOUNT RECEIVED ON THE GROUND OF COMPENSATION FROM THE BUILDER. IN SUP PORT OF HIS SUBMISSION, THE LD. DR RELIED UPON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN SMT. SHOBHA JAIN VS. CIT [75 TAXMANN. COM 223 (ALD.). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PAR TIES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE AL SO DELIBERATED ON THE CASE LAW RELIED BY LD. AR FOR THE ASSESSEE AND THE LD. DR FOR THE REVENUE. WE HAVE NOTED THAT THERE IS NO DISPUTE THAT THE ASS ESSEE BOOKED ONE FLAT ON 10.04.2007 AT THE TOTAL COST OF RS. 20,88,519/-. THE ASSESSEE PAID RS. 2,51,000/- ON 02.04.2007 AND FURTHER RS. 13,00,000/ - ON 05.05.2007. THEREFORE, THE ASSESSEE PAID AGGREGATE OF RS. 15,51 ,000/-. THE ASSESSEE ITA NO . 1028 MUM 2018-SHRI GIRISH P. RUPANI. 6 CANCELLED THE BOOKING AND RECEIVED RS. 24,77,804/- AGAINST THE PAYMENT OF RS. 15,51,000/- THEREBY THE ASSESSEE EARNED A SU M OF RS. 9,26,804/- OVER AND ABOVE THE PAYMENT MADE BY HIM. THE ASSESSI NG OFFICER TREATED THE SAID SUM OF RS. 9,26,804/- AS INTEREST, WITHOUT MAKING ANY INVESTIGATION FORM THE BUILDER. THE ASSESSEE TREATE D THE BOOKING OF FLAT AS A CAPITAL ASSET AND AFTER CLAIMING INDEXATION OVER THE CAPITAL GAIN AND ALSO CLAIMED DEDUCTION UNDER SECTION 54 AS THE ASSE SSEE CLAIMED TO HAVE INVESTED RS. 34,00,000/- IN ACQUISITION OF NEW RESI DENTIAL PLOT. THE ASSESSING OFFICER TREATED THE ADDITIONAL AMOUNT/COM PENSATION AS INCOME FROM OTHER SOURCES, CONSEQUENTLY THE BENEF IT OF SECTION 54 WAS ALSO DENIED. THE LD. CIT(A) ALSO CONFIRMED THE ACTI ON OF ASSESSING OFFICER BY TAKING VIEW THAT NEITHER THE CONVEYANCE- DEED WAS EXECUTED NOR THE ASSESSEE HAS TAKEN POSSESSION. THE LD CIT(A ) ALSO CONCLUDED THAT THE ASSESSEE HAS MADE A PROVISIONAL BOOKING AS SHOW N IN THE CANCELLATION LETTER DATED 25.07.2011. 7. SECTION 2(14) OF THE ACT DEFINES THE WORD CAPITAL ASSET MEAN 'PROPERTY OF ANY KIND HELD BY AN ASSESSEE' WHETHER OR NOT CON NECTED WITH BUSINESS OR PROFESSION. THE WORD 'TRANSFER' IN RELATION TO A CAPITAL ASSET IS DEFINED UNDER SECTION 2(47) WHICH INCLUDE THE SALE, EXCHANG E OR RELINQUISHMENT OF THE ASSET OR THE EXTINGUISHMENT OF ANY RIGHTS TH EREIN. IN OUR VIEW THE WORD 'PROPERTY', IS A TERM OF WIDEST IMPORT AND SIG NIFYING EVERY POSSIBLE INTEREST WHICH A PERSON CAN CLEARLY HOLD OR ENJOY, IT HAS BEEN HELD SO BY ITA NO . 1028 MUM 2018-SHRI GIRISH P. RUPANI. 7 HONBLE APEX COURT IN AHMED GM. ARIFF V. CWT [1970 ] 76 ITR 471 (SC). 8. THE HONBLE JURISDICTIONAL HIGH COURT IN PCIT VS. V EMBU VAIDYANATHAN (SUPRA) WHILE CONSIDERING THE FOLLOWING QUESTION OF LAW WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ITAT WAS JUSTIFIED IN TREATING THE GAIN ARISING FROM THE SALE OF CAPITAL ASSET AS LONG TERM CAPITAL GAIN WITHOUT APP RECIATING THE FACT THAT MERE LETTER OF ALLOTMENT DOES NOT LEAD TO CREATION OF PROPER AND EFFECTIVE RIGHT OVER THE CAPITAL ASSET S OUGHT TO BE ACQUIRED, BUT ONLY ON EXECUTION OF AN AGREEMENT SPE LLING OUT ALL THE EXACT TERMS AND CONDITIONS FOR ACQUISITION. THE HONBLE COURT DECIDED THE ABOVE QUESTION BY PAS SING THE FOLLOWING ORDER: 2. THIS QUESTION ARISES IN FOLLOWING BACKGROUND. T HE RESPONDENT-ASSESSEE IS AN INDIVIDUAL. THE ASSESSEE HAD FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 AND CLAIMED LONG TERM CAPIT AL GAIN ARISING OUT OF CAPITAL ASSET IN THE NATURE OF A RESIDENTIAL UNIT. DURING THE COURSE OF ASSESSMENT THE ASSESSING OFFICER EXAMINED THIS CLAI M AND CAME TO THE CONCLUSION THAT THE GAIN ARISING OUT OF SALE OF CAP ITAL ASSET WAS A SHORT TERM CAPITAL GAIN. THE CONTROVERSY BETWEEN THE ASSESSEE AND THE REVENUE REVOLVES AROUND THE QUESTION AS TO WHEN THE ASSESSEE CAN BE STATED TO HAVE ACQUIRED THE CAPITAL ASSET. THE ASSESSEE ARGUED THAT THE RES IDENTIAL UNIT IN QUESTION WAS ACQUIRED ON THE DATE ON WHICH THE ALLOTMENT LET TER WAS ISSUED BY THE BUILDER WHICH WAS ON 31ST DECEMBER, 2004. THE ASSES SING OFFICER HOWEVER CONTENDED THAT THE TRANSFER OF THE ASSET IN FAVOUR OF THE ASSESSEE WOULD BE COMPLETE ONLY ON THE DATE OF AGREEMENT WHICH WAS EX ECUTED ON 17TH MAY, 2008. 3. CIT APPEALS AND THE TRIBUNAL HELD THE ISSUE IN F AVOUR OF THE ASSESSEE RELYING ON VARIOUS JUDGMENTS OF DIFFERENT HIGH COUR TS INCLUDING THE ITA NO . 1028 MUM 2018-SHRI GIRISH P. RUPANI. 8 JUDGMENT OF THIS COURT IN CASE OF COMMISSIONER OF I NCOME-TAX, BOMBAY CITY I VS. TATA SERVICES LIMITED 1. RELIANCE WAS AL SO PLACED ON CBDT CIRCULARS. 4. HAVING HEARD LEARNED COUNSEL FOR THE PARTIES, WE NOTICE THE CBDT IN ITS CIRCULAR NO.471 DATED 15TH OCTOBER, 1986 HAD CLARIF IED THIS POSITION BY HOLDING THAT WHEN AN ASSESSEE PURCHASES A FLAT TO B E CONSTRUCTED BY DELHI DEVELOPMENT AUTHORITY ('D.D.A.' FOR SHORT) FOR WHIC H ALLOTMENT LETTER IS ISSUED, THE DATE OF SUCH ALLOTMENT WOULD BE RELEVAN T DATE FOR THE PURPOSE OF CAPITAL GAIN TAX AS A DATE OF ACQUISITION. IT WAS N OTED THAT SUCH ALLOTMENT IS FINAL UNLESS IT IS CANCELLED OR THE ALLOTTEE WITHDR AW FROM THE SCHEME AND SUCH ALLOTMENT WOULD BE CANCELLED ONLY UNDER EXCEPT IONAL CIRCUMSTANCES. IT WAS NOTED THAT THE ALLOTTEE GETS TITLE TO THE PROPE RTY ON THE ISSUE OF ALLOTMENT LETTER AND THE PAYMENT OF INSTALLMENTS WAS ONLY A F OLLOW-UP ACTION AND TAKING THE DELIVERY OF POSSESSION IS ONLY A FORMALI TY. 5. THIS ASPECT WAS FURTHER CLARIFIED BY THE CBDT IN ITS LATER CIRCULAR NO.672 DATED 16TH DECEMBER, 1993. IN SUCH CIRCULAR REPRESE NTATIONS WERE MADE TO THE BOARD THAT IN CASES OF ALLOTMENT OF FLATS OR HO USES BY CO-OPERATIVE SOCIETIES OR OTHER INSTITUTIONS WHOSE SCHEMES OF AL LOTMENT AND CONSIDERATION ARE SIMILAR TO THOSE OF D.D.A., SIMILAR VIEW SHOULD BE TAKEN AS WAS DONE IN THE BOARD CIRCULAR DATED 15TH OCTOBER, 1986. IN THE CIRCULAR DATED 16TH DECEMBER, 1993 THE BOARD CLARIFIED AS UNDER: '2. THE BOARD HAS CONSIDERED THE MATTER AND HAS DEC IDED THAT IF THE TERMS OF THE SCHEMES OF ALLOTMENT AND CONSTRUCTION OF FLATS/HOUSES BY THE CO-OPERATIVE SOCIETIES OR OTHER INSTITUTIONS AR E SIMILAR TO THOSE MENTIONED IN PARA 2 OF BOARD'S CIRCULAR NO.471, DAT ED 15-10-1986, SUCH CASES MAY ALSO BE TREATED AS CASES OF CONSTRUC TION FOR THE PURPOSES OF SECTIONS 54 AND 54F OF THE INCOME-TAX A CT.' IT CAN THUS BE SEEN THAT THE ENTIRE ISSUE WAS CLARI FIED BY THE CBDT IN ITS ABOVE MENTIONED TWO CIRCULARS DATED 15TH OCTOBER, 1 986 AND 16TH DECEMBER, 1993. IN TERMS OF SUCH CLARIFICATIONS, TH E DATE OF ALLOTMENT WOULD BE THE DATE ON WHICH THE PURCHASER OF A RESIDENTIAL UNIT CAN BE STATED TO HAVE ACQUIRED THE PROPERTY. THERE IS NOTHING ON RECORD T O SUGGEST THAT THE ALLOTMENT IN CONSTRUCTION SCHEME PROMISED BY THE BU ILDER IN THE PRESENT CASE WAS MATERIALLY DIFFERENT FROM THE TERMS OF ALLOTMEN T AND CONSTRUCTION BY ITA NO . 1028 MUM 2018-SHRI GIRISH P. RUPANI. 9 D.D.A.. IN THAT VIEW OF THE MATTER, CIT APPEALS OF THE TRIBUNAL CORRECTLY HELD THAT THE ASSESSEE HAD ACQUIRED THE PROPERTY IN QUESTION ON 31ST DECEMBER, 2004 ON WHICH THE ALLOTMENT LETTER WAS IS SUED. 9. FURTHER, THE HONBLE BOMBAY HIGH COURT IN CIT VS. V IJAY FLEXIBLE CONTAINER (186 ITR 693) WHILE CONSIDERING THE QUEST ION 'WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE APPELLATE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT THE AMOUNT OF RS. 1 LAKH, BEING THE COMPENSATION RECEIVED BY THE ASSESSEE FROM B.V. DHU RU, CANNOT BE TREATED AS 'CAPITAL GAINS' IN THE HANDS OF THE ASSE SSEE' PASSED THE FOLLOWING ORDER ; 3. SECTION 45 OF THE INCOME-TAX ACT, 1961 ('THE ACT') MAKES ANY PROFITS OR GAINS ARISING FROM THE TRANSFER OF A CAPITAL ASSET CHARGEABLE TO INCOME-TAX UNDER THE HEAD 'CAPITAL GAINS'. A CAPITAL ASSET IS DEFINED BY SECTION 2( 14 ) OF THE ACT TO MEAN 'PROPERTY OF ANY KIND HELD BY AN AS SESSEE'. THE WORD 'TRANSFER' IN RELATION TO A CAPITAL ASSET IS DEFINE D BY SECTION 2( 47 ) TO INCLUDE' THE SALE, EXCHANGE OR RELINQUISHMENT OF THE ASSET O R THE EXTINGUISHMENT OF ANY RIGHTS THEREIN'. THE SUPREME COURT HELD THE WOR D 'PROPERTY', IN AHMED GM. ARIFF V. CWT [1970] 76 ITR 471 , TO BE 'A TERM OF WIDEST IMPORT AND SIGNIFYING EVERY POSSIBLE INTEREST WHICH A PERSON C AN CLEARLY HOLD OR ENJOY'. THE ISSUE THAT ARISES IN THIS REFERENCE IS: IS THE RIGHT CONFERRED UPON THE ASSESSEE BY THE SAID AGREEMENT FOR SALE 'PROPERTY O F ANY KIND'? 4. UNDER THE PROVISIONS OF SECTION 54 OF THE TRANSFER OF PROPERTY ACT, 1882, A CONTRACT FOR THE SALE OF IMMOVABLE PROPERTY IS A CO NTRACT THAT A SALE OF SUCH PROPERTY SHALL TAKE PLACE ON TERMS SETTLED BETWEEN THE PARTIES AND IT DOES NOT OF ITSELF CREATE ANY INTEREST IN OR CHARGE ON SUCH PROPERTY. SECTION 40 OF THE TRANSFER OF PROPERTY ACT STATES THAT WHERE A THIRD PERSON IS ENTITLED TO THE BENEFIT OF AN OBLIGATION ARISING OUT OF CONTRACT AN NEXED TO THE OWNERSHIP OF IMMOVABLE PROPERTY, BUT NOT AMOUNTING TO AN INTERES T THEREIN OR EASEMENT THEREON, SUCH RIGHT OR OBLIGATION MAY BE ENFORCED A GAINST A TRANSFEREE WITH NOTICE THEREOF OR A GRATUITOUS TRANSFEREE OF THE PR OPERTY AFFECTED THEREBY, BUT NOT AGAINST A TRANSFEREE FOR CONSIDERATION WITHOUT NOTICE OF THE RIGHT OR OBLIGATION NOR AGAINST SUCH PROPERTY IN HIS HANDS. THE ILLUSTRATION TO SECTION 40 READS, THUS: ITA NO . 1028 MUM 2018-SHRI GIRISH P. RUPANI. 10 'A, CONTRACTS TO SELL SULTANPUR TO B. WHILE THE CON TRACT IS STILL IN FORCE HE SELLS SULTANPUR TO C, WHO HAS NOTICE OF THE CONTRAC T. B MAY ENFORCE THE CONTRACT AGAINST C TO THE SAME EXTENT AS AGAINST A. ' 5. IN THE CASE OF RAM BARAN PRASAD V. RAM MOHIT HAZRA AIR 1967 SC 744, THE SUPREME COURT HELD THAT IT WAS MANIFEST THAT A CONTRACT FOR THE SALE OF IMMOVABLE PROPERTY DID NOT CREATE ANY INTEREST IN T HE IMMOVABLE PROPERTY. IN SONI LALJI JETHA V. SONI KALIDAS DAVCHAND AIR 1967 SC 978, THE SUPREME COURT CAME TO THE CONCLUSION THAT A CONTRACT FOR SA LE OF IMMOVABLE PROPERTY, WHILE IT DID NOT CREATE INTEREST IN IMMOVABLE PROPE RTY, CREATED A PERSONAL OBLIGATION OF A FIDUCIARY CHARACTER WHICH COULD BE ENFORCED BY A SUIT FOR SPECIFIC PERFORMANCE NOT ONLY AGAINST THE VENDOR BU T ALSO AGAINST A PURCHASER FOR CONSIDERATION WITH NOTICE. THE MADRAS HIGH COUR T IN NOCHAT KIZHAKKE MADATHIL VENKATESWARA AIYAR V. KALLOOR ILLATH RAMAN NAMBUDHRI AIR 1917 MAD. 358, HELD THAT AN EXECUTORY CONTRACT FOR THE C ONVEYANCE OF LAND WAS NOT A MERE RIGHT TO SUE. THE RIGHT TO SUE WAS NO DOUBT INVOLVED IN IT ON BREACH OF ITS STIPULATIONS, BUT BEFORE BREACH THERE WAS ALSO THE RIGHT TO HAVE THE LAND CONVEYED. A MERE RIGHT TO SUE WAS APPLICABLE ONLY T O CASES WHERE THERE HAD BEEN A BREACH ENDING IN DAMAGES AND WHERE THE SPECI FIC ENFORCEMENT OF THE CONTRACT COULD NOT BE OBTAINED. THE AFORE GOING DISCUSSION LEADS, WE THINK, TO THE CONCLUSION THAT THE RIGHT TO OBTAIN A CONVEYANCE OF IMMOVABLE PROPERTY FALLS WIT HIN THE EXPRESSION 'PROPERTY OF ANY KIND' USED IN SECTION 2( 14 ) AND IS, CONSEQUENTLY, A CAPITAL ASSET. 6. THE VERY ISSUE AROSE BEFORE THIS COURT IN CIT V. TATA SERVICES LTD . [1980] 122 ITR 594. THE ASSESSEE THERE HAD ENTERED INTO AN AGREEMENT WITH A TO PURCHASE LAND AND HAD PAID EARNEST MONEY. A WAS REL UCTANT TO COMPLETE THE CONVEYANCE. ULTIMATELY, A TRIPARTITE AGREEMENT WAS ENTERED INTO BETWEEN THE ASSESSEE, A AND X WHERE UNDER THE ASSESSEE TRANSFER RED AND ASSIGNED IN FAVOUR OF X ITS RIGHT, TITLE AND INTEREST UNDER THE AGREEMENT AND RECEIVED THE SUM OF RS. 5 LAKHS AS CONSIDERATION AND A FURTHER S UM OF RS. 90,000 BEING THE REFUND OF EARNEST MONEY. THE QUESTION BEFORE THE CO URT IN REFERENCE WAS WHETHER THE TRANSACTION WHICH BROUGHT THE ASSESSEE THE SUM OF RS. 5 LAKHS INVOLVED THE TRANSFER OF A CAPITAL ASSET AND GAVE R ISE TO A CAPITAL GAIN. THE COURT NOTED THE DEFINITIONS OF 'CAPITAL ASSET' AND 'TRANSFER' UNDER THE ACT. IT NOTED THAT A CONTRACT FOR THE SALE OF LAND WAS CAPA BLE OF SPECIFIC PERFORMANCE AND WAS ASSIGNABLE AND, IN THIS BEHALF, RELIED UPON THE MADRAS HIGH COURT JUDGMENT AFOREMENTIONED. IT CONCLUDED THAT A RIGHT TO OBTAIN CONVEYANCE OF IMMOVABLE PROPERTY WAS PROPERTY AS CONTEMPLATED BY SECTION 2( 14 ) . IT HELD THAT THE AMOUNT OF RS. 5 LAKHS HAD BEEN RECEIVED BY THE ASSESSEE AS CONSIDERATION FOR ASSIGNING ITS RIGHTS UNDER THE AG REEMENT, WHICH FELL WITHIN THE WIDE DEFINITION OF 'CAPITAL ASSET' IN THE ACT. IT ALSO HELD THAT THE EARNEST MONEY PAID BY THE ASSESSEE TO A WAS THE CONSIDERATI ON FOR WHICH THE PROPERTY UNDER THE AGREEMENT HAD BEEN ACQUIRED. ITA NO . 1028 MUM 2018-SHRI GIRISH P. RUPANI. 11 7. THE DECISION IN THE CASE OF TATA SERVICES LTD. ( SUPRA ) WAS FOLLOWED BY THIS COURT IN CIT V. STERLING INVESTMENT CORPN. LTD. [1980] 123 ITR 441 . THIS WAS A CASE WHERE THE ASSESSEE HAD ENTERED INTO AN A GREEMENT TO PURCHASE IMMOVABLE PROPERTY AND HAD PAID EARNEST MONEY. MATT ERS DRAGGED ON. ULTIMATELY, AN AGREEMENT WAS REACHED AND ONLY THE S UM OF RS. 10,000 WAS RETURNED TO THE ASSESSEE. THE ASSESSEE CLAIMED BEFO RE THE TAX AUTHORITIES THAT IT HAD LOST THE BALANCE OF THE EARNEST MONEY THAT I T HAD PAID AND THAT THIS WAS A CAPITAL LOSS. THIS COURT WAS CALLED UPON ON REFER ENCE, TO DECIDE WHETHER THIS WAS CORRECT. IT CONSIDERED THE DEFINITION OF ' CAPITAL ASSET' UNDER THE ACT AND HELD THAT THE CONTRACTUAL RIGHT OF THE PURCHASE R TO OBTAIN TITLE TO IMMOVABLE PROPERTY FOR A PRICE, WHICH RIGHT WAS ASS IGNABLE, HAD TO BE CONSIDERED TO BE 'PROPERTY' AND, THEREFORE, A 'CAPI TAL ASSET'. IN THIS BEHALF REFERENCE WAS MADE TO THE JUDGMENT IN THE CASE OF TATA SERVICES LTD. ( SUPRA ) . THE COURT REJECTED THE ARGUMENT THAT IF THE RIGHT T O PURCHASE WAS GIVEN UP AND THE VENDOR WAS RELIEVED OF HIS OBLIGAT ION, THERE WOULD BE NO CAPITAL GAIN. THE COURT APPROVED OF WHAT HAD BEEN S AID IN THE CASE OF CIT V. RASIKLAL MANEKLAL ( HUF ) [1974] 95 ITR 656 (BOM.) , IN REGARD TO THE ESSENTIAL FEATURES OF A TRANSACTION OF RELINQUISHME NT, NAMELY, THAT THE PROPERTY IN WHICH THE INTEREST WAS RELINQUISHED CON TINUED TO EXIST; IT CONTINUED TO BE OWNED BY SOME PERSON OR PERSONS EVE N AFTER THE TRANSACTION OF THE RELINQUISHMENT AND THE INTEREST OF THE PERSO N RELINQUISHING HIS INTEREST IN THE PROPERTY WAS GIVEN UP OR ABONDONED OR SURREN DERED. THE COURT HELD THAT THE LOSS TO THE ASSESSEE WHICH HAD ARISEN OUT OF THE FORFEITURE OF THE EARNEST MONEY THAT HAD BEEN PAID BY IT WAS NOT ALLO WABLE AS A CAPITAL LOSS. 8. THE DECISIONS IN THE CASES OF TATA SERVICES LTD. ( SUPRA ) AND STERLING INVESTMENT CORPN. LTD. ( SUPRA ) NEGATIVE ALL THE THREE SUBMISSIONS THAT HAVE BEEN MADE BEFORE US BY MR. ZAVERI, THE LEARNED COUN SEL FOR THE ASSESSEE, NAMELY, THAT NO CAPITAL ASSET WAS ACQUIRED BY THE A SSESSEE AS A RESULT OF THE SAID AGREEMENT FOR SALE; THAT, IN THE ALTERNATIVE, THERE WAS NO TRANSFER OF A CAPITAL ASSET; AND THAT, IN THE FURTHER ALTERNATIVE THERE HAD BEEN NO CAPITAL GAIN BECAUSE THERE HAD BEEN NO COST OF ACQUISITION OF TH E CAPITAL ASSET. MR. ZAVERI, THEREFORE, ATTEMPTED TO PERSUADE US TO TAKE A VIEW DIFFERENT FROM THAT TAKEN BY THIS COURT IN THE AFORE MENTIONED CASES. WHILE W E ARE NOT PERSUADED TO DO SO, WE MUST RECORD THAT IT IS HIS INDUSTRY WHICH HA S BROUGHT TO OUR ATTENTION THE DECISIONS THAT WE REFER TO IN THIS JUDGMENT. 9. THE DELHI HIGH COURT IN THE CASE OF CIT V. R. DALMIA [1987] 163 ITR 517 , CONSIDERED THE QUESTION AS TO WHETHER THE RIGHT ACQ UIRED BY THE ASSESSEE UNDER AGREEMENTS TO SELL IMMOVABLE PROPERTY WAS NOT A PROPRIETARY RIGHT. FOLLOWING THE EARLIER JUDGMENT OF THE DELHI HIGH CO URT IN CIT V. J. DALMIA [1984] 149 ITR 215 , IT WAS HELD THAT THE RIGHT ACQUIRED BY THE ASSESS EE UNDER THE AGREEMENTS TO SELL HAD TO BE HELD NOT TO BE A P ROPRIETARY RIGHT AND, HENCE, NOT A CAPITAL ASSET. IN THE EARLIER JUDGMENT OF THE DELHI HIGH COURT THE FACTS WERE THAT ONE 'K' HAD ENTERED INTO AN AGREEMENT WIT H CONTRACTORS FOR THE ITA NO . 1028 MUM 2018-SHRI GIRISH P. RUPANI. 12 CONSTRUCTION OF A BUILDING UPON LAND OWNED BY THEM AND THE SALE THEREOF TO HIM. EARNEST MONEY WAS PAID. IN EXERCISE OF THE RIG HT TO HAVE THE CONVEYANCE EXECUTED IN THE NAME OF A NOMINEE, THE ASSESSEE WAS NOMINATED. THE ASSESSEE WAS CONSTRAINED TO FILE A SUIT AGAINST THE CONTRACTORS FOR AN INJUNCTION AGAINST SELLING THE PROPERTY TO THIRD PA RTIES AND HE OBTAINED AN INJUNCTION. WHEN THE SUIT REACHED HEARING, PARTIES AGREED TO GO TO ARBITRATION AND THE ASSESSEE GAVE UP HIS CLAIM FOR SPECIFIC PER FORMANCE OF THE AGREEMENT AND RETAINED HIS RIGHT TO CLAIM DAMAGES. THE ARBITR ATOR AWARDED DAMAGES TO THE TUNE OF RS. 1,02,500. THE QUESTION BEFORE THE C OURT WAS WHETHER THE AMOUNT OF RS. 1,02,500 COULD BE ASSESSED TO TAX AS A CAPITAL GAIN. THE DELHI HIGH COURT NOTED THE JUDGMENT OF THIS COURT IN THE CASE OF TATA SERVICES LTD. ( SUPRA ) AND DISTINGUISHED IT ON FACTS. THE COURT SAID THA T IN THE CASE BEFORE IT, IT HAD TO DETERMINE WHETHER THE DAMAGES RECEIVED BY THE ASSESSEE WERE IN RESPECT OF A CAPITAL ASSET. THERE WAS A BREACH OF C ONTRACT AND THE ASSESSEE RECEIVED DAMAGES IN SATISFACTION THEREOF. HE HAD A MERE RIGHT TO SUE FOR DAMAGES. ASSUMING THE SAME TO BE PROPERTY IT COULD NOT BE TRANSFERRED UNDER SECTION 6( E ) OF THE TRANSFER OF PROPERTY ACT. 10. HAVING REGARD TO THE STATUTORY PROVISIONS AND THE AUTHORITIES WHICH WE HAVE CITED ABOVE, WE CANNOT, WITH RESPECT, AGREE TH AT THE RIGHT ACQUIRED UNDER AN AGREEMENT TO PURCHASE IMMOVABLE PROPERTY IS A ME RE RIGHT TO SUE. THE ASSESSEE ACQUIRED UNDER THE SAID AGREEMENT FOR SALE THE RIGHT TO HAVE THE IMMOVABLE PROPERTY CONVEYED TO HIM. HE WAS, UNDER T HE LAW, ENTITLED TO EXERCISE THAT RIGHT NOT ONLY AGAINST HIS VENDORS BU T ALSO AGAINST A TRANSFEREE WITH NOTICE OR A GRATUITOUS TRANSFEREE. HE COULD AS SIGN THAT RIGHT. WHAT HE ACQUIRED UNDER THE SAID AGREEMENT FOR SALE WAS, THE REFORE, PROPERTY WITHIN THE MEANING OF THE ACT AND, CONSEQUENTLY, A CAPITAL ASS ET. WHEN HE FILED THE SUIT IN THIS COURT AGAINST THE VENDORS HE CLAIMED SPECIF IC PERFORMANCE OF THE SAID AGREEMENT FOR SALE BY CONVEYANCE TO HIM OF THE IMMO VABLE PROPERTY AND, ONLY IN THE ALTERNATIVE, DAMAGES FOR BREACH OF THE AGREEMENT. A SETTLEMENT WAS ARRIVED AT WHEN THE SUIT REACHED HEARING, AT WH ICH POINT OF TIME THE ASSESSEE GAVE UP HIS RIGHT TO CLAIM SPECIFIC PERFOR MANCE AND TOOK ONLY DAMAGES. HIS GIVING UP OF THE RIGHT TO CLAIM SPECIF IC PERFORMANCE BY CONVEYANCE TO HIM OF THE IMMOVABLE PROPERTY WAS REL INQUISHMENT OF THE CAPITAL ASSET. THERE WAS, THEREFORE, A TRANSFER OF A CAPITAL ASSET WITHIN THE MEANING OF THE ACT. WE MAY AT THIS STAGE ALSO DEAL WITH THE FURTHER ARGUMENT THAT THERE WAS NO CONSIDERATION FOR THE ACQUISITION OF THE CAPITAL ASSET. IN OUR VIEW, THIS COURT WAS RIGHT IN THE VIEW THAT IT TOOK THAT THE PAYMENT OF EARNEST MONEY UNDER THE AGREEMENT FOR SALE WAS THE COST OF THE ACQUISITION OF THE CAPITAL ASSET. 11. OUR ATTENTION WAS INVITED BY MR. ZAVERI TO THE JUD GMENT OF THE ANDHRA PRADESH HIGH COURT IN CIT V . BARIUM CHEMICALS LTD. [1987] 168 ITR 164 / 31 TAXMAN 471 . THE FACTS THERE WERE THAT THE ASSESSEE HAD ENTERE D INTO AN AGREEMENT WITH AN ENGLISH COMPANY FOR THE ERECTION OF A PLANT. TRIAL RUNS OF ITA NO . 1028 MUM 2018-SHRI GIRISH P. RUPANI. 13 THE PLANT SHOWED THAT THE PLANT WAS DEFECTIVE. IN T HE MEANWHILE THE ENGLISH COMPANY HAD LEFT THE ERECTION SITE. NEGOTIATIONS RE SULTED IN A SETTLEMENT WHEREBY THE ENGLISH COMPANY PAID TO THE ASSESSEE SU MS AGGREGATING TO RS. 47,20,939. AS A CONDITION, THE ASSESSEE WAIVED ITS CLAIM AGAINST THE ENGLISH COMPANY. THE COURT HELD THAT THESE SUMS COULD NOT B E BROUGHT TO TAX AS CAPITAL GAINS. THIS DECISION WAS RENDERED IN THE CO NTEXT OF THE FINDINGS THAT THE BUSINESS OF THE ASSESSEE WAS IN THE CHEMICALS T HAT THE PLANT WAS EXPECTED TO PRODUCE, THAT THE SETTLEMENT COULD NOT BE TREATE D AS BEING IN THE ORDINARY COURSE OF THE BUSINESS OF THE ASSESSEE AND THAT THE RE HAD BEEN A STERILISATION OF THE ASSESSEE'S CAPITAL ASSETS IN THAT THE ENGLIS H COMPANY HAD NOT ERECTED THE PLANT ACCORDING TO STIPULATION. THE DECISION WA S, THEREFORE, RENDERED UPON THE PARTICULAR FACTS OF THAT CASE, WHICH ARE NOT AK IN TO THE FACTS BEFORE US. 12. IN CIT V. ASHOKA MARKETING LTD. [1987] 164 ITR 664 , THE CALCUTTA HIGH COURT HELD UPON THE FACTS THAT THERE HAD BEEN NO EL EMENT OF COST IN THE ACQUISITION FOR WHICH THE SUM OF RS. 1 LAKH WAS PAI D AS LIQUIDATED DAMAGES UNDER AN AGREEMENT TO PURCHASE PROPERTY. IN CIT V. DHANRAJ DUGAR [1982] 137ITR 350 , THE FACTS BEFORE THE CALCUTTA HIGH COURT WERE UNU SUAL. THE ASSESSEE WAS A BROKER OF IMMOVABLE PROPERTY. HE ENT ERED INTO AN AGREEMENT WITH THREE OTHER PERSONS FOR THE PURCHASE OF AN IMM OVABLE PROPERTY WHICH WAS TO BE DEVELOPED AND RESOLD. THE ASSESSEE WAS NO T TO PAY ANY PART OF ITS PURCHASE PRICE. THERE WERE DISPUTES BETWEEN THE FOU R PERSONS AND THE ASSESSEE FILED A SUIT CLAIMING PARTITION. UPON A SE TTLEMENT THE ASSESSEE RECEIVED RS. 1 LAKH. THE QUESTION WAS WHETHER THE S UM OF RS. 1 LAKH WAS RECEIVED BY THE ASSESSEE FROM HIS NORMAL BUSINESS A S A BROKER OR UPON THE DISTRIBUTION OF A CAPITAL ASSET. THE COURT HELD THA T EVEN IF THERE WAS ANY TRANSFER OF A CAPITAL ASSET BY REASON OF THE SETTLE MENT, IT HAD NOT COST THE ASSESSEE ANYTHING IN TERMS OF MONEY AND SO THE QUES TION OF COMPUTATION OF A CAPITAL GAIN COULD NOT ARISE. THIS DECISION WAS REN DERED UPON ITS OWN FACTS. 13. THERE REMAINS FOR CONSIDERATION A DECISION OF THE GUJARAT HIGH COURT IN CIT V. HIRALAL MANILAL MODY [1981] 131 ITR 421 , WHICH MR. ZAVERI CITED. THE QUESTION IN THIS CASE WAS WHETHER THE DAMAGES R ECEIVED BY THE ASSESSEE FOR BREACH BY THE SELLER OF AN AGREEMENT TO PURCHAS E IMMOVABLE PROPERTY WAS A REVENUE RECEIPT. THE ASSESSEE, HAD BEEN HELD BY T HE TRIBUNAL NOT TO BE A DEALER IN IMMOVABLE PROPERTY. THE COURT FOUND THAT THE TRIBUNAL HAD APPLIED THE CORRECT LEGAL TESTS IN ARRIVING AT ITS CONCLUSI ON THAT THE ASSESSEE HAD NOT BEEN PROVED TO BE A DEALER IN IMMOVABLE PROPERTY AN D, ACCORDINGLY, IT HELD THAT THE AMOUNT WHICH HE HAD RECEIVED BY WAY OF DAM AGES WAS NOT A REVENUE RECEIPT. HAVING REGARD TO THE NATURE OF THE CONTROV ERSY BEFORE THE COURT, THIS CASE DOES NOT RENDER US ANY ASSISTANCE. 14. WE SEE, WITH RESPECT, NO CONVINCING REASON TO TAKE A VIEW OTHER THAN THAT WHICH HAS BEEN TAKEN BY THIS COURT IN THE CASES OF TATA SERVICES LTD. ( SUPRA ) AND STERLING INVESTMENT CORPN. LTD. ( SUPRA ) . WE MUST, HOLD, THEREFORE, THAT THE ASSESSEE ACQUIRED A CAPITAL ASSET BY REASON OF THE SAID AGREEMENT FOR SALE, ITA NO . 1028 MUM 2018-SHRI GIRISH P. RUPANI. 14 THAT THERE WAS A TRANSFER OF THAT CAPITAL ASSET WHE N THE ASSESSEE ENTERED INTO CONSENT TERMS AND RELINQUISHED IT, AND THAT THE CAP ITAL ASSET HAD BEEN ACQUIRED FOR THE COST OF RS. 17,500 PAID AS AND BY WAY OF EA RNEST MONEY UNDER THE SAID AGREEMENT FOR SALE. 15. THE QUESTION THAT IS POSED ASKS WHETHER THE AMOUNT OF RS. 1 LAKH CAN BE TREATED AS A CAPITAL GAIN IN THE HANDS OF THE ASSES SEE. WE FIND THAT THE ITO HAD DEDUCTED FROM OUT OF THE TOTAL SUM OF RS. 1,17, 500 RECEIVED BY THE ASSESSEE UNDER THE CONSENT TERMS THE AMOUNT OF RS. 17,500 AS BEING THE COST OF ACQUISITION OF THE ASSET AND THE SUM OF RS. 17,9 04 ON ACCOUNT OF EXPENSES AND LEGAL CHARGES. THE ASSESSMENT WAS MADE BY HIM, RIGHTLY, ON THE BASIS THAT THE CAPITAL GAIN WAS OF RS. 82,086. ACCORDINGLY, WE ANSWER THE QUESTION THUS: THE AMOUNT OF RS. 82,086 SHALL BE TREATED AS A CAPI TAL GAIN IN THE HANDS OF THE ASSESSEE. 10. CONSIDERING THE DECISION OF JURISDICTIONAL HIGH COU RT AS REFERRED ABOVE, WE ARE OF THE VIEW THAT THE ASSESSEE ON BOOKING ACQ UIRED A RIGHT IN THE ASSET ON 10.04.2007. THE ASSET/INTEREST IN ASSET/ F LAT WAS SURRENDERED IN 25 TH JULY 2011, THEREFORE, THE ASSESSEE RETAINED RIGHT IN THE ASSET FOR MORE THAN 36 MONTH, THEREFORE, THE ASSESSEE WAS QUALIFIE D FOR CLAIMING LTCG ON CANCELLATION/SURRENDER OF SUCH ASSET AND THE COM PENSATION SO RECEIVED IS QUALIFIED FOR LTCG. 11. THE CASE LAW RELIED BY LD. DR FOR THE REVENUE IN CA SE OF SHOBHA JAIN VS CIT (SUPRA) IN OUR VIEW IS NOT APPLICABLE ON THIS G ROUNDS OF APPEAL. THE FACTS OF THIS CASE ARE ENTIRELY BASED ON DIFFERENT FACTS. IN THE SAID CASE, THE DISPUTE WAS WITH REGARD TO DISALLOWANCE UNDER SECTI ON 54F. THE ASSESSING OFFICER DISALLOWED THE EXEMPTION HOLDING THAT IT IS PERMISSIBLE ONLY IN RESPECT OF RESIDENTIAL HOUSE IS PURCHASED O R CONSTRUCTED WITHIN THE STIPULATED PERIOD. THE ASSESSEE HAS SHOWN AGREE MENT FOR PURCHASE OF LAND. AND THE ASSESSEE FAILED TO SHOW THAT THERE WA S TRANSFER OF PROPERTY ITA NO . 1028 MUM 2018-SHRI GIRISH P. RUPANI. 15 BY EXECUTION OF SALE DEED. THE TRIBUNAL RECORDED A CLEAR FINDING THAT THERE WAS NO SALE OF PROPERTY IN DISPUTE FOR THE RE ASONS THAT NO DOCUMENT OF SALE DEED WAS PLACED BEFORE THE REVENUE AUTHORIT Y. MOREOVER, THE ASSESSEE IN THE PRESENT CASE CLAIMED RIGHT IN THE A SSET, WHICH WAS REMAINED IN THE OWNERSHIP OF ASSESSEE FOR MORE THAN 36 MONTH WHEN IT WAS RELINQUISHED/ SURRENDERED. IN THE RESULT, GROUN D NO.1 OF THE APPEAL IS ALLOWED. 12. GROUND NO.2 RAISED IN ALTERNATIVE TO GROUND NO.1. O NCE WE HAVE ALLOWED THE GROUND NO.1, THEREFORE, THE DISCUSSIONS ON GROU ND NO.2 HAVE BECOME ACADEMIC. GROUND NO.3 IS GENERAL IN NATURE, HENCE, NEED NO DISCUSSION AND ADJUDICATION. 13. GROUND NO.4 RELATES TO CONSEQUENTIAL BENEFIT OF DED UCTION UNDER SECTION 54/54F. CONSIDERING THE FACT THAT WE HAVE ALLOWED T HE GROUND NO.1 OF APPEAL IN FAVOUR OF ASSESSEE, THEREFORE, WE DIRECT THE ASSESSING OFFICER TO VERIFY THE FACT IN ACCORDANCE WITH THE PROVISION OF SECTION 54/54F AND GRANT THE EXEMPTION TO ASSESSEE IN ACCORDANCE WITH LAW. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/04/2019. SD/- SD/ - N.K. PRADHAN, PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 10.04.2019 SK ITA NO . 1028 MUM 2018-SHRI GIRISH P. RUPANI. 16 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR G BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI