BHOGILAL M. MEHTA (HUF), MUMBAI V. ITO WD 14(3)(1), MUMBAI

ITA 6705/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79075 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 07-05-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 19-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Additional evidence; Capital receipt; Surrender of tenancy right
• Section: 148; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BEN CH, MUMBAI JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; ,OA JH JKTSUNZZ JH JKTSUNZZ JH JKTSUNZZ JH JKTSUNZZ] YS[KK LNL; DS LE{K ] YS[KK LNL; DS LE{K ] YS[KK LNL; DS LE{K ] YS[KK LNL; DS LE{K BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER VK;DJ VIHY LA[;K / ITA NO.6705/MUM/2013 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR: - 2001-02 BHOGILAL M. MEHTA (HUF) C/O MEHTA TRADING CORPORATION, 146/B, CHIKHAL HOUSE, 1 ST FLOOR, PRINCESS STREET. MUMBAI 400 002. VS. THE INCOME TAX OFFICER-14 (3)(1). MUMBAI. PAN:-AABHM5931P APPELLANT RESPONDENT ASSESSEE BY / FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS SHRI VIMAL PUNMIYA REVENUE BY/ JKTLO DH VKSJ LS JKTLO DH VKSJ LS JKTLO DH VKSJ LS JKTLO DH VKSJ LS SHRI MAURYA PRATAP ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 7.10.2013 OF CIT FOR A.Y. 2001-02. THE ASSESSEE HAS RAISED FOLLO WING GROUNDS IN THIS APPEAL:- 1 THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION O F RS. 32,50,000/- ON ACCOUNT OF SURRENDER OF TENANCY RIGHT AS INCOME FRO M OTHER SOURCES AGAINST LONG TERM CAPITAL GAIN CLAIMED BY ASSESSEE AND NOT ALLOWED EXEMPTION U/S 54EA. 2. THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE TRANSACTION IS GENUINE AND CANNOT BE TERMED AS A COLORABLE DEVISE. 3. THE LD. CIT(A) ERRED IN CONFIRMING THE CHARGEABI LITY OF INTEREST U/S 234C & 234C OF HE INCOME TAX ACT, 1961. DATE OF HEARING 28.05.2014 DATE OF PRONOUNCEMENT 04.06.2014 BHOGILAL M. MEHTA (HUF) 2 | P A G E 4. THE LD. CIT(A) ERRED IN CONFIRMING INVOCATION OF PROVISIONS OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. GROUND NO.1 AND 2 IS REGARDING DENIAL OF EXEMPTI ON U/S 54EA. 3. THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 3 0.10.2001 CLAIMING DEDUCTION U/S 54 IN RESPECT OF THE RECEIPT AGAINST SURRENDER OF TENANCY RIGHTS. THE RETURN WAS PROCESSED U/S 143(1) AND LATER ON VIDE NOTICE U/S 1 48 DATED 15.04.2004, THE ASSESSMENT WAS REOPENDED AS IN THE OPINION OF THE A SSESSING OFFICER THE ASSESSEE HAS WRONGLY CLAIMED DEDUCTION U/S 54 IN RESPECT OF THE RECEIPT FOR SURRENDER OF TENANCY RIGHTS. IN THE ASSESSMENT ORDER THE ASSESSI NG OFFICER DENIED DEDUCTION U/S 54 AND BROUGHT TO TAX THE AMOUNT OF RS. 36,00,000/- UNDER THE HEAD INCOME FROM OTHER SOURCES. IN FIRST ROUND OF LITIGATION CIT(A) DELETED THE ADDITION AND ALLOWED THE APPEAL OF THE ASSESSE VIDE ORDER DATED 14.01.2009. ON FURTHER APPEAL BY THE REVENUE BEFORE THIS TRIBUNAL THE MATTER WAS RESTORE D TO THE RECORD OF THE ASSESSING OFFICER FOR PASSING A FRESH ORDER AFTER EXAMINATION OF THE ADDITIONAL EVIDENCES AND OTHER MATERIAL AS THE ASSESSEE MAY PRODUCE DURING T HE COURSE OF PROCEEDINGS. WHILE PASSING THE FRESH ORDER THE ASSESSING OFFICER AGAIN TAXED THE SAID AMOUNT OF RS. 36,00,000/- UNDER THE HEAD INCOME FROM OTHER S OURCES. 3. ON APPEAL, THE CIT(A) CONFIRMED THE DISALLOWANCE /ADDITION MADE BY ASSESSING OFFICER BY IMPUGNED ORDER. 4. BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE AND HIS BROTHER INDULAL MEHTA HAD TENANCY RIGHTS IN THE PREMISES AT ROOM NO. 11 AND ROOM NO. 10 ON GROUND FLOOR, BLD G. NO. 5, SURVEY NO. 2070 OF MALABAR & CUMBALLA HILL DIVISIONS MUMBAI. SUBSEQUEN TLY, THE ASSESSEE AND HIS BHOGILAL M. MEHTA (HUF) 3 | P A G E BROTHER ENTERED INTO AN MOU WITH M/S SHRIPATI GROUP OF COMPANIES FOR SURRENDER OF TENANTED PREMISES AND FOR AN ALTERNATIVE ACCOMMODAT ION TO BE CONSTRUCTED BY THE BUILDER AGAINST THE CONSTRUCTION COST OF RS. 6,15,0 00/-. ASSESSEES SHARE OF CONSTRUCTION COST IS RS. 3,50,000/-. THE LD. AUTHOR IZED REPRESENTATIVE HAS FURTHER SUBMITTED THAT AS PER THE TERMS OF MOU DATED 5.12.1 995 IF THE BUILDER FAILED TO PROVIDE ALTERNATIVE ACCOMMODATION BY 31.12.2000 OR THE ACCOMMODATION NOT APPROVED BY THE ASSESSEE THEN THE BUILDER SHALL GIV E RS. 60,00,000/- INCLUSIVE OF COST OF CONSTRUCTION OF RS. 6,15,000/-. THIS AMOUNT OF RS. 60,00,000/- WAS TO BE PAID TO THE ASSESSEE AND HIS BROTHER (HUF). ON 25 TH MARCH 2000, THE ASSESSEE AND HIS BROTHER (HUF) RECEIVED 60,00,000 FROM THE BUILD ER IN WHICH THE ASSESSEES SHARE WAS 36,00,000/-. THE SAID AMOUNT HAS BEEN INV ESTED BY THE ASSESSEE IN THE HDFC MUTUAL FUND TO THE EXTENT OF RS. 12,00,000/- A ND REMAINING AMOUNT OF RS. 24,00,000/- AT UTI MIP 2000. THE ASSESSEE CLAIMED E XEMPTION U/S 54EA IN THIS REGARD. THE LD. AUTHORIZED REPRESENTATIVE HAS SUBMI TTED THAT THE ASSESSING OFFICER DENIED THE EXEMPTIN U/S 54EA ON THE GROUND THAT THE TENANCY WAS NOT GENUINE AND TREATED THE SAID AMOUNT AS INCOME FROM OTHER SOURCE S. THE LD. AUTHORIZED REPRESENTATIVE HAS CONTENDED THAT THE ASSUMPTION OF THE ASSESSING OFFICER IS BASELESS WHEN THE ASSESSEE HAS BEEN SHOWN AS TENANT IN RESPECT OF THE PREMISES IN QUESTION IN THE RECORD OF MHADA. HE HAS FURTHER CONTENDED THAT MHADA HAS INDEPENDENTLY PROVIDED INFORMATION OF OLD AND PRESE NT TENANTS OF THE PREMISES AND ASSESSEES NAME IS CLEARLY MENTIONED IN THE LIST OF PRESENT TENANTS. MHADA IS A GOVERNMENT BODY AND RELIABILITY OF ITS RECORD CANNO T BE QUESTIONED. THE REDEVELOPMENT PROCESS HAS BEEN UNDERTAKEN BY MBRRB A UNIT OF MHADA WHICH IS A STATUTORY BOARD AND, THEREFORE, THE LIST PROVIDED BY THE STATUTORY BODY CANNOT BE BRUSHED ASIDE IN THE ABSENCE OF ANY CONTRARY RECOR D. THE ASSESSING OFFICER HAS FAILED TO COMPLY WITH THE DIRECTION OF THIS TRIBUNA L IN THE EARLIER ROUND OF LITIGATION, WHERE SPECIFIC DIRECTION WAS GIVEN TO THE ASSESSING OFFICER TO CONSIDER THE INFORMATION FURNISHED BY THE MHADA BUT THE AUTHORIT IES BELOW HAVE COMPLETELY IGNORED THE RELEVANT EVIDENCE. HE HAS FURTHER SUBMI TTED THAT THE ASSESSEE HAS ALSO BHOGILAL M. MEHTA (HUF) 4 | P A G E PRODUCED RENT RECEIPTS TO ESTABLISH THE TENANCY OF THE ASSESSEE AND HIS BROTHER (HUF) IN RESPECT OF THESE TENANTED PREMISES. THE L D. AUTHORIZED REPRESENTATIVE HAS REFERRED THE RENT RECEIPTS PLACED AT PAGE 6 OF THE PAPER BOOK. THUS THE LD. AUTHORIZED REPRESENTATIVE HAS SUBMITTED THAT THE AS SESSEE HAS PRODUCED ALL THE RELEVANT RECORDS TO PROVE THAT THE ASSESSEE WAS HAV ING THE TENANCY RIGHT IN THE PREMISES IN QUESTION. THE DOCUMENTS INCLUDE RENT RE CEIPTS, AGREEMENT DATED 10 TH APRIL 1995, AGREEMENT DATED 25 TH MARCH 2010, LIST OF TENANTS PROVIDED BY MHADA AND LIST OF BEST SHOWING THE ASSESSEE AS TENANT IN RESPECT OF THE PREMISES IN QUESTION. THE LD. AUTHORIZED REPRESENTATIVE HAS REF ERRED AND RELIED UPON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT DATED 22.02.2012 IN THE OF CIT VS. R.R. CHATURVEDI & OTHERS IN INCOME TAX APPEAL NO. 1 196 OF 2011 AS WELL AS THE DECISION IN THE CASE OF CIT VS. REJENDRA R. CHATURV EDI IN INCOME TAX APPEAL NO. 1448 OF 2011 AND SUBMITTED THAT THE HONBLE HIGH C OURT HAS HELD THAT THE AMOUNT RECEIVED AS TRANSFER OF TENANCY RIGHTS IS ASSESSABL E AS CAPITAL GAIN AND NOT INCOME FROM OTHER SOURCES. THUS THE LD. AUTHORIZED REPRESE NTATIVE OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSES HAS RECEIVED THE AMOUNT IN QUESTION AS PER THE MOU DATED 5.12.1995 AFTER THE EXPIRY OF MORE THAN THREE YEARS AND IN LIEU OF THE ALTERNATIVE ACCOMMODATION, THEREFORE,T HE AMOUNT IS CAPITAL RECEIPT AND SHOULD BE ASSESSED AS CAPITAL GAIN IN THE HANDS OF THE ASSESS EE. WHEN THE ASSESSEE HAS INVESTED THE SAID CAPITAL GAIN AS PER THE PROVISION S OF SECTION 54EA, THEREFORE THE EXEMPTION CANNOT BE DENIED. ALTERNATIVELY THE ASSES SEE HAS SUBMITTED THAT IF THE TENANCY RIGHT IS NOT CONSIDERED AS GENUINE THEN THE GAIN IS LONG TERM CAPITAL GAIN AS THE CONSTRUCTION COST OF RS. 3,50,000/- WAS PAID IN THE YEAR 1995 FOR ACQUIRING THE ALTERNATIVE ACCOMMODATION AND THE AMOUNT IS RECEIVE D IN THE YEAR 2000. THEREFORE, THE SAID AMOUNT RECEIVED IS CAPITAL IN NATURE AND H AS TO BE ASSESSED AS LONG TERM CAPITAL GAIN. HE HAS RELIED UPON THE FOLLOWING DECI SIONS:- BHOGILAL M. MEHTA (HUF) 5 | P A G E (I) SSPDL LTD. VS. DEPUTY COMMISSIONER OF INCOME TA X. IT APPEAL NO. 976 OF 2012 (HYD.) (II) CIT VS. MRS. GRACE COLLIES [2001] 248 ITR 323 (III) B. RAMAKRISHNAIAH VS. ITO (39 SOT 379) (IV) AJAY C MEHTA VS. DCIT (114 ITD 6280(AHD.) 5. BY PLACING RELIANCE ON THE ABOVE DECISIONS, THE LD AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS RECEIVED THE AMOUNT IN QUESTION IN LIEU OF RELINQUISHMENT OF HIS RIGHT IN THE PROPERTY DEVELOPED BY THE BUILDER THEN THIS CONSIDERATION RECEIVED BY THE ASS ESSEE IS AGAINST THE TRANSFER OF CAPITAL ASSET. 6. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT THE ASSESSING OFFICER HAS POINTED OUT VARIOUS FLAWS AND LACUNAE IN THE RECORD S FILED BY THE ASSESSEE, FURTHER THERE IS NO WRITTEN AGREEMENT BETWEEN THE ASSESSEE AND LANDLORD IN RESPECT OF THE ALLEGED TENANCY. THE LIST OF MHADA CANNOT BE RELIED UPON AS EVIDENCE FOR TENANCY OF THE ASSESSEE AS THE SAME IS PROVIDED BY THE BUIL DER TO THE AUTHORITY, THEREFORE, THE SO CALLED TENANCY IS NOT GENUINE AND THE ASSESS EE HAS ARRANGED THE ENTIRE TRANSACTIONS TO GET THE BENEFIT U/S 54EA. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS RECEIVED RS. 36,00,000/- F ROM THE BUILDER M/S. SHRIPATI GROUP OF COMPANIES. THIS FACT OF RECEIPT OF RS. 36, 00,000/- OUT OF TOTAL OF RS. 60,00,000/- SHARED BETWEEN THE ASSESSEE AND HIS BRO THER (HUF) HAS NOT BEEN DISPUTED BY THE AUTHORITIES BELOW. THE DISPUTE IS O NLY ON THE POINT WHETHER THIS AMOUNT RECEIVED BY THE ASSESSEE IS AGAINST THE SURR ENDER OF TENANCY AND THE BHOGILAL M. MEHTA (HUF) 6 | P A G E SURRENDER OF RIGHT IN THE PROPERTY TO BE DEVELOPED BY THE DEVELOPER AND TO BE CONSIDERED AS CAPITAL GAIN OR NOT. AUTHORITIES BELO W HELD THAT THIS AMOUNT CANNOT BE TREATED AS CAPITAL GAIN AS THE ENTIRE TRANSACTION W AS JUST A COLOURABLE DEVICE TO EVADE PAYMENT OF TAX. THE ASSESSING OFFICER HAS REF USED TO ACCEPT THE RENT RECEIPT, THE LIST OF TENANTS PROVIDED BY MHADA AS WELL AS BE ST. THE ASSESSING OFFICER HAS ATTEMPTED TO POINT OUT SOME DEFICIENCIES IN THE RE CEIPT AS WELL AS THE AGREEMENT DATED 10.4.1995 IN WHICH THE NAME OF THE ASSESSEE W AS WRITTEN IN TYPING BHOGILAL M. MEHTA AND THEN HUF HAS BEEN INSERTED WITH PEN. W E FIND THAT THE SAID TYPING MISTAKE HAS BEEN CORRECTED AT THE TIME OF SIGNING T HE AGREEMENT AND PARTIES HAVE ENDORSED BY SIGNING THE SAID CORRECTION IN THE AGRE EMENT. THEREFORE, MERELY BECAUSE A CORRECTION IS MADE IN THE AGREEMENT WOULD NOT RENDER ENTIRE AGREEMENT AS NON GENUINE WHEN AT ALL OTHER PLACES THE NAME OF THE ASSESSEE IS CORRECTLY MENTIONED IN THE AGREEMENT. EVEN THIS IS IMMATERIAL MISTAKE WHICH HAS BEEN CORRECTED IN THE NAME OF THE ASSESSEE, THEREFORE, I T DOES NOT AFFECT THE TERMS AND CONDITIONS OF THE AGREEMENT. FURTHER WE NOTE THAT T HE RENT RECEIPTS PLACED ON RECORD ARE DULY SIGNED AND ALSO BEARING DATES AND MONTH FO R WHICH THE RENT WAS PAID. THE RENT RECEIPT COUPLED WITH THE AGREEMENT IN RESPECT OF THE PREMISES IN QUESTION ESTABLISH THE FACT THAT THE ASSESSEE WAS HAVING TEN ANCY RIGHT IN RESPECT OF THE PREMISES. THE SAID TENANCY RIGHT WAS SURRENDERED BY THE ASSESSEE IN LIEU OF ALTERNATIVE ACCOMMODATION TO BE CONSTRUCTED BY THE DEVELOPER UNDER THE REDEVELOPMENT PLAN. IN THIS RESPECT AN MOU WAS EXEC UTED BETWEEN THE ASSESSEE AND THE DEVELOPER ON 5.12.1995. THE RELEVANT PART O F THE MOU IN PARA 6 AND 7 OF RECITALS AND CLAUSE 7 OF THE TERMS AND CONDITIONS O F THE AGREEMENT ARE AS UNDER:- 6. THE OWNERS HEREBY COMMIT AND AGREE WITH THE TEN ANT THAT A RESIDENTIAL PREMISES ADMEASURING APPROX. 840 .45 SQ. FT. CARPET AREA AND LEDGE AREA OF 14.85 SQ. FT. I.E. TOTAL BUILD UP AREA OF 1145.67 S Q. FT. SHALL BE RESERVED FOR THE TENANT/OCCUPANT BETWEEN 8 TH AND 10 TH FLOOR AND SAME SHALL NOT BE ALLOTTED OR GIVEN POSSESSION OF TO ANYBODY ELSE. BHOGILAL M. MEHTA (HUF) 7 | P A G E 7. THE TENANT/OCCUPANT HEREBY AGREES TO PAY A NOMIN AL CONSTRUCTION CHARGE OF RS. 6,15,000/- TO THE SAID OWNERS. CLASUE 7 IT IS FURTHER AGREED BY AND BETWEEN THE PARTIES HE RETO THAT, ON COMPLETION OF ALL THE CIGVIL WORKS PERTAINING TO THE FLAT TO BE A LLOTTED BETWEEN 8 TH AND 10 TH FLOOR THE SAID OWNERS SHALL, INTIMATE THE SAID TENA NT/OCCUPANT TO TAKE THE INSPECTION OF THE SAID PERMANENT ALTERNATE ACCOMMO DATION AND IF THE TENANT/OCCUPANT DOES NOT APPROVE THE SAID PERMANENT ALTERNATE ACCOMMODATION AND DECLINES TO ACCEPT POSSESSION OF THE SAME THEN THE SAID OWNERS SHALL PAY TO THE SAID TENANT/OCCUPANT AN AMO UNT OF RS. 60,00,000/- AS COMPENSATION IN LIEU OF THE PERMANENT ALTERNATE ACCOMMODATION, INCLUSIVE OF RS. 6,15,000/- TO BE PAID BY THE TENA NT/OCCUPANT. 8. IT IS CLEAR FROM THE MOU THAT IN LIEU OF SURREND ER OF TENANCY/OCCUPANCY RIGHTS OF THE EXISTING PREMISES THE ASSESSEE ALONG WITH HI S BROTHER (HUF) WAS TO BE GIVEN THE BUILD UP AREA OF 1145. 67 SQ. FT. THE ASSESSEE AND HIS BROTHER (HUF) ALSO AGREED TO PAY CONSTRUCTION CHARGES OF RS. 6,15,000/ - OVER AND ABOVE THE SURRENDER OF TENANCY RIGHTS. AS PER THE SAID MOU THE ASSESSEE AND HIS BROTHER (HUF) WERE GIVEN THE OPTION TO DECLINE TO ACCEPT THE POSSESSIO N OF THE ALTERNATIVE ACCOMMODATION AND TO RECEIVE AN AMOUNT OF RS. 60,00 ,000/- AS COMPENSATION IN LIEU OF PERMANENT ALTERNATIVE ACCOMMODATION INCLUS IVE OF RS. 6,15,000/- CONSTRUCTION COST PAID BY THE ASSESSEE AND HIS BRO THER (HUF). ON 25 TH MARCH 2000, THE PARTIES ENTERED INTO AN AGREEMENT WHEREBY THE A SSESSEE AND HIS BROTHER HUF AGREED TO RECEIVE RS. 60,00,000/- AGAINST THE SURRE NDER OF TENANCY RIGHTS AND THE RIGHTS IN THE ALTERNATIVE ACCOMMODATION. THE AMOUNT OF RS. 6,15,000/- WAS COMPRISING OF PAYMENT OF RS. 3,15,000/- AND RS. 2, 65,000/- BY ASSESSEE AND BROTHER (HUF) ACCORDING TO THE AREAS UNDER TENANCY. THERE IS NO DISPUTE THAT THE RENT WAS BEING PAID IN RESPECT OF PREMISES IN QUES TION AND THE BUILDER WANTED TO RECONSTRUCT THE PROPERTY UNDER THE REDEVELOPMENT A GREEMENT, THEREFORE, THE ASSESSEE ALONG WITH HIS BROTHER (HUF) WAS OFFERED A LTERNATIVE ACCOMMODATION BY THE BUILDER. THE TENANCY RIGHT HAS BEEN RECOGNIZED AS THE CAPITAL ASSET U/S 55(2) OF THE INCOME TAX ACT. THEREFORE, THERE IS NO DOUBT TH AT THE CONSIDERATION TO BE BHOGILAL M. MEHTA (HUF) 8 | P A G E RECEIVED BY THE ASSESSEE AGAINST THE SURRENDER OF T ENANCY RIGHTS IS CAPITAL IN NATURE AND TO BE ASSESSED AS CAPITAL GAIN. THE QUESTION AR ISES WHETHER THE CAPITAL GAIN IS LONGER CAPITAL GAIN OR SHORT TERM CAPITAL GAIN. SIN CE THE ASSESSEE HAS AGREED TO SURRENDER THE TENANCY RIGHT IN THE YEAR 1995 AND AL SO PAID THE CONSTRUCTION COST AS AGREED BETWEEN THE PARITES, THEREFORE, THE VALUE OF TENANCY RIGHTS ALONG WITH THE CONSTRUCTION COST WAS CONVERTED/SUBSTITUTED INTO TH E ALTERNATIVE ACCOMMODATION TO BE PROVIDED BY THE BUILDER IN THE YEAR 2000. IN STE AD OF ACCEPTING THE ALTERNATIVE ACCOMMODATION, THE ASSESSEE PREFERRED TO RECEIVE TH E AGREED SUM OF RS. 36,00,000/- INCLUSIVE OF 3,50,000/- AS CONSTRUCTIO N COST PAID BY THE ASSESSEE. THUS THE ASSESSEE HAS FINALLY SURRENDERED ITS TENANCY RI GHT AS WELL AS ALTERNATIVE ACCOMMODATION RIGHTS ONLY BY WAY OF THE AGREEMENT D ATED 25 TH MARCH 2000. THEREFORE, THIS AMOUNT WAS RECEIVED AFTER MORE THAN THREE YEARS. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. R . R. CHATURVEDI IN INCOME TAX APPEAL NO. 1196 OF 2011 HAS ACCEPTED THE STATUS OF THE TENANTS AS PER THE LIST OF TENANTS CERTIFIED BY MUMBAI BUILDINGS REPAIRS AND R ECONSTRUCTION BOARD (MBRRB). HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. REJENDRA R. CHATURVEDI (SUPRA), THE EARLIER TENANT IN RESPECT O F THE BUILDING IN QUESTION HAS OBSERVED IN PARA 3 AS UNDER:- 3) THIS APPEAL FILED BY THE REVENUE RELATES TO CON SIDERATION RECEIVED BY THE TENANTS IN RESPECT OF SURRENDER OF TENANCY. ONCE, IT IS ACCEPT ED THAT THE AMOUNTS PAID BY M/S. R.R. CHATURVEDI (AOP) TO THE RESPONDENT ASSESSEE HE REIN, WAS FOR THE TRANSFER/SURRENDER OF TENANCY IT FOLLOWS THAT THE A MOUNT RECEIVED BY THE RESPONDENT ASSESSEEE HEREIN, IN HIS HANDS WOULD BE AMOUNTS REC EIVED AS TRANSFER OF TENANCY ASSESSABLE AS CAPITAL GAIN AND NOT AS INCOME FRO M OTHER SOURCES. IN THE ABOVE CIRCUMSTANCES WE SEE NO REASON TO ENTERTAIN QUESTIO N (A). 9. THE HONBLE HIGH COURT HAS HELD THAT THE AMOUNT RECEIVED AGAINST THE TRANSFER OF TENANCY IS ASSESSABLE AS CAPITAL GAIN A ND NOT INCOME FROM OTHER SOURCES. IN THE CASE IN HAND, THE AMOUNT RECEIVED B Y THE ASSESSEE IS AGAINST THE TRANSFER OF CAPITAL ASSET AND, THEREFORE, WE DO NOT FIND ANY JUSTIFICATION IN TREATING THE SAME AS INCOME FROM OTHER SOURCES BY THE AUTHORITIE S BELOW. THE ASSESSEE HAS BHOGILAL M. MEHTA (HUF) 9 | P A G E PRODUCED SUFFICIENT MATERIAL TO ESTABLISH THE TENAN CY RIGHTS AND SURRENDER OF TENANCY RIGHTS AND CREATING THE RIGHT TO HAVE ALTER NATIVE ACCOMMODATION. FINALLY THE ASSESSEE SURRENDERED THE RIGHT IN ALTERNATIVE ACCOM MODATION AND RECEIVED THE AMOUNT IN QUESTION WHICH IS CAPITAL GAIN IN NATURE. THE CIT(A) HAS ALLOWED THE DEDUCTION OF RS. 3,50,000/- FROM THE TOTAL RECEIPT OF RS. 36,00,000/-. SINCE THE AMOUNT HAS BEEN INVESTED IN THE PRESCRIBED UNITS U/ S 54EA, THEREFORE, THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 54EA AGAINST THE SAID RECEIPT. 10. GROUND NO. 3 IS REGARDING CHARGES OF INTEREST U/S 234 B AND 234C. SINCE THE LEVY OF INTEREST IS MANDATORY AND CONSEQUENTLY, THE REFORE, WHEN THE ISSUE ON MERIT HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE THIS IS SUE BECOMES INFRUCTUOUS. 11. THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GRO UND AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW, THE LD. CIT(A) ERRED IN CONSIDERING THAT IF IT IS ASSUMED THAT TENANCY RIGH T IS NOT GENUINE THAN RECEIPT OF RS.. 32,50,000/- IS AN CAPITAL RECEIPT WHICH IS NOT CHARGEABLE UNDER THE HEAD INCOME FROM CAPITAL GAIN AND CANNOT BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES 12. SINCE THE MAIN GROUND HAS BEEN DECIDED IN FAVOU R OF THE ASSESSEE, THEN THE ADDITIONAL GROUND RAISED BY THE ASSESSEE BECOMES IN FRUCTUOUS. 13. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED .. ORDER PRONOUNCED IN THE OPEN COURT TODAY I.E 4 -6-2014 SD/- SD/- ( RAJENDRA ) (VIJAY PAL RAO) (ACCOUNTANT MEMBER/ YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; ) (JUDICIAL MEMBER/ U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; ) MUMBAI DATED 4-6 -2014 SKS SR. P.S,