Appeal Details
Counselvise Citation
[2019] 118 COUNSELVISE.COM (IT) 3241 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
1 year(s) 3 month(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
27-02-2019
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
J
Assessment Year
2014-2015
Appeal Filed On
27-11-2017
Judgement Text
F IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.6743/ MUM/2017 ( / ASSESSMENT YEAR : 2014 - 15 ) A SSISTANT C OMMISSIONER OF I NCOME - TAX - 16(2) ROOM NO. 440, 4 TH FLOOR, AAYAKAR BHAWAN, M K ROAD, MUMBAI - 400020 / V. DR. JAYESH KESHRICHAND SHAH, INDUSTRIAL SEWING MACHINE CO 702, 7 TH FLOOR, INDIRA APARTMENTS 1736, M L DAHA NUKAR ROAD, MUMBAI - 400026 ./ PAN : AAFPS4197R ( / APPELLANT ) .. ( / RESPONDENT ) REVENUE BY: SHRI. RAJIV GUBGOTRA ,DR ASSESSEE BY: SHRI. H .N MOTIWAL L A & SHRI. DALPAT SHAH / DATE OF HEARING : 02.01.2019 / DATE OF PRONOUNCEMENT : 27 .02.2019 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER: THIS APPEAL, FILED BY REVENUE , BEING ITA NO. 6743/MUM/2017 , IS DIRECTED AGAINST APPELLATE ORDER DATED 13.09.2017 IN APPEAL NO. IT - 365 / 2016 - 17/114/17 - 18, PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 5 , MUMBAI (HEREINAFTER CALLED THE CIT(A)), FOR ASSESSMENT YEAR 2014 - 15 , THE APPELLATE PROC EEDINGS HAD ARISEN BEFORE LEARNED CIT(A) FROM THE ASSESSMENT ORDER DATED 29.12.2016 PASSED BY LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO) U/S 143(3) OF I.T.A. NO.6743/MUM/2017 2 THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) FOR AY 2014 - 15 . 2. THE GROUNDS OF A PPEAL RAISED BY R EVENUE IN THE MEMO OF APPEAL FILED WITH THE INCOME - TAX APPELLATE TRIBUNAL, MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER: - A) 'WHETHER ON FACTS AND IN CIRCUMSTANC ES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,40,00,000/ - AS ASSESSED UNDER INCOME FROM OTHER SOURCES?' B) 'THE APPE LLANT PRAYS THAT THE ORDER OF CI T(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED.' C) 'THE APPEL LANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY NECESSARY.' 3. THE BRIEF F ACTS OF THE CASE ARE THAT THE ASSESSEE IS A DOCTOR BY PROFESSION . D URING THE COURSE OF ASSESSMENT PROCEEDINGS CONDUCTED BY THE AO U/S. 143(3) R.W.S. 14 3(2) OF THE 1961 ACT , T HE AO OBSERVED THAT THE ASSESSEE HAS SHOWN TAXABLE LONG TERM CAPITAL G AIN AT NIL AS DETAILED UNDER: - 1. TRANSFER OF TENANCY RIGHTS AT ZERO. THIS WAS BASED ON THE BASIS OF IT S WORKING REPORTED IN SCHEDULE 4 THEREOF AS UNDER: - 1.1 SALE CONSIDERATION 1,40,00,000 LESS: PURCHASE OF RES. PROPERTY U/S. 54F 1,42,05,000 TAXABLE LTCG 0 ____________ THE ABOVE INFORMATION WAS ALSO CAPTURED IN AIR INFORMATION WHICH WAS CONFRONTED BY THE AO TO THE ASSESSEE . THE ASSESSEE IN C OMPLIANCE THEREOF , INTER - ALIA, SUBMITTED COPY OF DEED OF TRANSFER AND ASSIGNMENT OF TENANCY/OCCUPANCY AGREEMENT DATED 24.06.2013 ENTERED INTO BETWEEN DR. RAJUL JAYESH SHAH, OUTGOING TENANT, THE ASSESSEE AS THE CONFIRMING PARTY, LODHA PROPERTIES DEVELOPMEN T PRIVATE LIMITED AS LANDLORDS AND DR. MANINDER CHHABRA AS INCOMING TENANTS . THE I.T.A. NO.6743/MUM/2017 3 ASSESSEE HAD RECEIVED DUR ING THE YEAR RS. 1,40,00,000/ - AS CONFIRMING PARTY VIDE AGREEMENT DATED 24.06.2013 FROM INCOMING TENANT D R MANINDER CHHABRA , WHEREIN VIDE SAID AGREEMENT DATED 24.06.2013 TENANCY /OCCUPANCY RIGHTS WERE TRANSFERRED AND ASSIGNED BY HIS WIFE DR. RAJUL J. SHAH , OUTGOING TENANT IN FAVOUR OF D R. MANINDER CHHABRA, THE INCOMING TENANT , WHILE THE ASSESSEE STOOD AS CONFIRMING PARTY AND HAS CLAIMED TO HAVE TRANSFERRED OCCUPANCY RIGHTS OF THE GROUND FLOOR OF THE PROPERTY UNDER CONSIDERATION . M/S. LODHA PROPERTIES DEVELOPMENT P LTD. , WERE ALSO SIGNATORY AS L ANDLORDS TO THE SAID AGREEMENT DATED 24.06.2013 . THIS DEED OF TRANSFER AND ASSIGNM ENT OF TENANCY/OCCUPANCY RIGHTS WAS EXECUTED AND REGISTERED WITH RESPECT TO SHOP NO.1 , C WING, COMPRISING OF GROUND FLOOR WITH MEZZANINE FLOOR SITUATED AT KRISHNA BHAVAN AT 246, 248, 250 & 252 WALKESHWAR ROAD, 11, BANGANGA CROSS ROAD, MUMBAI 4000 06, ADM EASURING 534.65 SQ. FT. E QUIVALENT TO 49.72 SQ. METERS (CARPET AREA) IN THE STRUCTURE NO. 2 STANDING ON THE LAND BEARING CADASTRAL SURVEY NO. 123, WALKESHWAR DIVISION. THE SAID AGREEMENT DATED 24.06.2013 WAS FILED BEFORE THE AO AND IS PLACED ON RECORD AT PAGE 12 41/PAPER BOOK . IT ALL HAPPEN ED THAT THE ASSESSEE WIFE WAS GRANTED TE NANCY BY M/S. NATHURAM RAMNARAY A N PRIVATE LTD. , LANDLORDS OF THE AFORESAID PREMISES , VIDE TENANCY AGREEMENT DATED 17.03.1994 ON MONTHLY RENTAL OF RS. 800/ - . T HE COPY OF TENANCY AGREEMENT IS PLACED ON RECORD IN PAPER BOOK / PAGE NO. 1 TO 6 . T HE SAID PREMISES WAS TO BE USED BY TENANT DR. RAJUL J. SHAH, FOR COMMERCIAL PURPOSES AS PER TERMS OF THE SAID AGREEMENT . T HE SAID M/S. NATHURAM RAMNARAY A N P. LTD I.E. LANDLORDS , VIDE L E TTER DATED. 30.03.1994 PERMITTED DR. RAJUL J. SHAH, AND HER HUSBAND I.E. THE ASSESSEE TO RUN CLINIC OR A POLY CLINIC FOR THEIR MEDICAL PROFESSION . T HE SAID LETTER DATED 30.03.1994 ISSUED BY LANDLORD NAMELY M/S. NATHURAM RAMNARAY A N P. LTD WAS FILED BEFORE TH E AO AND IS PLACED IN PAPER BOOK AT PAGE NO. 7 AND 8 . THE RENT RECEIPT ISSUED BY M/S. NATHURAM RAMNARAYAN P. LTD, IN FAVOUR OF DR. RAJUL J. SHAH , DATED 30.03.1994 AS WELL FOR THE MONTHS OF JULY AND AUGUST 2005 ARE ALSO I.T.A. NO.6743/MUM/2017 4 PLACED IN PAPE R BOOK FILED BY THE ASSESSEE AT PAGE NO. 9 AND 10 . T HE ASSESSEE HAD CLAIMED TO BE RUNNING HIS CLINIC FOR HOMEOPATHIC MEDICINE FROM THE GROUND FLOOR OF THE S AID PREMISES SINCE 1994 , WHILE HIS WIFE DR. RAJUL J. SHAH, TENANT OF THE SAID PREMISES HAD CLAIMED OF RUNNING HER CLI NIC FROM THE MEZZANINE FLOOR OF THE SAID PREMISES. THE WIFE OF THE ASSESSEE DR. RAJUL J SHAH WAS TENANT OF BOTH GROUND FLOOR AND MEZZANINE FLOOR OF THE SAID SHOP NO. 1 , KRISHNA BHAVAN . THE ASSESSEE HAD CLAIMED TO BE REGULARLY PAYING RENTAL TO HIS WIFE DR. RAJUL J. SHAH SINCE 1994 FOR USING GROUND FLOOR OF THE SAID SHOP F OR RUNNING HIS CLINIC , DETAILS OF WHICH FOR LAST FIVE YEARS ARE A S HERE UNDER: - FINANCIAL YEAR RENT PAID TO DR. RAJUL SHAH 2008 - 09 RS.54,000 2009 - 10 RS.54,000 2010 - 11 RS.54,000 2011 - 12 RS.54,000 2012 - 13 RS.54,000 IT IS ALSO CLAIMED THAT SAID DR RAJUL J SHAH WAS OFFERING AFORESAID RENTAL INCOME AS INCOME IN THE RETURN OF INCOME FILED WITH REVENUE AND PAYING TAXES ON THE SAME . THE SAID DR RAJUL J SHAH HAD ISSUED LETTER DATED 14.11.201 6 (PB/PAGE 42 - 43) TO THE AO CONFIRMING THAT SHE WAS HOLDING TENANCY IN THE SAID PREMISES SINCE 01.04.1994. THE LETTER ALSO STIPULATED THAT THE ASSESSEE WAS RUNNING HIS CLINIC FROM GROUND FLOOR OF THE SAID SHOP WHILE SHE WAS RUNNING HER CLINIC FROM MEZZANINE FLOOR OF THE SAID PREMISES. SHE ALSO CONFIRMED THAT SHE RECEIVED AFORE - STATED RENT FOR THE PREMISES FROM THE ASSESS EE AND THE SAME WERE SHOWN AS INCOME IN HER BOOKS OF ACCOUNTS. SHE CONFIRMED THAT THE ASSESSEE STOOD IN SAID AGREEMENT DATED 24.06.2013 AS CONFIRMING PARTY AS HE WAS SUB - TENANT IN THE SAID PREMISES AND PAYMENT OF RS. 1,40,00,000/ - WAS RECEIVED BY THE ASSES SEE FOR TRANSFERRING HIS I.T.A. NO.6743/MUM/2017 5 OCCUPATIONAL RIGHTS AND FOR GIVING VACANT AND PEACEFUL POSSESSION OF THE AFORESAID PREMISES. THE POSITION HA D REMAIN ED UNCONTROVERTED BY REVENUE AS TO RUNNING OF CLINIC BY THE ASSESSEE FROM GROUND FLOOR OF SAID SHOP AND PAYMENT OF RENTALS TO HIS WIFE. THE ASSESSEE HAD ALSO BROUGHT ON RECORD EVIDENCES THAT TELEPHONE CONNECTION IN HIS NAME WAS INSTALLED AT THE SAID PREMISES WHICH IS PLACED IN PAPER BOOK / PAGE NO. 44 TO 45 . THE EVIDENCE IS ALSO BROUGHT ON RECORD THAT MOBILE/INTERNET CONNECTION IN HIS NAME WAS ALSO INSTALLED AT THE SAID ADDRESS, WHICH IS PLACED IN PAPER BOOK AT PAGE NO. 46 TO 48 . T HE ASSESSEE WAS ALSO HOLDING LICENCE FOR POSSES SION OF RECTIFIED SPRIT INCLUDING A BSOLUTE ALCOHOL FOR MEDICINAL USED BY RMP , VIDE APPRO VAL DATED 21.05.1998 ISSUED BY COLLECTOR, MUMBAI. THE ASSESSEE ALSO HELD PERMISSION IN FORM NO. K DATED 31.01.200 1 AND 22.02.2010 UNDER BOMBAY HOMEOPATHIC AND BIOCHEMIC PRACTITIONERS ACT, 1959 TO CARRY ON PRACTICE OF HOMEOPATHY WHEREIN THE AFORESAID ADDRESS OF THE ASSESSSEE IS SHOWN TO BE REGISTERED ADDRESS IN THE RECORDS OF MAHARASHTRA COUNCIL OF HOMEOPATHY , WHICH IS PLACED IN PAPER BOOK PAGE NO. 50 AND 51 . THE ASSESSEE ALSO HOLD NOC DATED 24.10.2007 ISSUED BY MAHARASHTRA COUNCIL OF HOMEOPATHY FOR FURTHER STUDY IN INDIA AND ABROAD (PAGE 52/PB) AND THE LETTER IS AGAIN SHOWING THE SAID PREMISES AS THE REGISTERED ADDRESS OF THE ASSSESSEE. THE ASSESSEE ID CARD ISSUED BY MAHARASHTRA COUNCIL OF HOMEOPAT HIC DATED 05.12.2015 SHOWING ASSESSEE HOLDING REGISTR ATION NUMBER 7980 W . E . F . 16.03.1981 IS PLACED O N RECORD AT PAGE NO. 53 OF THE PAPER BOOK WHEREIN AGAIN THE SAID ADDRESS WAS SHOWN AS REGISTERED ADDRESS OF THE ASSESSEE . THUS, THE ASSESSEE IS CONTENDING THAT IT WAS RUNNING ITS CLINIC FOR HOMEOPATHY FROM THE SAID PREMISES. THE ASSESSEE HAD CLAIMED THAT HE WAS RUNNING HIS CLINIC IN THE SAID PREMISES AS SUB - TENANT OF HIS WIFE DR. RAJUL J. SHAH, UNDER PERMISSION GRANTED ON 30.03.1994 BY M/S. NATHURAM RAMNARAYAN P. LTD. . SINCE THE ASSESSEE HAS CLAIMED THAT IT HAS INTEREST IN THE SAID PROPERTY WHEN THE TENANCY /OCCUPANCY RIGHTS WERE TRANSFERRED AND ASSIGNED BY HIS WIFE DR. RAJUL J. SHAH, IN FAVOUR OF D R. MANINDER CHHABRA , THE ASSESSEE I.T.A. NO.6743/MUM/2017 6 STOOD AS CONFIRMING PARTY TO TRANSFER AND ASSIGN HIS INTERES T IN THE SAID PROPERTY AS SUB - TENANT/OCCUPANT IN FAVOUR OF D R. MANINDER CHHABRA AND REC EI VED RS. 1,40,00,000/ - FROM SAID D R MANINDER CHABRA WHO WAS INCOMING TENANT . THE CLAUSE 8(B) OF THE SAID AGREEMENT DATED 24.06.2013 (PB/PAGE 28) HAS SPECIFIED THAT THE ASSESSEE ALONG WITH HIS WIFE HAD BEEN IN CONTINUOUS , EXCLUSIVE AND UNINTERRUPTED USE, OCCUPATION AND POSSESSION OF THE AFORESAID TENANTED PREMISES. H IS WIFE ALSO RECEIVED RS. 1,95,00,000/ - FROM D R. MANINDER CHHABRA TO TRANSFER AND ASSIGN TENANCY /OCCUPANCY RIGHTS IN THE SAID SHOP IN FAVOUR OF D R. MANINDER CHHABRA . I T ALSO HAPPENED THAT SAID M/S. NATHURAM RAMNARAYAN P. LTD. VIDE CONVEYANCE DEED DATED 15.12.2006 REGISTERED UNDER NO. BBE - 2/12405 OF 2006 ON 22.12.2006 WITH THE S UB - R EGISTRAR OF ASSURANCES AT MUMBAI HAD TRANSFERRED THEIR OWNERSHIP INTEREST IN THE AFORESAID PROPERTY IN FAVOUR OF M/S. LODH A PROPERTIES DEVELOPMENT P LTD. WHO ARE NOW OWNERS OF THE SAID AFORESAID PROPERTY . THUS, BY VIRTUE OF THE CONVEYANCE DEED DATED 15.12.2006 REGISTERED ON 22.1 2.2006, LODHA PROPERTIES DEVELOPMENT PRIVATE LIMITED BECAME LANDLORDS /OWNERS OF THIS PROPERTY. UN DER THIS TRANSFER AND ASSIGNMENT OF TENANCY /OCCUPANCY AGREEMENT DATED 24.06.2013 , THE SAID INCOMING TENANT D R. MANINDER CHHABRA ALSO AGREED TO TOOK OVER LITI GATION OF EVICTION PURSUED BY M/S. LODHA PROPERTIES DEVELOPMENT P LTD., AGAINST DR. RAJUL J. SHAH. THE SAID LODHA PROPERTIES DEVELOPMENT PRIVATE LIMITED WAS ALSO SIGNATORY T O AGREEMENT DATED 24.06.2013 AS L ANDLORDS WHEREIN THEY WERE CONFIRMING PARTY . T HE S AID M/S. LODHA PROPERTIES DEVELOPMENT P LTD., HAS ALSO ISSUED LETTER DATED 16.12.2016 IN FAVOUR OF ASSESSEE WHEREIN IT CONFIRM ED ABOUT THE ENTIRE DEED OF TRANSFER AND ASSIGNMENT OF TENANCY/OCCUPANCY WHEREIN VIDE PARA 3 AND 4 IN THE SAID AGREEMENT, THE ASS ESSEE WAS STATED TO BE HAVING INTEREST IN THE SAID PROPERTY BY WAY OF PERMISSION FROM LANDLORDS M/S. NATHURAM RAMNARAYAN P. LTD WHICH STOOD TRANSFERRED UNDER DEED DATED 24.06.2013 WHEREIN THE WIFE OF THE ASSESSEE WHO WAS MONTHLY TENANT TRANSFERRED AND ASSI GNED HER TENANCY RIGHTS IN I.T.A. NO.6743/MUM/2017 7 FAVOUR OF INCOMING TENANT DR MANINDER CHHABRA , WHEREIN THE ASSESSEE HAD STOOD CONFIRMING PARTY IN THE SAID DEED DATED 24.06.2013 . THE SAID LETTER DATED 16.12.2016 IS PLACED IN PAPER BOOK/PAGE 54 - 55. THE ASSESSEE HAS SHOWN THIS RECEIPT OF RS.1,40,00,000/ - AS INCOME UNDER THE HEAD INCOME FROM CAPITAL G AINS , WHILE THE AO WAS OF THE VIEW THAT THE SAID RECEIPTS ARE TO BE BROUGHT TO TAX UNDER THE HEAD INCOME FROM OTHER S OURCES , VIDE ASSESSMENT ORDER DATED 29.12.2016 PASSED BY T HE AO U/S 143(3) OF THE 1961 ACT . 5. AGGRIEVED BY THE ASSESSMENT FRAMED BY THE AO U/S 143(3) VIDE ASSESSMENT ORDER DATED 29.12.2016 , THE ASSESSEE FILED FIRST APPEAL BEFORE LEARNED CIT(A) WHO WAS PLEASED TO ALLOW THE APPEAL OF THE ASSESSEE ON THIS ISSUE V IDE APPELLATE ORDER DATED 13.09.2017, BY HOLDING AS UNDER: FACTS OF THE CASE 2.1 THE APPELLANTS WIFE DR. RAJUL SHAH HAD TAKEN SHOP NO.1 'C' WING, KRI SHNA BHAWAN, GROUND FLOOR, 250 W ALKESHWAR ROAD, MUMBAI, ON RENT FROM M/S NATHURAM RAMNARAYAN PVT. LTD. (LANDLORD) FROM 1.4.1994. SHE HAD ENTERED INTO A TENANCY AGREEMENT ON 17.3.1994. SHE IS HOMOEOPATHIC CONSULTANT. THE APPELLANT IS ALSO A HOMEOPATHIC CONSULTANT. BY A LETTER DATED 30.3.1 994 THE LAND LORD PERMITTED DR. RAJUL SHAH TO PERMIT THE APPELLANT TO RUN HIS CLINIC IN THE SAID PREMISES W.E.F 01.04.1994. THE PREMISES CONSISTED OF GROUND FLOOR AND A MEZZANINE FLOOR. DR. RAJUL SHAH HAD SUBLET THE GROUND FLOOR TO THE APPELLANT FOR RUNNIN G AS CLINIC IN 1994. SHE WAS RUNNING HER SEPARATE CLINIC AT THE MEZZANINE FLOOR OF THE PREMISES SINCE 1994. 2.2 THE APPELLANT USED TO PAY RENT FOR THE U SE OF GROUND FLOOR. THE FOLLOWING ARE THE DETAILS OF THE RENT PAID BY THE APPELLANT DURING LAST 5 YEARS. FY RENT PAID TO DR. RAJUL SHAH 2008 - 09 54,000 2009 - 10 54,000 2010 - 11 54,000 2011 - 12 54,000 2012 - 13 54,000 I.T.A. NO.6743/MUM/2017 8 CONFIRMATION LETTER FROM DR. RAJUL SHAH DATED 14.11.2016 WAS FILED WITH THE SAID AO. 2.3 DR. RAJUL SHAH TRANSFERRED AND ASSIGNED THE TENANCY OF THE ABOVE PREMISES TO LODHA PROPERTIES DEV. PVT. LTD., BY AN AGREEMENT DATED 24.06.2013. COPY OF THIS AGREEMENT IS FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WITH THE SAID ASSESSING OFFICER. THE HEADING OF THIS AGREEMENT IS DEED OF TRANSFER AND ASSIGNMENT OF TENANCY /OCCUPANCY. THIS AGREEMENT IS EXECUTED BY DR. RAJUL SHAH (OUTGOING TENANT), DR. JAYESH SHAH (CONFIRMING PARTY).LODHA PROPERTIES DEVELOPMENT PVT. LTD (LAND LORDS) AND MR. MANINDER CHHABRA (INCOMING TENANT). LODHA PROPERTIES DEVELOPMEN T PVT. LTD. (DEVELOPERS) HAD PURCHASED THE ENTIRE BUILDING COMPLEX KNOWN AS KRISHNA BHAVAN ON 250, WALKESHWAR ROAD, MUMBAI. THERE WERE SEVERAL TENANTS IN THE BUILDING. DR. RAJUL SHAH WAS ONE OF SUCH TENANT. 2.4 IN ORDER TO GET VACANT POSSESSION OF THE BUIL DING THE DEVELOPERS ENTERED INTO SIMILAR AGREEMENTS WITH THE OTHER TENANTS AND PAID CONSIDERATION TO THE OTHER TENANTS, THEIR SUB - TENANTS AND OTHER OCCUPIERS OF THE VARIOUS FLATS IN THE BUILDING. THE SUB - TENANT / OCCUPIER WAS MADE CONFIRMING PARTY IN THE A GREEMENTS BY DEVELOPERS WITH THE OTHER TENANTS. 2.5 SINCE THE APPELLANT WAS IN OCCUPATION OF THE GROUND FLOOR OF THE PREMISES GIVEN ON RENT TO DR. RAJAL SHAH HE WAS MADE A CONFIRMING PARTY. BY THIS AGREEMENT THE APPELLANT HAD GIVEN UP HIS OCCUPATION RIGHT IN THE GROUND FLOOR AND GIVEN VACANT POSSESSION TO THE DEVELOPERS (THROUGH THE INCOMING TENANT). IN CONSIDERATION FOR THIS HE WAS PAID RS. 1,40,00,000/ - BY CHEQUE DATED 21.6.2013 AS STATED IN THE AGREEMENT. 2.6 THE APPELLANT AS OCCUPIER (SUB - TENANT) OF THE PREMISES HAS FILED THE FOLLOWING DOCUMENTS WITH THE SAID AO. (I) COPY OF MTNL TELEPHONE BILL DATED 30.11.2011 FOR TEL. NO. 23643774 WHICH GIVES HIS ADDRESS AS KRISHNA B HAVON, 250 WALKESHWAR ROAD, MUMBAI. (II) BILL DATED 22/11/2011 FOR HIS MOBILE PHONE (9819799337) OF VODAFONE REGISTERED AT THE ABOVE ADDRESS. (III) INTERNET CONNECTION WITH TATA PHOTON IN THE NAME OF THE APPELLANT IS ALSO REGISTERED AT THE ABOVE ADDRESS. THIS IS EVIDENT FROM THE BILL DATED 19. 10.2011 FILED WITH THE SAID AO. (IV) COPY OF T HE LICENSE GIVEN BY THE COLLECTOR FOR THE POSSESSION OF RECTIFIED SPIRIT (INCLUDING ALCOHOL) FOR MEDICAL USE BY A REGISTERED MEDIAL PRACTITIONER FOR THE APPELLANTS CLINIC AT KRISHNA BHAVAN, 250, WALKESHWAR ROAD, MUMBAI. (V) CERTIFICATE TO PRACTICE HORNOEOP OTHY BY BOMBAY HOMOEOPOTHY AND BIOCHEMIC PRACTIONER'S ACT, 19 59, GIVEN TO THE APPELLANT WITH THE ADDRESS AT KRISHNA BHAVAN, 250, WOLKESHWAR ROAD, MUMBAI. I.T.A. NO.6743/MUM/2017 9 (VI) LETTER DATED 16/12/ 2016 FROM LODHA PROPERTIES DEVELOPMENT PVT. LTD., FROM THIS IT IS EVIDENT THAT THE APPELLANT WAS IN OCCUPATION OF THE ABOVE PREMISES AND WAS CARRYING ON HIS MEDICAL PRACTICE FROM THE SAID PREMISES. THIS FACT IS ACCEPTED BY THE AO IN PARA 3.3 AND 3.4 AT PAGE 8 OF THE ASSESSMENT ORDER AS STATED IN PARA 1.2 ABOVE. 2.7 THE ABOVE FACTS, INCLUDING THE FACT THAT THE APPELLANT WAS PAYING RENT FOR THE ABOVE PREMISES SINCE 1994, ESTABLISHED THAT HE WAS A SUBTENANT OF THE PREMISES AND THAT HE HAD A LEGAL RIGHT TO OCCUPY THE PREMISES. IN THE AGREEMENT DATED 24.6.2013 THE EXPRESSION 'SUB - TENANT' IS NOT USED. INSTEAD OF THIS THE EXPRESSION 'OCCUPIER' OR 'OCCUPANCY' IS USED. THE APPELLANT HAS BEEN PAID THE CONSIDERATION OF RS. 140 LACS FOR GIVING UP HIS SUBTENANCY OR RIGHT OF OCCUPANCY AND TO HAND OVER VACANT POSSESSION OF THE PREMISES. THE FOLLOWI NG CLAUSES OF THE AGREEMENT ESTABLISH THAT WHAT HAS BEEN PAID TO HIM IS TO GIVE UP HIS SUB - TENANCY OR OCC UPANCY RIGHT, WHICH IS A 'CAPITA L ASSET'. (I) THE PREAMBLE OF THE AGREEMENT STATES THAT 'THIS DEED OF TRANSFER AND ASSIGNMENT OF TENANCY / OCCU PANCY M ADE AT MUMBAI ON THIS 24T H DAY OF JUNE, 2013'. (II) PREAMBLE G(C) REFERS TO LETTER DATED 30.03. 1994 WRITTEN BY NATHURARN RAMANA RAYAN PVT. LTD., ADDRESSED TO DR. RAJUL SHAH PERMITTING HER TO ALLOW THE APPELLANT (DR. JAYESH SHAH) TO RUN HIS CLINIC IN THE SA ID PREMISES. (III) PARA 2 OF THE AGREEMENT SATES AS UNDER : - '2. THE OUTGOING TENANT WITH THE CONFIRMATION OF THE CONFIRMING PARTY HEREBY TRANSFERS TO THE INCOMING TENANT ........ALL RIGHT, TITLE AND INTEREST OF THE SAID OUTGOING TENANT ALONG WITH THE CONF IRMING PARTY THEREIN TOGETHER WITH ALL AND WHATSOEVER RIGHT, TITLE AND INTEREST WHICH OUTGOING TENANT ALONG WITH THE CONFIRMING PARTY HAS OR MAY ACQUIRE OR BECOME ENTITLED TO HEREAFTER INTO OR UPON THE SAID TENANTED PREMISES INCLUDING RIGHTS TO PERMANENT A LTERNATE ACCOMMODATION IN THE EVENT OF REDEVELOPMENT OF THE SAID PROPERTY BY THE LANDLORD ............................. (IV) PARA 3 OF THE AGREEMENT STATES AS UNDER : - '3 IN CONSIDERATION OF AFORESAID THE INCOMING TENANT HAS AGREED TO PAY AFORESAID CONSID ERATION OF A SUM OF RS.3,35,00,000 / - (RUPEES THREE CRORES THIRTY FIVE LAKHS ONLY) TO THE OUTGOING TENANT AND CONFIRMING PARTY IN FULL AND FINAL SETTLEMENT AND ON RECEIPT OF THE SAME, THE OUTGOING TENANT AND THE CONFIRMING PARTY SHALL HAND OVER VACANT, QUIE T AND PEACEFUL POSSESSION OF THE SAID TENANTED PREMISES TO THE INCOMING TENANT ALONG WITH THE ORIGINAL TITLE DOCUMENTS, IF ANY, ON COMPLETION OF THE TRANSACTION IN THE MANNER STATED HEREIN '. I.T.A. NO.6743/MUM/2017 10 (V) PARA 4 OF THE AGREEMENT STATES THE MANNER IN WHICH CONSIDERA TION FOR THE AFORESAID TRANSFER OF THE RESPECTIVE RIGHTS OF THE OUTGOING TENANT AND THE CONFIRMING PARTY IS TO BE PAID. PARA 4 (II) REFERS TO PAYMENT OF CONSIDERATION OF R S. 140 LACS TO DR. JAYESH SHAH (CONFIRMING PARTY). (VI) PARA 5 OF THE AGREEMENT STATES AS UNDER : 5. THE OUTGOING TENANT ALONG WITH CONFIRMING PARTY , WITH THE CONCURRENCE OF THE LA ND LORD, HAVE UPON EXECUTION HEREOF HANDED OVER TO THE INCOMING TENANT, THE VACANT, QUIET AND PEACEFUL POSSESSION OF THE SAID TENANTED PREMISES ............ .......ETC. HENCE FORTH THE OUTGOING TENANT ALONG WITH THE CONFIRMING PARTY HAVE NO R IGHT, TITLE, INTEREST AND/ OR CLAIM OF ANY NATURE WHATSOEVER IN THE SAID TENANTED PREMISES... (VII) P ARA 7 OF THE AGREEMENT STATES A S UNDER - 7. THE OUTGOING TENANT ALONG WITH CONFIRMING PARTY DO HEREBY COVENANT WITH AND RE PRESENT AND ASSURE TO THE INCOMING TENANT THAT HER/ THEIR TENANCY/ OCCUPANCY RIGHTS TO THE SAID TENANTED PREMISES IN CAPACITY AS TENANT / OCCUPANT THEREOF ARE CLEAN, CLEAR AND MARKETABLE ........... ..PARTY. THE OUTGOING TENANT AND THE CONFIRMING PARTY STATE THAT THEY ARE IN NO MANNER DIRECTLY OR INDIRECTLY PREVENTED FROM ENTERING INTO THIS AGREEMENT. (VIII) PARA 8 OF THE AGREEMENT STATES AS UNDER - '8. THE OUTGOING TENANT ALONG WITH THE CONFIRMING PAR TY COVENANT WITH THE INCOMING TENANT THAT: (A) (B) THE OUTGOING TENANT ALONG WITH CONFIRMING PARTY HAS BEEN IN CONTINUOUS EXCLUSIVE AND UNINTERRUPTED USE, OCCUPATION AND POSSESSION OF THE SAID TENANTED PREMISES: (C) (D) THE OUTGOING TENANT ALONG WITH CONFI RMING PARTY HAS NOT BEEN PROHIBITED FROM DEALING WITH DISPOSING OFF OR TR ANSFERRING HER / THEIR TENANCY / OCCUPANCY RIGHTS IN RESPECT OF THE SAID TENANTED PREMISES OR ANY PART THEREOF BY ANY AUTHORITIES. (E) . (F) . (G) . (H) . (I) . (J) . I.T.A. NO.6743/MUM/2017 11 (K) . (L) AS AND WHEN REQUIRED, THE OUTGOING TENANT ALONG WITH THE CONFIRMING PARTY AS WELL AS ALL PERSONS CLAIMING UNDER OR THROUGH IT SHALL EXECUTE ALL NECESSARY DOCUMENTS, WRITINGS, DEEDS, FORMS, AFFIDAVITS AND OTHER ASSURANCES AS MAY BE REQUIRED OR AS MAY BE FOUND TO BE EXECUTED AT ANY TIME HEREAFTER FOR PROPERLY AND EFFECTIVELY CARRYING OUT THIS D EED AND FOR HAVING THE INCOMING TENANTS RECOGNIZED AS TENANTS AND ACQUIRER OF THE SAID TENANTED PREMISES ON TENANCY.' (IX) PARA 9 OF THE AGREEMENT STATES AS UNDER ) '9 THE OUTGOING TENANT ALONG WITH THE CONFIRMING PARTY HAS REPRESENTED AND ASSURED TO THE I NCOMING TENANT THAT HER/ THEIR RIGHTS IN RESPECT OF THE SAID TENANTED PREMISES ARE FREE FROM ALL ENCUMBRANCES AND CLAIMS AND REASONABLE DOUBTS OF ANY NATURE WHATSOEVER. IN THE EVENT IT IS FOUND THAT THE OUTGOING TENANT'S TITLE TO THE SAID TENANTED PREMISES IS DEFECTIVE OR ANY CLAIM IS MADE ON THE SAID TENANTED PREMISES OR INCOMING TENANT SUFFERS ANY LOSS OR DAMAGES BY THE STATEMENTS, DECLARATIONS, R EPRESENTATIONS AND ASSURANCES MA DE BY THE OUTGOING TENANT AND CONFIRMING PARTY OR ANY CLAIM WHETHER DIRECTLY O R INDIRECTLY IS MADE ON THE SAID TENANTED PREMISES, IN THAT CASE THE OUTGOING TENANT / CONFIRMING PARTY AGREES TO INDEMNIFY AND HEREBY INDEMNIFY AND KEEP INDEMNIFIED THE INCOMING TENANT AND / OR HIS SUCCESSOR AND ASSIGNS AGAINST ALL LOSS, DAMAGES, COST AND EXPENSES, WHICH MAY BE SUFFERED BY AND / OR THE CLAIMS THAT MAY BE MADE AGAINST THE INCOMING TENANT ON ACCOUNT OF ABOVE AND THE OUTGOING TENANT/CONFIRMING PARTY SHALL REIMBURSE THE INCOMING TENANT AND/OR HIS SUCCESSORS AND ASSIGNS FOR THE SA ME.' (X) PARA 11 OF THE AGREEMENT STATES AS UNDER, '11 THE OUTGOING TENANT/ CONFIRMING PARTY HAVE PAID ALL THE RENT TAXES CESSES, CHARGES, DUTIES AND OTHER OUTGOINGS IN RESPECT OF THE SAID TENANTED PREMISES TILL DATE HEREOF AND THEREAFTER ALL SUCH OUTGOING SHALL BE PAYA BLE BY THE INCOMING TENANT.' (XI) PARA 12 OF THE AGREEMENT STATES THAT ' ON EXECUTION HEREOF AND AS AFORESAID, THE OUTGOING TENANT/ CONFIRMING PARTY HAVE WITH THE CONSEN T OF THE LANDLORD PUT THE INCOMING TENANT IS POSSESSION OF THE SAID TENANTED PREMISES A S LAWFUL MONTHLY TENANT THEREOF. 3. SUBMISSIONS: 3.1 FROM THE ABOVE PARAGRAPHS OF THE AGREEMENT IT IS EVIDENT THAT THE APPELLANT WAS IN OCCUPATION OF PART OF THE ABOVE PREMISES (GROUND FLOOR). AS STATED IN PARA 3 ABOVE, THE APPELLANT WAS PAYING RENT TO DR . RAJUL SHAH WHO WAS A TENANT OF THE PREMISES. SHE HAS PAID TAX ON THIS RENT INCOME. THE LANDLORD OF THE PREMISES HAD, BY LETTER DATED 30.03.1994, I.T.A. NO.6743/MUM/2017 12 PERMITTED DR. RAJUL SHAH TO ALLOW THE APPELLANT TO USE THE PREMISES FOR HIS CLINIC. THUS THE APPELLANT WAS SU B - T ENANT / OCCUPIER OF THE GROUND FLOOR OF THE PREMISES. ALTHOUGH THE TERM 'SUBTENANT' IS NOT USED IN THE ABOVE AGREEMENT, THE APPELLANT WAS MA DE A CONFIRMING PARTY AS HE WAS AN OCCUPIER OF PART OF THE PREMISES AND THE DEVELOPER WANTED VACANT POSSESSION OF THAT PORTION OF THE PREMISES OCCUPIED HIM. THEREFORE, THE AGREEMENT USES THE TERMS 'OUTGOING TENANT' AND 'OCCUPIER', 'OCCUPANCY' ETC. THE TERM 'OCCUPIE R', 'OCCUPANCY' ETC. REFERS TO T HE CONFIRMING PARTY (DR. JAYESH SHAH).PARA 3 OF THE AGREEMENT STATES THA T THE CONFIRMING PARTY SHALL HAND OVER VACANT, QUIET AND PEACEFUL POSSESSION OF THE PREMISES. FURTHER, PARA 4 STATES THAT IN CONSIDERATION OF THE ABOVE (I.E. HANDING OVER POSSESSION OF THE PREMISES) THE CONFIRMING PARTY IS PAID RS. 140 LACS. IT IS WELL SET TLED LAW THAT THE RIGHT TO OCCUPY THE PREMISES I.E. POSSESSION OF A PROPERTY IS A 'CAPITAL ASSET'. FOR THIS PURPOSE IT IS IMMATERIAL WHETHER THIS IS A RIGHT OBTAINED BY AN AGREEMENT OR THE PERSON IS IN POSSESSION OF THE PROPERTY BY ORAL CONSENT OF THE LAND LORD OR THE TENANT. MOREOVER, THE APPELLANT WAS IN POSSESSION OF THE GROUND FLOOR SINCE 1994 I.E. ABOUT 20 YEARS. IN VIEW OF THIS LEGAL POSITION, IT IS SUBMITTED THAT RS. 140/ - LACS RECEIVED BY THE APPELLANT UNDER THE ABOVE AGREEMENT WAS A LONG TERM CAPITA L GAIN AS HE WAS IN OCCUPATION OF THE GROUND FLOOR SINCE1994 (I.E. FOR ABOUT 20 YEARS) 3.2 IT IS SUBMITTED THAT THE TERM 'IMMOVABLE PROPERTY' IS NOT DEFINED IN SECTION 2 BUT IS DEFINED IN SECTION 269A (E) AS UNDER: IMMOVABLE PROPERTY MEANS (I) ANY LAND OR ANY BUILDING OR PART OF A BUILDING, AND INCLUDES, WHERE ANY LAND OR ANY BUILDINGS OR PART OF A BUILDING IS TRANSFERRED TOGETHER WITH ANY MACHINERY, PLANT, FURNITURE, FITTINGS OR OTHER THINGS, SUCH MACHINERY, PLANT, FURNITURE FITTINGS OR OTHER THINGS ALSO EXPLANATION -- FOR THE PURPOSES OF THIS SUB - CLAUSE, LAND, BUILDING, PART OF A BUILDING, MACHINERY, PLANT, FURNITURE, FITTINGS AND OTHER THINGS INCLUDE ANY RIGHTS THEREIN ; (II) THEREFORE, ANY RIGHT OF OCCUPATION IN ANY IMMOVABLE PROPERTY ALSO WILL BE CONSIDERED AS A PROPERTY I.E. 'CAPITA! ASSET'. 3.3 SECTION 2 (14) OF THE INCOME TAX ACT DEFINES A CAPITAL ASSET TO MEAN 'PROPERTY OF ANY KIND HELD BY AN ASSESSEE, WHETHER OR NOT CONNECTED WITH HIS BUSINESS OR PROFESSION'. IT IS SUBMITTED THAT THE T ERM 'PROPERTY OF ANY KIND' WILL INCLUDE RIGHT OF OCCUPATION IN ANY PROPERTY. 3.4 IN THE CASE OF CIT V/S MISS PIROJA C. PATEL 122 TAXMAN 752 (BORN) THE HON'BLE BOMBAY HIGH COURT HAS HELD THAT 'ON EVICTION OF HUTMENT DWELLERS FROM THE LAND IN QUESTION, THE V ALUE OF THE LAND INCREASED AND, THEREFORE, THE EXPENDITURE INCURRED FOR I.T.A. NO.6743/MUM/2017 13 HAVING THE LAND VACATED WOULD CERTAINLY AMOUNT TO COST OF IMPROVEMENT. ACCORDINGLY, THE COMPENSATION PAID BY THE ASSESSEE AND OTHER CO - OWNERS TO THE HUTMENT DWELLERS FOR VACATING THE L AND WAS AN ALLOWABLE EXPENDITURE WITHIN THE MEANING OF SECTION 48'. FROM THIS JUDGMENT OF BOMBAY HIGH COURT IT IS EVIDENT THAT THE PERSONS OCCUPYING THE PROPERTY HAVE A RIGHT IN THE PROPERTY AND ANY PAYMENT TO SUCH PERSON WILL ADD TO THE COST OF ACQUISITIO N OF THE PROPERTY U/S 48. 3.5 IF A REFERENCE IS MADE TO THE 'DEED OF TRANSFER AND ASSIGNMENT OF TENANCY / OCCUPANCY' DATED 24.06.2013 AT PAGE 7 IT WILL BE EVIDENT THAT FOR STAMP DUTY PURPOSES ALSO THIS DEED IS CONSIDERED AS A TRANSFER OF IMMOVABLE PROPERTY . THE STAMP DUTY VALUATION HAS BEEN MADE AT RS.3,34,58,000/ - AS AGAINST THE TOTAL CONSIDERATION OF RS.3,35,00,000/ - I.E. RS. 1,95,00,000 TO DR. RAJUL SHAH, OUTGOING TENANT AND 1,40,00,000/ - TO DR. JAYESH SHAH (APPELLANT) OCCUPIER). THE STAMP DUTY OF 5% I.E. 16,75,000/ - PAYABLE FOR TRANSFER OF IMMOVABLE PROPERTY HAS BEEN CHARGED ON THIS DOCUMENT. IT IS, THEREFORE, SUBMITTE D THAT THE ABOVE PAYMENT OF RS. 140 LAKHS TO THE APPELLANT WAS FOR TRANSFER OF RIGHT IN THE PROPERTY. IN OTHER W ORDS, THIS AMOUNT WAS RECEIVED BY THE APPELLANT FOR TRANSFER OF A CAPITOL ASSET (I.E RIGHT IN THE PROPERTY) AND, THEREFORE, WAS TAXABLE AS CAPITAL GAIN. 3.6 IT IS SUBMITTED THAT THE SAID A.O. HAS RELIED ON THE WORDING OF SOME OF THE CLAUSES OF THE DEED OF TRANSFER AND ASSIGNMENT OF TENANCY / OCCUPANCY IN PARA 3.1 AND 3.6 ON PAGES 7 AND 9 OF THE ASSESSMENT ORD ER. IT IS SUBMITTED THAT THE A. O . WAS NOT JUSTIFIED IN RELYING UPON SOME PORTION OF THE AGREEMENT AND IN NOT CONSIDERING THE WHOLE OF TH E AGREEMENT. IN THE CASE OF ITO V/S GHANSHYAMDAS R. THA KKAR 56 TTJ 460 (AHMADABAD) ITA TRIBUNAL HAS HELD THAT 'COUNSEL FOR THE ASSESSEE IS RIGHT THAT STATEMENT OF THE ASSESSEE SHOULD NOT BE CONSIDERED HAVING CHOSEN ONE PART OR OTHER OF IT BUT THAT HAS TO BE CONSIDERED IN ITS ENTIRELY'. IT IS SUBMITTED THAT IF THE ENTIRE DEED OF TRANSFER OF TENANCY / OCCUPANCY IS CONSIDERED, WITH THE OTHER DOCUMENTS RELIED UPON, IT IS EVIDENT THAT THE COMPENSATION OF R S. 140 LAKHS WAS RECEIVED BY THE APPELLANT AS A CONSIDERATION FOR GIVING UP HIS SUB - TENANCY / OCCUPANCY RIGHT WHICH WAS A CAPITAL ASSET. 3.7 THE APPELLANT ALSO RELIES ON THE FOLLOWING CASES IN SUPPORT OF HIS ABOVE SUBMISSIONS. CASES RELIED UPON: (I) DCIT VS. STAR CHEMICALS (BOM) (PR) LTD., 110 TTJ 753 (MUM) IN THIS CASE IT IS HELD THAT WHERE LAND IN QUES TION WAS HELD BY THE ASSESSEE UN DER ADVERSE POSSESSION, ITS COST OF ACQUISITION IS NOT. THEREFORE, IT WAS NOT CHARGEABLE TO TAX UNDER THE PROVISIONS OF SECTION 45 ON ITS SALE. IN SUCH A CASE EXPENDITURE INCURRED BY THE ASSESSEE IN ORDER TO DEFEND ITS POSSESSION OVER LAND CANNOT BE CONSIDERED AS COST OF ACQUISITION INCURRED BY THE ASSESSEE. I.T.A. NO.6743/MUM/2017 14 THE RATIO OF THIS DECISION IS THAT PROPERTY WHICH IS IN ADVERSE POSSESSION IS A CAPITAL ASSET. IN THIS CASE THE ITAT HAS HELD THAT THERE WAS N O COST AND HENCE SECTION 45 DOES NOT APPLY. (II) CIT VS. APPUKUTTY 119 TAXMANN 637 (KERALA H.C.) IN THIS CASE IT IS HELD AS UNDER: M WAS IN POSSESSION OF THE BUILDING AS TENANT AND HE WAS CONDUCTING HIS PROPRIETARY CONCERN IN THAT BUILDING. THAT WAS CONVERTED INTO PARTNERSHIP. THUS, THE ASSESSE - PARTNERSHIP CAME INTO POSSESSION OF THE BUILDING IN 1962. APPARENTLY, NO AMOUNT WAS PAID FOR GETTING POSSESSION. IT COULD BE SAID TO BE A SELF - GENERATED ASSET. IT IS TRUE THAT POSSESSORY RIGHT IS DIFFERENT FROM TENANCY RIGHT. IN SALMOND ON JURISPRUDENCE, IT IS STATED AS FOLLOWS: 'POSSESSION DIFFERS FROM OWNERSHIP IN ANOTHER QUITE DIFFERENT RESPECT. OWNERSHIP, AS WE SAW CONSISTS OF A COMBINATION OF LEGAL RIGHTS, SOME OR ALL OF WHICH MAY BE PRESENT IN ANY PARTICUL AR INSTANCE, AND SUCH RIGHTS IMPLY THE EXISTENCE OF LEGAL RULES AND A SYSTEM OF LAW. WITH POSSESSION THIS IS NOT SO. A POSSESSOR IS NOT SO MUCH ONE WHO HAS CERTAIN RIGHTS AS ONE WHO ACTUALLY HAS POSSESSION. WHETHER A PERSON HAS OWNERSHIP DEPENDS ON RULES O F LAW; WHETHER HE HAS POSSESSION IS A QUESTION THAT COULD BE ANSWERED AS A MATTER OF FACT AND WITHOUT REFERENCE TO LAW AT ALL'. THERE IS NO GUIDELINE ON THE BASIS OF WHICH THIS RIGHT CAN BE VALUED. FURTHER, IN THE INSTANT CASE IT COULD NOT BE SAID THAT ANY COST WAS INCURRED FOR ACQUIRING POSSESSORY RIGHT. IN VIEW OF THE ABOVE, THE TRIBUNAL WAS RIGHT IN UPHOLDING THE ASSESSEE'S CLAIM THAT THE CONSIDERATION FOR TRANSFER OF POSSESSION OF SHOP WAS EXEMPT AND, THUS DELETING THE SOME FROM THE COMPUTATION OF CAPIT AL GAINS.' (III) ACIT VS. GIRISH CHANDRA SHARMA 5 SOT 372 (DELHI) IN THIS CASE IT IS HELD AS UNDER: 'IN THIS CASE THE ASSESSEE, A LAWYER, WAS GIVEN GROUND FLOOR OF THE PREMISES TAKEN BY HIS CLIENT ON RENT. THE ASSESSEE WAS NOT PAYING ANY RENT BUT WAS RENDE RING SERVICES AS RETAINER TO HIS CLIENT. THE ASSESSEE WAS IN OCCUPATION OF THE SAID PREMISES FOR OVER 20 YEARS. THE BUILDING WAS SOLD BY THE LANDLORD AND THE CLIENT WHO WAS THE TENANT, HAD TO GIVE VACANT POSSESSION. THE ASSESSEE WHO WAS IN OCCUPATION OF TH E GROUND FLOOR HAD TO GIVE POSSESSION OF THE PREMISES TO THE NEW LANDLORD. FOR GIVING UP THIS POSSESSION THE ASSESSEE WAS PAID COMPENSATION OF RS.30 LAKHS BY THE NEW LANDLORD. THE ASSESSEE CLAIMED THIS AS CAPITAL RECEIPT EXEMPT FROM TAX. THE AO TAXED THIS COMPENSATION OF RS.30 LAKHS AS LONG TERM CAPITAL GAIN. THE CIT (A) AND THE 1TA TRIBUNAL HAS HELD THIS RECEIPT AS A CAPITAL RECEIPT NOT LIABLE TO TAX.' (IV) ACI T VS. G.C. SHAH& CO. 369 ITR 323 (GUJARAT) I.T.A. NO.6743/MUM/2017 15 IN THIS CASE IT IS HELD THAT RS.5 LAKHS RECEIVED BY T HE ASSESSE TOWARDS SURRENDER OF SUB - TENANCY RIGHT IS A CAPITAL GAIN AND IT IS RIOT ASSESSABLE AS A CASUAL INCOME U/S 10(3) READ WITH SECTION 56(1) OF THE INCOME TAX ACT. (V) KEWAL SILK MILLS V/S ACIT21 ITR(T) 121 (MUMBAI) IN THIS CASE IT HELD AS UNDER: T HE ASSESSEE BROUGHT ON RECORD CERTAIN RECEIPTS WHICH SHOWED THAT WHAT WAS BEING PAID BY THE ASSESSEE WAS CONSIDERED TO BE RENT BY THE OTHER PARTY AND THUS SAID PARTY IN PRINCIPLE HAD ACCEPTED THAT THE ASSESSEE WAS THE TENANT FROM WHOM THE RENT WAS BEING RE CEIVED. THE FURTHER CORRESPONDENCE BETWEEN THE ASSESSEE AND ITS LICENSOR, THE PURCHASER OF THE LAND AND THE ASSESSEE ARE ALSO DESCRIBING RIGHT OF THE ASSESSEE AS TENANCY RIGHT ONLY AND THE DEED EXECUTED BETWEEN PURCHASER OF THE PREMISES AND THE ASSESSEE IS ALSO DESCRIBED AS DEED OF SURRENDER OF TENANCY. THUS, THE ASSESSEE WAS ENJOYING A RIGHT OVER THE PROPERTY IN THE NATURE OF BEING TENANT OF THE SA ME FOR THE LAST SO MANY YEARS AND THAT RIGHT OF THE ASSESSEE CANNOT BE CONSIDERED OR EVALUATED MUCH LESS T HAN THE RIGHT OF TENANCY. IN VIEW OF THE ABOVE DISCUSSION, IT IS TO BE HELD THAT THE ASSESSEE, IN FACT, WAS ENJOYING POSSESSION OF THE IMPUG NED PROPERTY AND FOR PEACEFUL VA CATION THEREOF IT HAD RECEIVED THE IMPUGNED AMOUNT WHICH WAS DESCRIBED BY BOTH PAR TIES AS AMOUNT PAID FOR SURRENDER OF TENANCY RIGHTS. THE ASSESSEE HAD ACQUIRED THE SAID RIGHT LONG BACK AND THE LICENSOR TO THE ASSESSEE ALSO HAD RECOGNIZED THE SAID RIGHT OF THE ASSESSEE. THE RIGHT OF THE ASSESSEE WAS UNDISPUTED AND THE NATURE THEREOF W AS 'PROPERTY OF ANY KIND' WHICH WAS HELD BY THE ASSESSEE AND WAS TO BE TERMED AS A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14). TENANCY RIGHTS HAVE ALSO BEEN RECOGNIZED AS CAPITAL ASSET WITH IN THE MEANING OF SECTION 55(2) (A). THEREFORE, THE AMOUNT RECEIVED BY THE ASSESSEE IS ASSESSABLE UNDER THE HEAD 'CAPITAL GAINS'. THE SAME CANNOT BE ASSESSED AS INCOME FROM OTHER SOURCES. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED.' 3.3 I HAVE CONSIDERED THE APPELLANT'S SUBMISSIONS. HERE, APPELLANT 'S WIFE DR.RAJUL JAYESH SHAH HAD TAKEN SHOP NO.1 C, WING, KRISHNA BHAVAN, GROUND FLOOR, 250 WALKESHWAR ROAD, MUMBAI ON RENT F ROM M/ S NATHURAM RAMNARAYAN PVT. LTD., LANDLORD, FROM 1.4.1994. SHE HAD ENTERED INTO A TENANCY AGREEMENT ON 17.3.1994. AS APPELLA NT IS A HOMEOPATHIC CONSULTANT, THE LANDLORD BY LETTER DATED 30.3.1994 PERMITTED HIM TO RUN HIS CLINIC IN THE SAID PREMISES WHICH WAS RENTED TO HIS WIFE. THE PREMISES CONSISTS OF GROUND FLOOR AND A MEZZANINE I.T.A. NO.6743/MUM/2017 16 FLOOR. APPELLANTS WIFE HAD SUBLET THE GROUND FLOOR TO THE APPELLANT FOR RUNNING HIS CLINIC IN 1994 AND HIS WIFE WAS RUNNING A SEPARATE CLINIC AT THE MEZZANINE FLOOR OF THE PREMISES SINCE 1994. 3.3.1 HERE APPELLANT ALONG WITH HIS WIFE ENTERED INTO AN AGREEMENT NAMED 'DEED OF TRANSFER AND ASSIGNMENT OF TENANCY/ OCCUPANCY' ON 24.6.2013 WITH LODHA PROPERTIES DEVELOPMENT. PVT. LTD. AND MR. MANINDER CHHABRA AS INCOMING TENANT. THE ABOVE MENTIONED PARTIES HAVE PAID A CONSIDERATION OF RS.3,35,00 ,000/ - AS PER CLAUSE 3 STATING THAT AP PELLANT ALONG WITH HIS WIFE SHALL HANDOVER VACANT, QUIET AND PEACEFUL POSSESSION OF THE SAID TENANTED PREMISES TO THE INCOMING TENANT ALONG WITH THE ORIGINAL TITLE DOCUMENTS, IF ANY, ON COMPLETION OF THE TRANSACTION IN THE MANNER STATED HEREIN. AO AFTER RE FERRING THE VARIOUS CLAUSES OF THE AGREEMENT CAME TO THE CONCLUSION THAT APPELLANT DID NOT HAVE ANY TEN ANCY RIGHT OVER THE PROPERTY. AL MOST APPELLANT HAD POSSESSION WHICH ACCORDING TO THE AO IS NOT A RIGHT WHICH WAS RECOGNIZED BY I.T. ACT. HENCE, CONSIDERA TION RECEIVED BY APPELL ANT ON THIS AGREEMENT FOR RS.1 40,00,000/ - WAS ASSESSED AS INCOME FROM OTHER SOURCES. IN THE RETURN OF INCOME, APPELLANT CLAIMED THIS CONSIDERATION RECEIVED AS CAPITAL GAIN AND FROM THAT CLAIM A DEDUCTION U/S 54F WAS MADE THUS DECLARI NG LTCG AS NIL. 3.3.2 IN THE ASSESSMENT ORDER, AO REFERRED THAT APPELLANT IS NOT MENTIONED AS SUBMITTED - TENANT ANYWHERE IN THE AGREEMENT AND ALSO STATED THAT APPELLANT IS ONLY REFERRED AS A CONFIRMING PARTY. WHEN WE EXAMINE THIS DEED OF TRANSFER AND ASSIG NING AGREEMENT, APPELLANT'S WIFE IS MENTIONED AS A OUTGOING TENANT AND APPELLANT IS STATED AS A CONFIRMING PARTY OF THE OUTGOING TENANT IN THE AGREEMENT. FURTHER, AO STATED THAT APPELLANT IS NOT MENTIONED AS A SUB - TENANT, SO HE DOES NOT HAVE ANY RIGHTS. IT IS TRUE THERE WAS NO MENTION OF SUB - TENANT IN THE AGREEMENT, HOWEVER, EVERYWHERE AS STATED ABOVE IN THE AGREEMENT IT WAS STATED AS OUTGOING TENANT AND CONFIRMING PARTY. AO REFERRED TO THE 2 CLAUSES OF THE AGREEMENT AND CAME TO THE CONCLUSION THAT APPELLAN T IS NOT HAVING ANY TENANCY RIGHT. CLAUSE MENTIONED BY AO IN ASSESSMENT ORDER IS PARA G(E) OF THE AGREEMENT WHICH IS AS UNDER : (E) IN THE PREMISES AFORESAID, THE OUTGOING TENANT CAME TO BE IN SOLE USE, OCCUPATION AND POSSESSION OF THE SAID TENANTED PREMI SES AND PAYING MONTHLY RENT AT THE RATE OF RS.987/ - (RUPEES NINE HUNDRED AND EIGHTY SEVEN ONLY) PER MONTH FOR THE SAME. THE ELECTRICITY BILL FOR COMMERCIAL PURPOSE DISCLOSING THE ADDRESS OF THE SAID TENANTED PREMISES STANDS IN HER SOLE NAME. THE COPIES OF THE RENT RECEIPT AND THE ELECTRICITY BILL ARE ANNEXED HEREWITH. BY AO'S OBSERVATION OF ABOVE PARA, AS OUTGOING TENANT IS APPELLANT'S WIFE, SO AS PER THE ABOVE PARA SHE CAME TO BE IN SOLE USE OF OCCUPATION AND POSSESSION OF THE PREMISES WHICH I.T.A. NO.6743/MUM/2017 17 APP ELLANT HAS NO RIGHT. WHEN WE EXAMINE THE PARA, IT IS TO BE STATED THAT IN THE HEADLINES OF PARA G IT STATES THAT THE OUTGOING TENANT AND THE CONFIRMING PARTY HEREBY DECLARE, REPRESENT AND WARRANT TO THE INCOMING TENANT AS FOLLOWS: IN PARA G, (E) IS ONE OF THE SUB - CLAUSE. FURTHER IMMEDIATELY IN H CLAUSE IT WAS MENTIONED AS UNDER : H IN THE CIRCUMSTANCES, THE OUTGOING TENANT WITH CONFIRMATION OF CONFIRMING PARTY HAVE NOW AGREED TO ASSIGN AND TRANSFER HER TENANCY RIGHTS IN RESPECT OF THE SAID TENANTED PREMISES TOGETHER WITH ALL AND EVERY OF HER RIGHT, TITLE, INTEREST AND CLAIM WHICH THE OUTGOING TENANT HAS IN TO OR UPON THE SAID TENANTED PREMISES INCLUDING RIGHTS OF PERMANENT ALTERNATE ACCOMMODATION, IN THE EVENT OF REDEVELOPMENT OF THE SAID PROPERTY BY THE LANDLORDS OR THEIR NOMINEES AND ASSIGNS FREE FROM ALL ENCUMBRANCES AND CLAIMS, WITH THE CONFIRMATION AND CONCURRENCE OF THE LANDLORDS WHO HAS TESTIFIED THESE PRESENTS BY JOINING IN AND EXECUTING THE SAME IN FAVOUR OF THE INCOMING TENANT, ON TERMS AND CONDITIONS AND FOR CONSIDERATION AGREED BETWEEN THE PARTIES HERETO WHICH ARE RECORDED HEREINAFTER. NOW IF WE READ TOGETHER CLAUSE G & H, HEADLINES OF CLAUSE G IN THE AGREEMENT IT IS CLEARLY MENTIONED THAT OUTGOING TENANT AND THE CONFIRMING PARTY HAVE NOW A GREED TO ASSIGN AND TRANSFER HER TENANCY RIGHTS IN RESPECT OF THE SAID TENANTED PREMISES TOGETHER WITH ALL AND EVERY OF HER RIGHT, TITLE, INTEREST AND CLAIM WHICH THE OUTGOING TENANT HAS IN TO OR UPON THE SAID TENANTED PREMISES. THIS CLAUSE HAS TO B E READ NOT IN PARTS. IT HAS TO BE READ WITH THE HEAD NOTE WHICH MENTION THAT OUTGOING TENANT AND THE CONFIRMING PARTY HEREBY DECLARE, REPRESENT AND WARRANT TO THE INCOMING TENANT WHERE ALL THE DETAILS ARE MENTIONED. AO READING THE PART OF THE CLAUSE WITHOUT FULLY READING ALL THE CLAUSES GIVES DISTORTED MEANING. FURTHER, AO MENTIONED THAT AS PER CLAUSE 8(A) WHICH IS AS UNDER 8. THE OUTGOING TENANT ALONGWITH THE CONFIRMING PARTY COVENANT WITH THE INCOMING TENANT THAT : (A) THE TENANCY IN RESPECT OF THE SAID TENANTED PREMISES IS STILL VALID, SUBSISTING AND STANDING IN THE NAME OF THE OUTGOING TENANT AND NO OTHER PERSON/S INCLU DING THE CONFIRMING PARTY HAS/HA VE ANY LIMS, SHARE, RIGHT, TITLE OR INTEREST IN TO OVER OR UPON THE SAID TENANTED PREMISES OR ANY PART THEREOF AN D THEY ARE ABSOLUTELY ENTITLED TO AND COMPETENT TO AND AUTHORIZED TO TRANSFER AND/OR DEAL WITH THE SAID TENANTED PREMISES. ACCORDING TO THE ABOVE CLAUSE, ONLY TENANCY RIGHT IS WITH THE WIFE OF THE APPELLANT AND ALL OTHER PERSONS INCLUDING THE APPELLANT DO E S NOT HAVE ANY RIGHT. HENCE, AO CONCLUDED THAT APPELLANT IS NOT HAVING ANY TEN ANCY RIGHT OVER THE PREMISES. AO I.T.A. NO.6743/MUM/2017 18 HAD NOT FULLY STATED THE CLAUSE 8 OF THE AGREEMENT. THE HEAD NOTE OF CLAUSE 8 IS 'THE OUTGOING TENANT ALONG WITH THE CONFIRMING PARTY COVENANT WI TH THE INCOMING TENANT THAT'. ON FULL READING OF THIS CLAUSE ALONG WITH THE HEAD NOTE, IT IS CLEAR THAT THE OUTGOING TENANT ALONG WITH THE CONFIRMING PARTY AFTER ENTERING IN TO THE AGREEMENT WITH THE INCOMING TENANT, THEY WILL HAVE NO RIGHTS OVER THE TENAN TED PROPERTIES INCLUDING THE CONFIRMING PARTY OVER THAT PREMISES. HERE AO CONSIDERED PART OF THE CLAUSE 8(A) AND CAME TO WRONG CONCLUSION. IF THE CLAUSE IS READ WITH WHOLE HEAD NOTE, IT GIVES TOTALLY OPPOSITE MEANING WHICH IS STATED ABOVE. HERE ALSO IN THE CLAUSE IT IS CLEARLY MENTIONED THAT TENANCY WITH RESPECT TO TENANTED PREMISES OF OUTGOING TENANT INCLUDING THE CONFIRMING PARTY HAVE VALID SUBSISTING RIGHT OVER THE TENANTED PREMISES. THIS SHOWS THAT APPELLANT THOUGH MENTIONED AS CONFIRMING PARTY HAD TENA NCY RIGHTS IN THE PROPERTY. INSTEAD OF EXAMINING THE AGREEMENT PARTLY BY READING WITH THE HEAD NOTES, IT IS COMMON THAT APPELLANT'S NAME IS MENTIONED AS CONFIRMING PARTY, APPELLANT'S WIFE AS OUTGOING TENANT. IN ALL THE PLACES IT IS ALTERNATIVELY MENTIONED AS TENANCY OR OCCUPANCY RIGHTS. 3.3.3 NOW WITH REGARD TO THE PAYMENT WHICH IS MENTIONED AS IN CLAUSE 3 AND 4 OF THE AGREEMENT, IT IS CLEARLY MENTIONED THAT IN CLAUSE 3 A SUM OF RS.3,35,00,000 / - WILL BE PAID TO THE OUTGOING TENANT AND CONFIRMING PARTY SHALL HAND OVER TO THE INCOMING TENANT, THE VACANT, QUIET AND PEACEFUL POSSESSION OF THE SAID TENANTED PREMISES. OUT OF THIS AMOUNT APPELLANT WAS PAID RS. 1,40,00,000 / - . AS PER CLAUSE 5 IT IS CLEARLY STA TED THAT THE OUTGOING TENANT ALONG WITH CONFIRMING PARTY, WITH THE CONCURRENCE OF THE LAND LORD, HAVE UPON EXECUTION HEREOF HANDED OVER TO THE INCOMING TENANT, THE VACANT, QUIET AND PEACEFUL POSSESSION OF THE SAID TENANTED PREMISES. WE THE WHO LE AGREEMENT IS READ TOGETHER AL ONG WITH HEAD NOTES, IT IS CLEAR THAT THOUGH APPELLANT IS MENTIONED AS CONFIRMING PARTY, THIS AMOUNT OF RS. 1,40,00,000 / - WAS PAID FOR VACANT, QUIET AND PEACEFUL POSSESSION OF THE SAID TENANTED PREMISES. AO BY REFERRING TO PART OF THE AG REEMENT WITHOUT CONSIDERING THE HEAD NOTES CAME INTO WRONG CONCLUSION. FURTHER, WHEN WE EXAMI NE SECTION 2(14) OF THE I T. ACT WHICH IS AS UNDER : 'CAPITAL ASSET MEANS - ; (A) PROPERTY OF ANY KIND HELD BY AN ASSESSEE, WHETHER OR N OT CONNECTED WITH HIS BUSINESS OR PROFESSION. (B) ANY SECURITIES HELD BY A FOREIGN INSTITUTIONAL INVESTOR WHICH HAS INVESTED IN SUCH SECURITIES IN ACCORDANCE WITH THE REGULATIONS MADE UNDER THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1 992. (C) ANY SECU RITIES HELD BY A FOREIGN INSTITUTIONAL INVESTOR WHICH HAS INVESTED IN SUCH SECURITIES IN ACCORDANCE WITH I.T.A. NO.6743/MUM/2017 19 THE REGULATIONS MADE UNDER THE SECURITIES AND EXCHANGE BOARD OF I NDIA ACT, 1992. IT IS CLEARLY MENTIONED IN THE ABOVE SECTION THAT CAPITAL ASSET MEANS PROPERTY OF ANY KIND HELD BY THE APPELLANT. HERE THIS CLAUSE OF PROPERTY WAS DEFINED BY SUPREME COURT AS UNDER : 3.3.4 IN DWARKADAS SHRIVAS VS SHOLAPUR SPINNING & WEAVING COMPANY. LTD. AIR 1954 SC 119, 139 WHERE IT IS HELD THAT PROPERTY IS A BUNDLE OF RIGHTS WHICH OWNER CAN LAWFULLY EXERCISE. HE IS ENTITLED TO USE AND ENJOY IT AS HE PLEASES, PROVIDED HE DOES NOT INFRINGE ANY LAW OF THE STATE. PROPERTY IS EITHER CORPORAL OR INCORPORAL. ACCORDING TO SUPREME COURT - PROPERTY MEANS HAVING A BUNDLE OF RIGHT S. WHEN WE EXAMINE THE CASE OF THE APPELLANT, APPELLANT WAS ALSO HAVING RIGHT OVER THE PROPERTY I.E. RIGHT TO POSSESSION WHICH APPELLANT HAD TRANSFERRED TO THE OUTGOING TENANT. THIS RIGHT WHICH APPEL LANT HAD TRANSFERRED WILL COME UNDER THE PURVIEW OF CAPIT AL ASSET AS HERE APPELLANT HAD OCCUPANCY, POSSESSION OR TENANCY RIGHTS. HENCE THESE RIGHTS WILL COME UNDER THE CATEGORY OF CAPITAL ASSET AS PER THE INCOME TAX ACT. 3.3.5 FURTHER IF AN INCOME HAS TO BE CONSIDERED AS INCOME FROM OTHER SOURCES, AS AO ASSESSED HERE, IN CIT VS D.P. SANDU BROS. AND CHEM BUR P LTD. [273 ITR 1] WHERE IT IS HELD THAT IT WOULD BE ILLOGICAL AND AGAINST THE SECTION 56 TO HOLD THAT EVERYTHING THAT IS EXEMPT FROM CAPITAL GAIN BY A STATUTE WOULD BE TAKEN AS A CASUAL OR NON - RECURRING RECEIP T U/S 10(3) R.W. SECTION 56. A RECEIPT THAT IS CAPITAL IN NATURE CANNOT BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES. HERE IT IS HELD THAT RECEIPT RECEIVED BY APPELLANT IS CAPITAL IN NATURE, HENCE, IT CANNOT BE ASSESSED AS INCOME FROM OTHER SOURCES . FURTHER, IF WE EXAMINE THE MEANING OF TENANT - AS PER RENT CONTROL ACT OF MAHARASHTRA U/S 5(1) TO (10) TENANT MEANS ANY PERSON BY WHOM OR WHOSE ACCOUNT RENT IS PAYABLE FOR ANY PREMISES AND INCLUDE FURTHER CLAUSES. HERE IT IS NOT DISPUTED THAT APPELLANT W AS PAYING RENT THROUGH HIS WIFE TO THE LANDLORD WHICH LANDLORD HIMSELF HAS ACCEPTED BY A LETTER, HENCE APPELLANT CANNOT BE STATED THAT HE IS NOT HAVING RIGHT OF THE TENANCY IN VIEW OF THE ABOVE ACT. 3.3.6 IN THE CASE OF NARANG OVERSEAS PVT. LTD. VS. ACIT 1 11 ITD 1(MUM) WHERE IT IS HELD - WHEREIN MESNE PROFITS AWARDED UNDER THE DECREE OF THE COURT BY WAY OF COMPENSATION FOR WRONGFUL POSSESSION OF PROPERTY AFTER TERMINATION OF LEAVE AND LICENSE AGREEMENT WAS HELD TO BE CAPITAL RECEIPT. 3.3.7 SUPREME COURT IN THE CASE OF UNION OF INDIA VS CADELL WEAVING MILL S (P) LTD.[2005] 273 ITR 1 WHERE IT IS HELD THAT TENANCY RIGHTS GIVE RISE TO CAPITAL ASSETS. IN THE HIGH COURT OF KERALA CT VS M. APPUKUTTY 119 TAXMAN 637 IT IS HELD THAT ASSESSEE'S CLAIM THAT CONSIDERATION FOR TRANSFER OF POSSESSION OF SHOP WAS EXEMPT FROM CAPITAL GAINS. I.T.A. NO.6743/MUM/2017 20 3.3.8 IN ALL THE ABOVE CASES, TENANCY RIGHT OR HANDING OVER THE POSSESSION OF THE PROPERTY WAS HELD AS CAPITAL ASSET. HENCE, IN VIEW OF THE ABOVE DETAILED DISCUSSION HERE APPELLANT RECEIVED AN AMOUNT OF RS.1,40,00,000/ - FOR VACATING PEACEFULLY THE OCCUPIED TENANTED PREMISES WHERE HE WAS RUNNING A CLINIC, IS TO BE CONSIDERED AS CAPITAL RECEIPT. HENCE, IT HAS TO BE ASSESSED AS CAPITAL GAIN ONLY AND NOT INCOME FROM OTHER SOURCES. HERE AO'S ADDITION OF CONSIDERATION RECEIVED BY APPELLANT IN INCOME FROM OTHER SO URCES IS NOT SUSTAINABLE IN LAW. APPELLANT HAD RIGHTLY OFFERED THE CONSIDERATION RECEIVED UNDER CAPITAL GAINS AND CLAIMED A DEDUCTION U/S 54F WHICH AO HAS NOT DISPUTED. HENCE , AO'S ADDITION OF RS.1,40,00,000/ - UNDER INCOME FROM OTHER SOURCES IS DELETED. TH IS GROUND OF APPEAL IS ALLOWED. 6. NOW , THE R EVENUE IS AGGRIEVED BY THE APPELLATE ORDER DATED 13.09.2017 PASSED BY LEARNED CIT(A) AND HAS FILE D AN APPEAL BEFORE THE TRIBUNAL. A RGUMENT S ARE ADVANCED BY LD. DR THAT TENANCY WAS HELD BY WIFE OF THE ASSESSEE OF GROUND FLOOR AND MEZZANINE FLOOR OF SHOP NO. 1, KRISHNA BHAVAN AND NOT BY THE ASSESSEE . I T WAS SUBMITTED BY LEARNED DR THAT THE ASSESSEE IS CLAIMING TO BE SUB - TENANT OF THE WIFE OF THE ASSESSEE AND COMPENSATION OF RS. 1.4 CRORE S WAS RECEIVED BY THE ASS ESSEE FOR TRANSFER AND ASSIGNMENT OF HIS SO CALLED SUB - TENANCY/OCCUPANCY RIGHT WITH RESPECT TO THIS PROPERTY AS THE ASSESSEE HAD CLAIMED THAT IT WAS RUNNING ITS CLINIC FROM GROUND FLOOR OF SHOP NO. 1 , KRISHNA BHAVAN , WHILE THE FACT IS THAT THE ASSESSEE IS NOT SUB - TENANT OF HIS WIFE. THUS, IT IS CLAIMED BY LEARNED DR THAT THE ASSESSEE IS MEDICAL PRACTITIONER AND WAS ONLY OCCUPYING THE PREMISES WITHOUT ANY AGREEMENT , UNDER PERMISSION GRANTED BY THE THEN LANDLORDS/OWNERS OF THE SHOP NO.1 , KRISHNA BHAVAN VID E LETTER DATED 30.03.1994 . THUS, IT WAS SUBMITTED THAT THE ASSESSEE DID NOT POSSESS ANY INTEREST IN THE SAID PROPERTY. IT WAS SUBMITTED BY LEARNED DR THAT THE AO HAS RIGHTLY BROUGHT THE SAID INCOME TO TAX UNDER THE HEAD I NCOME FROM OTHER SOURCES . IT WAS SUBMITTED BY LEARNED DR THAT LD. CIT(A) ERRED IN GRANTING RELIEF TO THE ASSESSEE ON THIS ISSUE . I T WAS SUBMITTED BY LEARNED DR THAT THE ASSESSEE WAS NOT SUB - TENANT AND ONLY ASSESSEE S WIFE WAS TENANT IN THE SAID PREMISES OF BOTH GROUND FLOOR AND MEZZANINE FLOOR OF SHOP NO. 1, KRISHNA BHAVAN . I T WAS SUBMITTED THAT THE THEN LANDLORD S/OWNERS M/S. NATHURAM I.T.A. NO.6743/MUM/2017 21 RAMNARAYAN P. LTD. HAD ONLY GRANTED PERMISSION TO THE ASSESSEE TO RUN CLINIC WHICH DOES NOT MEAN THAT THE ASSESSEE ACQUIRED AN INTEREST OR RIGHT IN THE SAID PROPERTY AS NO WHERE IT IS MENTION ED IN THE LETTER DATED 30.03.1994 THAT THE ASSESSEE IS SUB - TENANT IN THE SAID PREMISES . T HUS I T WAS SUBMITTED BY LEARNED DR THAT AO RIGHTLY BROUGHT TO TAX SAID INCOME UNDER THE HEAD INCOME FROM OTHER S OU RCES , WHILE ON THE OTHER HAND LD. COUNSEL FOR THE ASSESSEE STRONGLY CONTENDED THAT THE ASSESSEE IS SUB - TENANT /OCCUPANT AND WAS RUNNING HIS CLINIC FROM THE GROUND FLOO R OF THE SAID TENANTED PREMISES BEING SHOP NO. 1 AT KRISHNA BHAVAN SINCE 1994 AND HE WAS OCCUPYING /POSSESSING THE SAID PREMISES SINCE 1994 UNINTERRUPTEDLY . IT WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE WAS PAYING RENT TO HIS WIFE FOR OCCUPYING/USING THE GROUND FLOOR OF SAID TENANTED SHOP SINCE 1994 . I T WAS SUBMITTED THAT THE DEFINITION OF THE CAPITAL ASSET IS VERY WIDE U/S. 2 ( 14 ) AND IT IS BUNDLE OF RIGHT . IT WAS SUBMITTED THAT THE ASSESSEE WAS ENJOYING THE SAID RIGHTS AS SUB - TENANT /OCCUPIER SINCE 1994 FOR WHICH RENT WAS ALSO PAID TO HIS WIFE WHO HELD TENANCY RIGHTS IN THE SAID PROPERTY AND THAT IS WHY THE ASSESSEE HAS ACTED AS A CONFIRMING PARTY IN THE AGREEMENT FOR TRANSFER AND ASSIGNMENT OF TENANCY/ OCCUPANCY RIGHTS BY HIS WIFE IN FAVOUR OF INCOMING TENANT FOR WHICH CONSIDERATION OF RS. 1.4 CRORES WAS RECEIVED BY T HE ASSESSEE . IT IS CLAIMED THAT THE ASSESSEE IS HOLDING UNINTERRUPTED POSSESSION OF THE GROUND FLOOR OF THE SHOP SINCE 1994 FOR WHICH THE RENT WAS ALSO PAID TO HIS WIFE DR RAJULA J. SHAH WHO HELD TENANCY IN SAID PREMISES . O UR ATTENTION WAS DRAWN BY LEARNE D COUNSEL FOR THE ASSESSEE TO PAPER BOOK / PAGE NO. 1 TO 6 WHEREIN TENANCY AGREEMENT DATED 17.03.1994 FOR TAKING ON RENT SAID PREMISES BY WIFE OF THE ASSESSEE IS PLACED. OUR ATTENTION WAS ALSO DRAWN TO LETTER DATED 30.03.1994 ISSUED BY LANDLORD PERMITTING ASSESSEE AND HIS WIFE TO RUN A CLINIC OR A POLYCLINIC FOR MEDICAL PROFESSION FROM SAID PREMISES. THE SAID LETTER IS PLACED IN PAPER BOOK/PAGE 7 - 8. OUR ATTENTION WAS ALSO DRAWN TO RENT RECEIPT ISSUED BY LANDLORD IN FAVOUR OF WIFE OF THE ASSESSEE ACKNOWLEDGING RECEIPT OF RENT FROM WIFE OF THE I.T.A. NO.6743/MUM/2017 22 ASSESSEE . THE RENT RECEIPTS IS DATED 30.03. 1994 WHICH IS PLACED IN PAPER BOOK/PAGE 9 . FURTHER , RENT RECEIPTS FOR JULY AND AUG US T 2005 ARE PLACED IN PAPER BOOK/PAGE 10. OUR ATTENTION WAS ALSO DRAWN TO AGREEMENT/DEED DATED 24.06.2013 FOR TRANSFER/ASSIGNMENT OF TENANCY/OCCUPANCY RIGHTS BY WIFE O F THE ASSESSEE DR RAJULA J SHAH , OUTGOING TENANT IN FAVOUR OF INCOMING TENANT NAMELY DR. MANINDER CHHABRA WHILE THE ASSESSEE SIGNED THE SAID AGREEMENT AS CONFIRMING PARTY AND LODHA PROPERTIES DEV ELOPMENT PRIVATE LIMITED SIGNED THE SAID AGREEMENT AS LANDLORDS. . THE SAID AGREEMENT IS PLACED IN PAPER BOOK/PAGE NUMBER 12 - 41. OUR ATTENTION WAS DRAWN TO LETTER DATED 14.11.2 016 WRITTEN BY DR. RAJULA J SHAH TO THE AO CONFIRMING THAT SHE WAS TENANT IN THE SAID SHOP AT KRISHNA BHAVAN AN D WAS REGULARLY PAYING RENT/TAXES . SHE HAS STATED IN THE LETTER DATED 14.11.2016 THAT THE ASSESSEE WAS OCCUPYING PREMISES SINCE 1994 AND WAS PAY ING RENT SINCE 1994. SHE STATED THAT HE WAS CARRYING ON HIS CLINIC FROM THE GROUND FLOOR OF THE SAID SHOP AT KRISHNA BHAVAN WHILE SHE WAS CARRYING ON HER CLINIC FROM MEZZANINE FLOOR OF THE SAID PREMISES . IT IS ALSO STATED BY HER THAT SHE WAS DECLARING REN TAL INCOME RECEIVED FROM HER HUSBAND TOWARDS SUB - TENANCY OF THE GROUND FLOOR OF THE SHOP NO. 1 OF KRISHNA BHUVAN IN THE RETURN OF INCOME FILED WITH REVENUE AND PAYING DUE TAXES TO GOVERNMENT. THE SAID LETTER IS PLACED IN PAPER BOOK/PAGE 42 - 43. OUR ATTENTIO N WAS ALSO DRAWN TO TELEPHONE, MOBILE AND INTERNET BILLS OF THE ASSESSEE WHICH ARE IN THE NAME OF THE ASSESSEE AND THE ADDRESS SHOWN IN THE SAID BILLS WAS OF THE GROUND FLOOR OF KRISHNA BHAWAN. THE SAID INVOICES ARE PLACED IN PAPER BOOK/PAGE 44 - 48. OUR ATT ENTION WAS ALSO DRAWN TO LICENSE ISSUED BY COLLECTOR, MUMBAI, DATED 21.05.1998 FOR ALLOWING ASSESSEE TO POSSESS RECTIFIED SPIRIT INCLUDING ABSOLUTE ALC OHOL FOR MEDICINAL USE BY A RMP WHICH ALSO SHOWS REGISTERED ADDRESS OF THE ASSESSEE AT THE SAID PREMISES AT KRISHNA BHAVAN . THE SAID LICENSE IS PLACED IN PAPER BOOK/PAGE 49. OUR ATTENTION WAS ALSO DRAWN TO FORM NO. K WHEREIN MAHARASHTRA COUNCIL OF HOMEOPATHY VIDE APPROVAL DATED 31.01.2001 HAS ALLOWED ASSESSEE TO CARRY ON PROFESSION OF HOMEOPATHY FROM THE I.T.A. NO.6743/MUM/2017 23 S AID PREMISES AT KRISHNABHUVAN IN TERMS OF SECTION 26(1)(A) OF THE BOMBAY HOMEOPATHIC AND BIOCHEMIC PRACTITIONERS ACT, 1959. THE SAID LICENSE IS PLACED IN PAGE 50/PB. OUR ATTENTION WAS ALSO DRAWN TO SIMILAR CERTIFICATE DATED 22.02.2010 WHICH IS PLACED IN PA PER BOOK/PAG E 51. OUR ATTENTION WAS ALSO DRAWN TO NOC DATED 24.10.2007 ISSUED BY MAHARASHTRA COUNCIL OF HOMEOPATHY GRANTING PERMISSION TO ASSESSEE TO FURTHER STUDY IN INDIA/ABROAD. THE SAID NOC REFLECTS THE ADDRESS OF THE AFORESAID KRISHNA BHUVAN AS ADDR ESS OF THE ASSESSEE. THE SAID NOC IS PLACED IN PAPER BOOK/PAGE 52. OUR ATTENTION WAS ALSO DRAWN TO ID ISSUED BY MAHARASHTRA COUNCIL OF HOMEOPATHY, DATED 05.12.2015 WHICH SHOWS THAT THE ASSESSEE IS REGISTERED PRACTITIONER SINCE 16.03.1981 AND HOLDS REGN. NO . 7980 . THE SAID ID ALSO SHOWS THE ADDRESS OF THE ASSESSEE TO BE AT THE SAME PREMISES AT KRISHNA BHAWAN. THE SAID ID IS PLACED IN PAPER BOOK/PAGE 53. OUR ATTENTION WAS ALSO DRAWN TO PAGE 54 - 55 /PAPER BOOK WHEREIN LETTER DATED 16.12.2016 WRITTEN BY LODHA P ROPERTIES DEVELOPMENT PRIVATE LIMITED IS PLACED WHEREIN THE ASSESSEE S WIFE HAD STATED TO HAVE TRANSFERRED AND ASSIGNED THE TENANCY RIGHTS IN SAID PROPERTY WITH THE CONFIRMATION OF THE ASSESSEE TO D R. MANINDER CHHABRA (INCOMING TENANT) VIDE REGISTERED DEED DATED 24.06.2013 WHEREIN LODHA PROPERTIES DEVELOPMENT PRIVATE LIMITED, OWNERS OF THE PLOT STOOD AS CONFIRMING PARTY . R ELIANCE IS PLACED BY LEARNED COUNSEL FOR THE ASSESSEE ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF ACIT V. G.C.SHAH & CO. REPORTED IN (2014) 369 ITR 323 ( GUJARAT ) AND DECISION OF MUMBAI - TRIBUNAL IN THE CASE OF KEWAL SILK MILLS V. ACIT REPORTED IN (2013) 21 ITR(T) 121(MUM. - TRIB.) . O UR ATTENTION W AS DRAWN TO PAGE NO. 104 OF THE PAPER BOOK WHEREIN MEANING OF TENANT HAS BEEN EXPLAINED IN THE ORDER OF TRIBUNAL IN KEWAL SILK MILL (SUPRA) BY REPRODUCING EXTRACTS FROM DECISION OF HONBLE SUPREME COURT IN THE CASE OF ANANDRAM CHANDANMAL MUNOT V. BANSILAL C HUNILAL KABRA, AIR 2000 SC 288, WHICH EXTRACT IS REPRODUCED HERE UNDER: - I.T.A. NO.6743/MUM/2017 24 6. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE AFOREMENTIONED POSITION OF LAW OF CONVERTING LICENSEE INTO PROTECTIVE TENANT AND PROTECTIVE SUB - TENANT REGARDLESS OF TH E INTENTION OF THE ORIGINAL GRANT EITHER OF THE LESSOR OR OF THE LESSEE HAS BEEN EXPLAINED BY THE HONBLE SUPREME COURT IN ITS DECISION IN THE CASE OF ANANDRAM CHANDANMAL MUNOT V. BANSILAL CHUNILAL KABRA, AIR 2000 SC 288(COPY OF THIS DECISION FILED AT PAG ES 43 TO 59 OF THE PAPER BOOK). HE INVITED OUR ATTENTION TOWARDS FOLLOWING OBSERVATIONS OF THE HONBLE SUPREME COURT: AFTER THE COMMENCEMENT OF THE AMENDING ACT OF ,1973 A TENANT IS BARRED EVEN TO GIVE ON LICENCE THE WHOLE OR ANY PART OF THE PREMISES LET T O HIM. SUBSECTION (2) OF SECTION 15 VALIDATES ANY SUB - TENANCY CREATED BEFORE THE FIRST DAY OF FEBRUARY 1973 A ND IN THAT CASE A TENANT IS NOT LIABLE TO EVICTION UNDER CLAUSE (E) OF SUB - SECTION (1) OF SECTION 13 OF THE ACT. WE MAY AT THIS STAGE REFER TO TH E RELEVANT PROVISIONS OF LAW UNDER THE ACT. SECTION 5(11) OF THE ACT DEFINES TENANT WHICH IS AS UNDER 5 (11) TENANT MEANS ANY PERSON BY WHOM OR ON WHOSE ACCOUNT RENT IS PAYABLE FOR ANY PREMISES AND INCLUDES : - (A) SUCH SUB - TENANT AND OTHER PERSONS AS HAVE DERIVED TITLE UNDER A TENANT BEFORE THE 1ST DAY OF FEBRUARY 1973; (AA) ANY PERSON TO WHOM INTEREST IN PREMISES HAS BEEN A SSIGNED OR TRANSFERRED AS PERMITTE D OR DEEMED TO BE PERMITTED, U NDER SECTION 15; (B) ANY PERSON REMAINING, AFTER THE DETERM INATION OF THE LEASE, IN POSSESSION, WITH OR WITHOUT THE ASSENT OF THE LANDLORD, OF THE PREMISES LEASED TO SUCH PERSON OR HIS PREDECESSOR WHO HAS DERIVED TITLE BEFORE THE 1ST DAY OF FEBRUARY 1973; (BB) SUCH LICENSEES AS ARE DEEMED TO BE TENANTS FOR THE P URPOSES OF THIS ACT BY SECTION 15A, (BBA) THE STATE GOVERNMENT, OR AS THE CASE MAY BE, THE GOVERNMENT ALLOTTEE REFERRED TO IN SUB - CLAUSE (B) OF CLAUSE (1A), DEEMED TO BE A TENANT, FOR THE PURPOSES OF THIS ACT BY SECTION 15B; IN REJOINDER THE LD. DR DISTINGUISH ED THE JUDGMENTS RELIED UPON BY THE ASSESSEE AND SUBMITTED THAT THESE CASES ARE DISTINGUISHABLE AND NOT APPLICABLE TO FACTUAL MATRIX OF THE CASE AS THE ASSESSEE WAS NOT HOLING ANY TENANCY RIGHTS OR SUB - TENANCY RIGHTS IN THE SAID PREMISES AS NO A GREEMENT IS PRODUCED TO EVIDENCE THE SAME . IT WAS SUBMITTED THAT THE LANDLORDS /OWNERS MERELY ALLOWED THE ASSESSEE TO CARRY ON MEDICAL PROFESSION FROM THE SAID PREMISES WHICH DOES NOT MEAN THAT THE ASSESSEE HAS ACQUIRED ANY INTEREST/TITLE IN THE SAID PREM IS E S I.T.A. NO.6743/MUM/2017 25 7. WE HAVE CONSIDER ED RIVAL CONTENTION S AND PERUSED THE MATERIAL ON RECORD INCLUDING ORDERS OF AUTHORITIES BELOW AND CITED CASE LAWS . WE HAVE OBSERVED THAT THE ASSESSEE IS HOMEOPATHIC DOCTOR BY PROFESSION AND WAS RUNNING HIS CLINIC FROM GROUND FLOOR OF SHOP NO.1, C WING, SITUATED AT KRISHNA BHAVAN AT 246, 248, 250 & 252 WALKESHWAR ROAD, 11, BANGANGA CROSS ROAD, MUMBAI 400006, ADMEASURING 534.65 SQ. FT. EQUIVALENT TO 49.72 SQ. METERS (CARPET AREA) IN THE STRUCTURE NO. 2 STANDING ON THE LAND BEARING CADA STRAL SURVEY NO. 123, WALKESHWAR DIVISION SINCE 1994. H IS WIFE WAS ALSO RUNNING HER CLINIC FROM MEZZANINE FLOOR OF THE SAID PREMISES SINCE 01.04.1994 . T HE WIFE OF THE ASSESSEE NAMELY DR. RAJUL J. SHAH, ENTERED INTO TENANCY AGREEMENT WITH M/S. NATHURAM R AMNARAYAN P. LTD, VIDE AGREEMENT DATED 17.03.1994 WHICH WAS TO BE EFFECTIVE FROM THE 01.04.1994 ON A MONTHLY RENT OF RS. 800/ - FOR THE SAID PREMISES DESCRIBED AS GROUND FLOOR GARAGE PREMISES IN THE TENANCY AGREEMENT DATED 17.03.1994 . THE SAID TENANCY AGREEMENT DATED 17.03.1994 IS PLACED ON RECORD (PB /PAGE 1 - 6 ) WHICH UNDISPUTEDLY PROVES THAT DR. RAJUL J. SHAH, WAS TENANT OF THE AFORESAID PREMISES SINCE 01.04.1994 . THE RENT RECEIPT DATED 30.03.1994 ISSUED BY LANDLORDS NATHURAM RAMNARAYAN PRIVATE LIMITE D IN FAVOUR OF WIFE OF THE ASSESSEE DR. RAJUL JAYESH SHAH FOR APRIL 1994 IS PLACED IN PAPER BOOK/PAGE 9. FURTHER, RENT RECEIPT FOR JULY/AUGUST 2005 ARE PLACED IN PAPER BOOK/PAGE 10. THE SAID M/S. NATHURAM RAMNARAYAN P. LTD., ISSUED LETTER DATED 30.03.1994 IN FAVOUR OF DR. RAJUL J. SHAH, WHEREIN SAID LANDLORD PERMITTED DR. RAJUL JAYESH SHAH AND HER HUSBAND I.E. THE ASSESSEE TO RUN A CLINIC OR A POLYCLINIC FROM THE SAID PREMISES (PB/PAGE 7 - 8 .) . U NDER THE AUTHORITY OF THE SAID LETTER DATED 30.03.1994 ISSU ED BY LANDLORDS/OWNER OF THE SAID PREMISES IN FAVOUR OF THE ASSESSEE ALONG WITH CONSENT GRANTED BY HIS WIFE DR RAJUL J.SHAH , THE ASSESSEE IS CLAIMING THAT HE WAS RUNNING HIS HOMEOPATHY CLINIC FROM THE GROUND FLOOR OF THE SAID PREMISES SINCE 1994 AND WAS HA VING UNINTERRUPTED POSSESSION /OCCUPANCY OF THE GROUND FLOOR OF THE SAID PREMISES SINCE 1994 . THE ASSESSEE HAD ALSO CLAIMED TO BE I.T.A. NO.6743/MUM/2017 26 PAYING RENT TO DR. RAJUL J. SHAH SINCE 1994 AND CLAIMING THAT THE ASSESSEE WAS SUB - TENANT OF DR. RAJUL J. SHAH . THE DETAILS OF RENT PAID BY THE ASSESSEE FOR THE LAST 5 YEARS ARE AS UNDER: - FINANCIAL YEAR RENT RECEIVED FROM DR. J.K SHAH 2008 - 09 RS.54,000 2009 - 10 RS.54,000 2010 - 11 RS.54,000 2011 - 12 RS.54,000 2012 - 13 RS.54,000 HIS WIFE, DR RAJUL J SHAH HAS ALSO CO NFIRMED VIDE LETTER DATED. 14.11.2016 THAT SHE WAS RECEIVING RENT FROM HER HUSBAND FOR RUNNING HIS CLINIC FROM GROUND FLOOR OF THE SAID PREMISES SINCE 1994 AND SHE WAS INCLUDING THE SAID RENT INCOME IN HER RETURN OF INCOME FILED WITH REVENUE. SHE HAS ALSO STATED IN THE SAID LETTER THAT HER HUSBAND DR. JAYESH K SHAH WAS SUB - TENANT IN THE SAID PREMISES ALTHOUGH NO FORMAL AGREEMENT WAS ENTERED INTO BY HER WITH HER HUSBAND. IT IS ALSO CLAIMED BY HER IN THIS LETTER DATED 14.11.2016 WHICH WAS FILED BEFORE THE AO THAT SHE TRANSFERRED AND ASSIGNED THE TENANCY IN THE SAID PREMISES TO THE DEVELOPERS (LODHA PROPERTIES AND DEVELOPMENT PRIVATE LIMITED) BY AN AGREEMENT DATED 24.06.2013 AND SINCE HER HUSBAND OCCUPIED THE SAID PREMISES AS HER SUB - TENANT, HE JOINED IN THE E XECUTION OF THE ABOVE AGREEMENT AS CONFIRMING PARTY. SINCE , HER HUSBAND WAS OCCUPIER OF THE GROUND FLOOR OF THE SAID PREMISES, THE DEVELOPER HAD PAID HIM RS. 1,40,00,000/ - ON 21.06.2013 AS CONSIDERATION FOR TRANSFERRING HIS OCCUPATION /SUB - TENANCY RIGHTS AND FOR GIVING VACANT AND PEACEFUL POSSESSION OF THE GROUND FLOOR PREMISES. SHE ALSO CLAIMED THAT SHE RECEIVED RS.1,95,00,000/ - FROM THE SAID DEVELOPERS FOR TRANSFERRING HER TENANCY RIGHTS AND FOR GIVING PEACEFUL AND VACANT POSSESSION OF THE PREMISES OCCUP IED BY HER. THE I.T.A. NO.6743/MUM/2017 27 ASSESSEE HAS ALSO BROUGHT ON RECORD SEVERAL EVIDENCES TO PROVE THAT HE WAS RUNNING HIS CLINIC FOR PURSUING HIS PRACTICE OF MEDICAL PROFESSION FROM THE GROUND FLOOR OF THE SAID PREMISES . T HE EVIDENCES FILED BY THE ASSESSEE ARE IN THE NATURE OF TELEPHONE , MOBILE AND INTERNET BILLS INSTALLED IN THE NAME OF THE ASSESSEE WITH THE SAID ADDRESS OF KRISHNA BHAVAN SHOWN AS ASSESSEES REGISTERED , WHICH ARE PLACED IN PAPER BOOK PAGE NO. 44 TO 48 . T HE ASSESSEE WAS ALSO HOLDING LICENCE FOR POSSESSING RECTIFIED SPRIT INCLUDING ABSOLUTE ALCOHOL FOR THE MEDICINAL USE BY R EGISTERED M ADICAL P RACTITIONER(RMP) ISSUED BY COLLECTOR , MUMBAI, VIDE APPROVAL DATED 21.05.1998 IN FAVOUR OF THE ASSESSEE WITH THIS ADDRESS OF KRISHNA BHAVAN SHOWN AS ASSESSEE S REGISTERED ADDRESS (PB/PAGE 49 .) . THE ASSESSEE IS ALSO HOLDING REGISTRATION ISSUED BY MAHARASHTRA COUNCIL OF HOMEOPATHY IN FAVOUR OF THE ASSESSEE TO CARRY ON PRACTICE OF HOMEOPATHY AS REQUIRED UN DER SECTION 26 OF THE BOMBAY HOMEOPATHY AND BIOCHEMIC PRAC TITIONERS ACT,1959 , DATED 31.01.2001 AND 22.02.2010 , WHEREIN THE ADDRESS OF THE ASSESSEE IS SHOWN TO BE OF KRISHNA BHAWAN IN BOTH THESE REGISTRATIONS(PB/PAGE 50 - 51 ) AS REGISTERED ADDRESS OF THE ASSESSEE . THE MAHARASHTRA COUNCIL OF HOMEOPATHY VIDE LE TTER DATED 24.10.2007(PB/PAGE 52) HAD ISSUED NOC IN FAVOUR OF THE ASSESSEE FOR PURSUING FURTHER STUDIES IN INDIA/ABROAD WHEREIN THE AFORESAID ADDRESS OF KRISHNA BHUVAN WAS SHOWN AS REGISTERED ADDRESS OF THE ASSESSEE(PB/PAGE 52). THE ID HELD BY THE ASSESSEE ISSUED BY MAHARASHTRA COUNCIL OF HOMEOPATHY IS AGAIN SHOWING THE SAID ADDRESS OF THE ASSESSEE , WHICH IS PLACED IN PAPER BOOK/PAGE 53. M/S LODHA PROPERTIES DEVELOPMENT PRIVATE LIMITED HAS ISSUED LETTER DATED 16.12.2016 WHEREIN THEY HAVE DESCRIBED THEMSELV ES TO BE THE OWNER OF THE SAID PROPERTY WHEREIN THEY HAVE CLAIMED THAT THEY ACQUIRED LAND BEARING CADASTRAL SURVEY NOS. 92,122 AND 123 OF MALABAR AND CUMBALLA HILL DIVISION LYING, BEING SITUATED AT 246, 248, 250 AND 252, WALKESHWAR ROAD, 11, BANGANGA CROSS ROAD , MUMBAI - 400006 ALONGWITH BUILDINGS/STRUCTURES STANDING THEREON KNOWN AS KRISHNA BHUVAN FROM M/S NATHURAM RAMNARAYAN PRIVATE LIMITED VIDE REGISTERED I.T.A. NO.6743/MUM/2017 28 CONVEYANCE DEED EXECUTED IN THE MONTH OF DECEMBER 2 006 AND REGISTERED WITH SUB - REGISTRAR OF ASSURANCE AT MUMBAI. THUS, THE SAID M/S. NATHURAM RAMNARAYAN P. LTD., HAD ALREADY TRANSFERRED ITS OWNERSHIP INTEREST IN THE SAID PROPERTY VIDE CONVEYANCE DEED DATED 15.12.2006 WHICH WAS REGISTERED WITH SUB - REGISTRA R OF ASSURANCE AT MUMBAI UNDER NO. BBE - 2/12403 - 05 OF 2006 IN FAVOUR OF M/S. LODHA PROPERTIES DEVELOPMENT P LTD. ON 22.12.2006, BY VIRTUE OF THIS CONVEYANCE DEED M/S. LODHA PROPERTIES DEVELOPMENT P LTD., BECAME THE OWNER OF THE PROPERTY AND SUIT OF EVICTION WAS PERSUED BY LODHA PROPERTIES DEVELOPMENT PRIVATE LIMITED AGAINST THE WIFE OF THE ASSESSEE. THERE WAS A DEED OF TRANSFER AND ASSIGNMENT OF TENANCY AND OCCUPANCY EXECUTED BY DR. RAJUL J. SHAH IN FAVOUR OF DR. MANINDER CHHABRA, ON 24.06.2013 WHEREIN ASSES SEE STOOD AS CONFIRMING PARTY AND M/S. LODHA PROPERTIES DEVELOPMENT P LTD., WERE REFERRED TO AS LANDLORDS . THE ASSESSEE GOT CONSIDERATION OF RS. 1.4 CRORE BY VIRTUE OF BEING CONFIRMING PARTY WHILE HIS WIFE DR. RAJUL J. SHAH GOT RS. 1.95 CRORES UNDER AGREE MENT DATED 24.06.2013 FOR TRANSFER OF HER TENANCY AND OCCUPANCIES IN FAVOUR OF DR. MANINDER CHHABRA. IN THE AFORESAID LETTER DATED 16.12.2016, T HE WIFE OF THE ASSESSEE DR. RAJUL J. SHAH WAS DESCRIBED AS MONTHLY TENANT OF THE SAID M/S NATHURAM RAMNARAYAN PRIVATE LIMITED IN RESPECT OF SHOP NO. 1 , C WING, GROUND FLOOR OF IN THE SAID BUILDING KRISHNA BHUVAN . THE SAID LETTER DATED 16.12.2016 ALSO STIPULATES THAT THE OWNERS UNDERSTAND THAT M/S NATHURAM RAMNARAYAN PRIVATE LIMITED HAD PERMITTED DR. RAJUL SHA H AND THE ASSESSEE TO RUN A CLINIC OR A POLYCLINIC FROM THE SAID TENANTED PREMISES SUBJECT TO APPROVALS FROM REQUISITE AUTHORITIES. IT IS ALSO STATED IN THIS LETTER THAT VIDE REGISTERED DEED OF TRANSFER AND ASSIGNMENT OF TENANCY/OCCUPANCY DATED 24.06.2013 , THE SAID DR RAJUL SHAH WITH THE CONFIRMATION OF HER HUSBAND SAID DR JAYESH SHAH ASSIGNED AND TRANSFERRED THE TENANCY RIGHTS IN RESPECT OF THE SAID TENANCY RIGHTS IN RESPECT OF THE SAID TENANTED PREMISES TO MR. MANINDER CHHABRA(INCOMING TENANT) FOR CONSID ERATION AND OTHER TERMS AND CONDITIONS AS ARE STATED IN THE SAID DEED. THEY ALSO CONFIRMED I.T.A. NO.6743/MUM/2017 29 THAT THEY ACTED AS CONFIRMING PARTY IN SAID AGREEMENT DATED 24.06.2013. THE SAID LETTER DATED 16.12.2016 WAS FILED BEFORE THE AO BY THE ASSESSEE (PB/PAGE 54 - 55) ALSO . THUS, IT IS CLAIMED BY THE ASSESSEE THAT HE HELD OCCUPANCY /SUB - TENANCY RIGHTS IN THE GROUND FLOOR OF THE SAID PREMISES AT SHOP NO. 1, KRISHNA BHUVAN UNINTERRUPTEDLY SINCE 1994 WHEREIN HE WAS RUNNING HIS CLINIC TO UNDERTAKE PRACTICE OF MEDICAL PROFESSION AND THE ASSESSEE ALSO PAID RENT TO HIS WIFE DR. RAJULA J SHAH SINCE 1994 WHICH SHE DECLARED AS HER RENTAL INCOME IN THE RETURN FILED WITH REVENUE. THE SAID OCCUPANCY /SUB - TENANCY RIGHT IS CLAIMED TO BE TRANSFERRED IN FAVOUR OF INCOMING TENANT DR. MANINDER C HHABRA VIDE AGREEMENT DATED 24.06.2013. THUS, IT IS FOR A LONG PERIOD OF 20 YEARS OR SO , THE ASSESSEE HAD CLAIMED TO BE RUNNING HIS CLINIC FROM GROUND FLOOR OF THE SAID PREMISES AND PAYING RENT TO HIS WIFE. THE CLAUSE 8(B) OF THE AGREEMENT DATED 24.06.20 13 ENTERED WITH DR. MANINDER CHHABRA CLEARLY STIPULATES THAT THE OUTGOING TENANT ALONG WITH CONFIRMING PARTY HAS BEEN IN CONTINUOUS , EXCLUSIVE AND UNINTERRUPTED USE, OCCUPATION AND POSSESSION OF THE SAID TENANTED PREMISES. THE SAID CLAUSE 8(B) OF AGREEME NT DATED 24.06.2013 IS REPRODUCED HEREUNDER: 8.THE OUTGOING TENANT ALONGWITH THE CONFIRMING PARTY COVENANT WITH THE INCOMING TENANT THAT : A)..... B) THE OUTGOING TENANT ALONGWITH CONFIRMING PARTY HAS BEEN IN CONTINUOUS EXCLUSIVE AND UNINTERRUPTED USE, OCCUPATION AND POSSESSION OF THE SAID TENANTED PREMISES; THUS ON THE STRENGTH OF THESE EVIDENCES AND BY VIRTUE OF HOL DING UNINTERRUPTED AND EXCLUSIVE POSSESSION OF GROUND FLOOR OF SAID SHOP FROM 01.04.1994 FROM WHERE THE ASSESSEE WAS RUNNING HIS CLINIC , THE ASSESSEE IS CLAIMING THAT HE HAS AN INTEREST IN THE SAID PROPERTY BY WAY OF OCCUPANCY /SUB - TENANCY RIGHTS SINCE 1994 FOR WHICH RENTS WERE ALSO PAID SINCE 1994 WHICH AMOUNTED TO CAPITAL ASSET AS IS COVERED BY DEFINITION OF CAPITAL ASSET U/S 2(14) OF THE 1961 ACT AND ON TRANSFER THEREOF , THE INCOME THEREOF RECEIVED BY THE ASSESSEE TO THE TUNE OF RS. I.T.A. NO.6743/MUM/2017 30 1,40,00,000/ - IS CHARGEABLE TO INCOME - T AX UNDER THE HEAD INCOME FROM CAPITAL G AINS . THE ASSESSEE HAS ALSO CLAIMED TO HAVE PAID RENT TO HIS WIFE FOR USAGE OF GROUND FLOOR OF THE SAID PREMISES SINCE 1994 WHICH SHE HAD CONFIRMED TO HAVE ACCOUNTED FOR IN HER RETURN OF INCOME FILED WITH REVENUE ON WHICH SHE CLAIMED TO HAVE PAID DUE INCOME - TAX TO THE REVENUE. THE PROFITS AND GAINS ARISING ON TRANSFER OF CAPITAL A SSETS ARE CHARGEABLE TO INCOME - TAX UNDER THE HEAD CAPITAL GAINS WITHIN CHARGING SECTION 45 OF THE 1961 ACT , AND SHALL BE DEEMED TO BE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE. . THE DEFINITION OF CAPITAL ASSET AS IS CONTAINED IN SECTI ON 2 ( 14 ) OF THE 1961 ACT IS VERY W IDE WHICH INCL UDE PROPERTY OF ANY KIND BARRING EXCLUSIONS AS ARE MENTIONED IN THE SAID SECTION 2 ( 14 ) OF THE 1961 ACT . THE PROVISIONS OF SECTION 2(14) OF THE 1961 ACT ARE REPRODUCED HEREUNDER: DEFINITIONS. 2. IN THIS ACT, UNLESS THE CONTEXT OTHERWISE REQUIRES, **** **** 14 ) 'CAPITAL ASSET' MEANS PROPERTY OF ANY KIND HELD BY AN ASSESSEE, WHETHER OR NOT CONNECTED WITH HIS BUSINESS OR PROFESSION, BUT DOES NOT INCLUDE ( I ) ANY STOCK - IN - TRADE, CONSUMABLE STOR ES OR RAW MATERIALS HELD FOR THE PURPOSES OF HIS BUSINESS OR PROFESSION ; [( II ) PERSONAL EFFECTS, THAT IS TO SAY, MOVABLE PROPERTY (INCLUDING WEARING APPAREL AND FURNITURE) HELD FOR PERSONAL USE BY THE ASSESSEE OR ANY MEMBER OF HIS FAMILY DEPENDENT ON HIM, BUT EXCLUDES ( A ) JEWELLERY; ( B ) ARCHAEOLOGICAL COLLECTIONS; ( C ) DRAWINGS; ( D ) PAINTINGS; ( E ) SCULPTURES; OR I.T.A. NO.6743/MUM/2017 31 ( F ) ANY WORK OF ART. EXPLANATION. FOR THE PURPOSES OF THIS SUB - CLAUSE, 'JEWELLERY' INCLUDES ( A ) ORNAMENTS MADE OF GOLD, SILVER, PLATINUM OR ANY OTHER PRECIOUS METAL OR ANY ALLOY CONTAINING ONE OR MORE OF SUCH PRECIOUS METALS, WHETHER OR NOT CONTAINING ANY PRECIOUS OR SEMI - PRECIOUS STONE, AND WHETHER OR NOT WORKED OR SEWN INTO ANY WEARING APPAREL; ( B ) PRECIOUS OR SEMI - PRECIOUS STONES, WHETHER OR NOT SET IN ANY FURNITURE, UTENSIL OR OTHER ARTICLE OR WORKED OR SEWN INTO ANY WEARING APPAREL;] ( III ) AGRICULTURAL LAND IN INDIA, NOT BEING LAND SITUATE ( A ) IN ANY AREA WHICH IS COMPRISED WITHIN THE J URISDICTION OF A MUNICIPALITY (WHETHER KNOWN AS A MUNICIPALITY, MUNICIPAL CORPORATION, NOTIFIED AREA COMMITTEE, TOWN AREA COMMITTEE, TOWN COMMITTEE, OR BY ANY OTHER NAME) OR A CANTONMENT BOARD AND WHICH HAS A POPULATION OF NOT LESS THAN TEN THOUSAND [ ACCO RDING TO THE LAST PRECEDING CENSUS OF WHICH THE RELEVANT FIGURES HAVE BEEN PUBLISHED BEFORE THE FIRST DAY OF THE PREVIOUS YEAR ] ; OR ( B ) IN ANY AREA WITHIN SUCH DISTANCE, NOT BEING MORE THAN EIGHT KILOMETRES, FROM THE LOCAL LIMITS OF ANY MUNICIPALITY OR C ANTONMENT BOARD REFERRED TO IN ITEM ( A ), AS THE CENTRAL GOVERNMENT MAY, HAVING REGARD TO THE EXTENT OF, AND SCOPE FOR, URBANISATION OF THAT AREA AND OTHER RELEVANT CONSIDERATIONS, SPECIFY IN THIS BEHALF BY NOTIFICATION IN THE OFFICIAL GAZETTE;] THE FOLLOWI NG ITEM ( B ) SHALL BE SUBSTITUTED FOR THE EXISTING ITEM ( B ) OF SUB - CLAUSE ( III ) OF CLAUSE ( 14 ) OF SECTION 2 BY THE FINANCE ACT, 2013, W.E.F. 1 - 4 - 2014 : ( B ) IN ANY AREA WITHIN THE DISTANCE, MEASURED AERIALLY, ( I ) NOT BEING MORE THAN TWO KILOMETRES, FROM THE LOCAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO IN ITEM ( A ) AND WHICH HAS A POPULATION OF MORE THAN TEN THOUSAND BUT NOT EXCEEDING ONE LAKH; OR ( II ) NOT BEING MORE THAN SIX KILOMETRES, FROM THE LOCAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO IN ITEM ( A ) AND WHICH HAS A POPULATION OF MORE THAN ONE LAKH BUT NOT EXCEEDING TEN LAKH; OR ( III ) NOT BEING MORE THAN EIGHT KILOMETRES, FROM THE LOCAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO IN ITEM ( A ) AND WHICH HAS A POPULATION OF MORE THAN TEN LAKH. EXPLANATION. FOR THE PURPOSES OF THIS SUB - CLAUSE, 'POPULATION' MEANS THE POPULATION ACCORDING TO THE LAST PRECEDING CENSUS OF WHICH THE RELEVANT FIGURES HAVE BEEN PUBLISHED BEFORE THE FIRST DAY OF THE PREVIOUS YEAR; I.T.A. NO.6743/MUM/2017 32 [( IV ) 6 PER CENT GOLD BONDS, 1977, [OR 7 PER CENT GOLD BONDS, 1980,] [OR NATIONAL DEFENCE GOLD BONDS, 1980,] ISSUED BY THE CENTRAL GOVERNMENT ;] [( V ) SPECIAL BEARER BONDS, 1991, ISSUED BY THE CENTRAL GOVERNMENT ;] [( VI ) GOLD DEPOSIT BONDS ISSUED UNDER THE GOLD DEPOSIT SCHEME, 1999 NOTIFIED BY THE CENTRAL GOVERNMENT.] [ EXPLANATION. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY CLARIFIED THAT 'PROPERTY' INCLUDES AND SHALL BE DEEMED TO HAVE ALWAYS INCLUDED ANY RIGHTS IN OR IN RELATION TO AN INDIAN COMPANY, INCLUDING RIGHTS OF MANAGEMENT OR CONTROL OR ANY OTHER RIGHTS WHATSOEVER;] SECTION 55(2) OF THE 1961 ACT RECOGNISES TENANCY RIGHTS . IN THE INSTANT CASE, IT IS NOT THE CASE THAT SUB - TENANCY IS CREATED IN FAVOUR OF OUT SIDER RATHER THE ASSESSEE IS FAMILY MEMBER BEING HUSBAND OF THE TENANT OF THE DEMISED PREMISES . THE PERMISSION FOR USE OF PREMISES FOR RUNNING HIS CLINIC WAS GRANTED BY THE LANDLORD/OWNER VIDE WRITTEN LETTER DATED 30.03.1994 IN FAVOUR OF THE ASSESSEE AND HIS WIFE . THE WIFE IS MONTHLY TENANT IN THE SAID PREMISES. THE WIFE DELIVERED THE POSSESSION OF THE GROUND FLOOR OF THE SAID PREMISES TO THE ASSESSEE SINCE 1994. THE ASSESSEE IS HOLDING UNINTERRUPTED POSSESSION SINCE 1994 AND RUNNING HIS CLINIC FROM GROU ND FLOOR OF THE SAID PREMISES SINCE 1994 FOR WHICH EVEN PAYMENT TOWARDS RENT TO HIS WIFE WAS MADE BY THE ASSESSEE SINCE 1994 . THE AGREEMENT BETWEEN THE WIFE AND THE ASSESSEE IS AN ORAL AGREEMENT. THE WIFE OF THE ASSESSEE IS MONTHLY TENANT IN THE SAID PREM ISES. THE ASSESSEE IS SUB - TENANT IN THE SAID PREMISES ON MONTH TO MONTH BASIS WHICH DOES NOT REQUIRED REGISTERED AGREEMENT WHILE POSSESSION IS DELIVERED OF THE GROUND FLOOR OF THE SAID PREMISES TO THE ASSESSEE BY WIFE OF THE ASSESSEE AFTER BEING PERMITTED BY LANDLORD/OWNER WHEREIN THE ASSESSEE WAS ALSO PERMITTED TO RUN HIS CLINIC FROM SAID PREMISES BY LANDLORD/OWNER VIDE LETTER DATED 30.03.1994 . I.T.A. NO.6743/MUM/2017 33 U NDER THESE CIRCUMSTANCES KEEPING IN VIEW CONJOINT READING OF ALL THE MATERIAL ON RECORD AND FACTUAL MATRIX OF THE CASE , WE ARE OF THE CONSIDERED VIEW THAT THE DEFINITION OF CAPITAL ASSET U/S. 2 ( 14 ) IS VERY WIDE AND SHALL INCLUDE PROPER TY OF ANY KIND BARRING EXCLUSIONS AS ARE MENTIONED IN SECTION 2 ( 14 ) . THE PROPERTY INCLUDE BUNDLE OF RIGHTS AND TRANSFER OF SUCH RIGHTS IN RELATION TO CAPITAL ASSETS AS DEFINED U/S 2(47) , INCLUDES TRANSFER VIDE VARIOUS MODES WHICH COULD BE THE SALE, EXCHANGE, RELINQUISHMENT OF THE ASSET OR THE EXTINGUISHMENT OF ANY RIGHTS THEREIN AND ALSO OTHER MODES AS SPECI FIED IN SECTION 2(47) . THE WIFE OF THE ASSESSEE HELD MONTHLY TENANCY IN THE SAID PREMISES CONSISTING OF GROUND FLOOR AND MEZZANINE FLOOR WHICH STOOD TRANSFERRED VIDE AGREEMENT DATED 24.06.2013 IN FAVOUR OF DR. MANINDER CHHABRA WHILE THE ASSESSEE WAS HOLDI NG USAGE/OCCUPANCY RIGHTS /SUB - TENANCY RIGHTS OVER GROUND FLOOR OF SAID PREMISES AND TO GET PEACEFUL AND VACANT POSSESSION, IT WAS IMPORTANT FOR THE INCOMING TENANT TO PAY CONSIDERATION TO THE ASSESSEE TO GET HIS RIGHTS OVER OCCUPANCY/USAGES /SUB - TENANCY TRA NSFERRED IN HIS FAVOUR OTHERWISE IT WOULD NOT HAVE BEEN POSSIBLE FOR THE INCOMING TENANT TO HAVE ENJOYED PEACEFUL AND VACANT POSSESSION OVER THE DEMISED PREMISES. THUS , IN OUR CONSIDERED VIEW THE ASSESSEE IS CLEARLY PAID FOR TRANSFER AND ASSIGNING OF HIS INTEREST/TITLE IN THE SAID PROPERTY BY WAY OF UNINTERRUPTED OCCUPANCY AND POSSESSORY RIGHTS OVER GROUND FLOOR OF SHOP NO. 1 KRISHNA BHUVAN SINCE 01.04.1994 TO RUN HIS CLINIC WHICH THE ASSESSEE WAS INFACT RUNNING SINCE 1994 FROM GROUND FLOOR OF SHOP NO. 1 KRISHNA BHUVAN , UNDER PERMISSION GRANTED TO THE ASSESSEE BY LANDLORDS M/S. NATHURAM RAMNARAYAN P. LTD , VIDE LETTER DATED 30.03.1994 AND ALSO WITH THE CONSENT OF HIS WIFE DR RAJULA J SHAH WHO WAS TENANT OF THE SAID SHOP NO. 1, KRISHNA BHUVAN . THE ASSESSEE WAS ALSO UNDISPUTEDLY PAYING RENT TO HIS WIFE FOR USAGE OF GROUND FLOOR OF SAID SHOP FOR RUNNING HIS HOMEOPATHIC CLINIC SINCE 1994 AND THE WIFE WAS INCLUDING SAID RENTAL INCOME IN HER RETURN OF INCOME FILED WITH REVENUE. T HE DETAILS OF SAID RENTAL INCOME FOR LAST FIVE YEARS ARE REPRODUCED IN PRECEDING PARAS OF THIS ORDER . THUS, WE HOLD THAT RS. I.T.A. NO.6743/MUM/2017 34 1.4 CRORE RECEIVED BY THE ASSESSEE FROM D R MANINDER CHHABRA WAS ON ACCOUNT OF TRANSFER OF CAPITAL ASSET BEING INTEREST HELD BY THE ASSESSEE IN GROUND FLOOR OF SAID SHOP TOWARDS OCCUPANCY RIGHTS WHICH WAS ACQUIRED BY WAY OF PERMISSION GRANTED BY LANDLORD AND ALSO WITH THE CONSENT OF HIS WIFE SUPPORTED WITH UNINTERRUPTED POSSESSION AND USAGE OF GROUND FLOOR OF SAID SHOP BY THE ASSESSEE SINCE 1994 FOR RUNNING HIS CLI NIC TILL THE DATE OF AGREEMENT I.E. 24.06.2013 (ALMOST 20 YEARS OR SO) , WHICH WAS FURTHER SUPPORTED BY PAYMENT OF RENT BY ASSESSEE TO HIS WIFE FOR SUCH OCCUPANCY/USAGE OF SAID PREMISES AND HENCE THE SAID SUM OF RS. 1,40,00,000/ - RECEIVED BY THE ASSESSEE WAS RIGHTLY BEEN OFFERED TO INCOME - TAX BY THE ASSESSEE UNDER THE HEAD I NCOME FROM CAPITAL G AIN S IN THE RETURN OF INCOME FILED WITH THE REVENUE. UNDER THESE CIRCUMSTANCES, WE DONOT FIND ANY REASONS THAT WHEN TENANCY IS RECOGNISED AS CAPITAL ASSET WITHIN MEANING OF SECTION 55(2) , AS TO WHY SUB - TENANCY IN FAVOUR OF THE ASSESSEE CANNOT BE TREATED AS CAPITAL ASSET MORE SO , CAPITAL ASSET IS SO WIDELY DEFINED U/S 2(14) OF THE 1961 ACT. REFERENCE IS DRAWN TO DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT V. D.P.SANDU BROS. CHEMBUR PRIVATE LIMITED (2005) 273 ITR 1(SC) , WHEREIN HONBLE SUPREME COURT HELD THAT : 16. THERE IS NO DISPUTE THAT A TENANCY RIGHT IS A CAPITAL ASSET THE SURRENDER OF WHICH WOULD A TTRACT SECTION 45 SO THAT THE VALUE RECEIVED WOULD BE A CAPITAL RECEIPT AND ASSESSABLE IF AT ALL ONLY UNDER ITEM E OF SECTION 14. REFERENCE IS ALSO DRAWN TO THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF ACIT V. G.C.SHAH & CO. (2014) 369 ITR 32 3(GUJ.), WHEREIN HONBLE GUJARAT HIGH COURT HELD AS UNDER: 4. HEARD. AT THE VERY OUTSET, LEARNED COUNSELS FOR THE PARTIES INVITED THE ATTENTION OF THIS COURT TO A DECISION OF THE HON'BLE APEX COURT IN THE CASE OF ' CIT V. D.P. SANDHU BROS. CHEMBUR (P.) LTD. [2005] 273 ITR 1/142 TAXMAN 713 (SC) . IN THAT CASE THE ASSESSEE HAD ENTERED INTO A LEASE AGREEMENT FOR FIFTY YEARS IN THE YEAR 1959, UNDER WHICH ANNUAL RENT WAS PAID BY THE LESSEE TO THE LESSOR. DURING THE PREVIOUS YEAR RELEVANT TO THE A.Y. - 1987 - 88, THE ASSESSEE SURRENDERED ITS TENANCY RIGHTS TO ITS LESSOR AND IN CONSIDERATION OF SUCH PREMATURE TERMINATION OF THE AGREEMENT, THE I.T.A. NO.6743/MUM/2017 35 LESSOR PAID THE ASSESSEE, THEREIN, A SUM OF RS. 35,00,000/ - . THE AO SOUGHT TO ASSESSES THE AFORESAID SUM AS 'INCOME FROM OTHER SOURCES' UNDER SECTION 10(3) READ WITH SECTION 56 OF THE ACT. WHEN AN APPEAL WAS PREFERRED, THE CIT(A) HELD THAT THE ASSESSEE WAS LIABLE TO PAY TAX ON CAPITAL GAINS ON THE AMOUNT OF RS. 35,00,000/ - , AFTER DEDUCTING RS. 7,00,000/ - LACS AS COST OF ACQUISITION. ON FURTHER APPEAL AGAINST THE AFORESAID ORDER, THE APPELLATE TRIBUNAL HELD THAT THE ASSESSEE DID NOT INCUR ANY COSTS TO ACQUIRE LEASE - HOLD RIGHTS AND THAT, IF AT ALL, ANY COSTS HAD BEEN INCURRED, IT WAS INCAPABLE OF BEING ASCERTAINED, SINCE, THE CAPITAL GAINS COULD NOT BE COMPUTED, AS ENVISAGED UNDER SECTION 48 OF THE ACT. ON APPEAL, THE HIGH COURT DISMISSED THE SAME. PURSUANT THERETO, THE MATTER WAS CARRIED BEFORE THE HON'BLE APEX COURT, WHICH DISPOSED OF THE MATTER OBSERVING AS UNDER; 'THAT IT WAS NOT OPEN FOR THE DEPARTMENT TO IMPOSE TAX ON SUCH CAPITAL RECEIPTS BY THE ASSESSEE UNDER ANY OTHER HEAD FOR THE A.Y. 1987 - 88, SINCE, INCOME DERIVED FROM A SOURCE FALLING UNDER A SPECIFIC HEAD IS TO BE COMPUTED UNDER THE APPROPRIATE SECTION AND NO OTHER. A TENANCY RIGHT IS A CAPITAL ASSET AND ITS SURRENDER WOULD ATTRACT SECTION 45 AND THE GAINS DERIVED WOULD BE ASSESSABLE, IF AT ALL, ONLY UNDER THE HEAD 'CAPITAL GAINS'. THAT BEING SO, IT CANNOT BE TREATED AS A CASUAL AND NON - RECURRING RECEIPT UNDER SECTION 10(3) AND SUBJECT TO TAX UNDER SECTION 56 OF THE ACT. IF THE INCOME CANNOT BE TAXED UNDER SECTION 45, IT CANNOT BE TAXED AT ALL.' 5. THUS, FR OM THE ABOVE DISCUSSION, IT BECOMES CLEAR THAT THE APPELLANT - REVENUE COULD HAVE TAXED THE AMOUNT OF RS. 5,00,000/ - UNDER THE HEAD OF 'CAPITAL GAINS', WHICH WAS RECEIVED TOWARDS SURRENDERING OF TENANCY RIGHT FROM LESSOR, AND NOT UNDER ANY OTHER HEAD. WE, TH EREFORE, DO NOT FIND THAT THE APPELLATE TRIBUNAL COMMITTED ANY JURISDICTIONAL ERROR IN PASSING THE IMPUGNED ORDER. REFERENCE IS ALSO DRAWN TO THE DECISION OF ITAT - MUMBAI DECISION IN THE CASE OF KEWAL SILK MILLS V. ACIT (2013) 31 TAXMANN.COM 405(MUM - TRIB.) , WHEREIN TRIBUNAL HELD THAT TENANCY RIGHTS IN RESPECT OF A PROPERTY IS A CAPITAL ASSET, BY HOLDING AS UNDER: 15. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. COPY OF AGREEMENT DATED JUNE 13, 1972 IS FILED BY THE ASSESSEE IN THE PAPER BOOK AT PAGES 20 TO 24. THE ASSESSEE BEING A PARTNERSHIP THROUGH ITS PARTNERS HAS BEEN REFERRED TO AS LICENSEES WHO WERE DESIROUS OF TAKING LICENCES OF LOOM AND MACHINERY MORE PARTICULARLY DESCRIBED IN SCHEDULE FOR A PERIOD OF ONE I.T.A. NO.6743/MUM/2017 36 YEAR FROM THE DATE OF THE AGREEMENT ON A MONTHLY COMPENSATION OF RS. 3250 PER MONTH. THE LICENSOR HAS BEEN REFERRED TO BE MODERN TEXTILE RAYON AND SILK MILLS P. LTD. (MODERN) AND IN CLAUSE 5, IT HAS BEEN MENTIONED THAT THE LICENSEES ARE ENTITLED TO USE A PORTION OF THE SAID SHED IN WHICH THE SAID LOOMS ARE SITUATED BY WAY OF PERMISSIBLE USE ON LICENCE BASIS ONLY AS INCIDENTAL TO USING THE SAID LOOMS AND MACHIN ERY AND SHALL NEVER BE CONSTRUED AS SUB - LESSEE IN ANY FORM OF THE SAID PORTION OF THE SAID SHED. THE ASSESSEE HAS ALSO BEEN PROVIDED WITH ACCESS TO THE SAID PORTION OF THE SAID SHED THROUGH PORTION OF THE SHED RETAINED BY THE LICENSORS OR OTHERWISE. IN A N UTSHELL THE ASSESSEE HAS BEEN REFERRED TO AS LICENSOR. FROM THE AGREEMENT DEED IT IS CLEAR THAT THE ASSESSEE HAD INCIDENTAL RIGHT OF THE PREMISES THROUGH WHICH THE LOOMS WERE TO BE USED. THE SAID RIGHT OF THE ASSESSEE HAS BEEN RECOGNISED FROM THE DATE OF A GREEMENT TILL SURRENDER OF THE SAID RIGHT. EVEN THE ORIGINAL TENANT AND THE ORIGINAL OWNER DID NOT DISPUTE SUCH RIGHT OF THE ASSESSEE OVER THE PROPERTY. NOW, THE CASE OF THE REVENUE IS THAT THE AGREEMENT DATED JUNE 13, 1972 DID NOT PROVIDE ANY RIGHT TO THE ASSESSEE OF SUB - TENANCY OF THE PREMISES BUT IT WAS ONLY WITH RESPECT TO LOOMS AND MACHINERY AND USER OF THE PREMISES WAS ONLY INCIDENTAL. BUT THE FACT REMAINS THAT INCIDENTAL RIGHT TO USE THE PREMISES WAS PROVIDED BY THE AGREEMENT ITSELF. THE FACT ALSO RE MAINS THAT ASSESSEE HAS BEEN REFERRED TO AS LICENSEE IN THE SAID AGREEMENT. THE PROVISIONS OF SECTION 5(11)(BB) AND 15A OF THE RENT CONTROL ACT HAVE ALREADY BEEN REPRODUCED ABOVE. BY VIRTUE OF AMENDMENT IN 1973, I.E., SUBSEQUENT TO THE DATE OF AGREEMENT OF THE ASSESSEE THAT THE LICENSEES WHO ARE DEEMED TO BE TENANT UNDER SECTION 15A WERE TO BE CONSIDERED AS TENANT. THEREFORE, IN ANY CASE, THE ASSESSEE HAD ACQUIRED THE STATUS OF TENANT OF THE LANDLORD. AS PER THE PROVISIONS OF SECTION 55(2) TENANCY RIGHT HAS BEEN CONSIDERED TO BE CAPITAL ASSET. MOREOVER, THE DEFINITION OF CAPITAL ASSET AS PER SECTION 2(14) OF THE ACT IS WIDE ENOUGH TO COVER 'PROPERTY OF ANY KIND' AND THE TYPE OF RIGHT ACQUIRED BY THE ASSESSEE IN THE PROPERTY USED BY IT CANNOT IN ANY MANNER BE SAID TO BE LESS THAN 'ANY KIND OF PROPERTY' HELD BY THE ASSESSEE. 16. APART FROM THE ABOVE CONCLUSION IT MAY BE MENTIONED HERE THAT THE ASSESSEE HAS FILED COPIES OF SOME RENT RECEIPTS OBTAINED BY IT FROM MODERN. THE FIRST COPY OF SUCH RECEIPT IS AT PAGE 2 5 OF THE PAPER BOOK VIDE WHICH A SUM OF RS. 39,000 HAS BEEN PAID BY THE ASSESSEE TO MODERN ON FEBRUARY 9, 2002, BY CHEQUE NO. 679943 'TOWARDS RENT FOR THE MONTHS FROM JULY 2001 TO DECEMBER 2001'. THE SAID AMOUNT HAS BEEN DULY ACKNOWLEDGE TO BE RECEIVED BY MODERN. THE SECOND RECEIPT IS DATED APRIL 3, 2003 COPY OF WHICH IS PLACED AT PAGE 26 OF THE PAPER BOOK WHICH IS A RECEIPT DATED APRIL 3, 2003, VIDE WHICH A SUM OF RS. 19,500 HAS BEEN PAID BY CHEQUE NO.621974, DATED MARCH 26, 2003 'TOWARDS RENT FOR MONTH FR OM JANUARY 2003 TO MARCH, 2003'. THE THIRD RECEIPT IS DATED FEBRUARY 9, 2005 COPY OF WHICH IS PLACED AT PAGE 27 OF THE PAPER BOOK, WHEREBY A SUM OF RS. 13,000 HAS BEEN PAID VIDE CHEQUE NO. 013369 DATED JANUARY 17, 2005 TO MODERN 'TOWARDS RENT FOR MONTHS OF DECEMBER 2004 AND JANUARY 2005'. ALL THESE RECEIPTS DULY SHOW THAT WHAT WAS BEING PAID BY THE ASSESSEE WAS CONSIDERED TO BE RENT BY THE OTHER PARTIES AND THUS PARTIES IN PRINCIPLE HAD ACCEPTED THAT THE ASSESSEE WAS THE TENANT FROM WHOM THE RENT WAS BEING RECEIVED BY THE OTHER PARTY. THE FURTHER CORRESPONDENCE BETWEEN THE ASSESSEE AND ITS LICENSOR, THE PURCHASER OF THE LAND AND THE I.T.A. NO.6743/MUM/2017 37 ASSESSEE ARE ALSO DESCRIBING RIGHT OF THE ASSESSEE AS TENANCY RIGHT ONLY AND THE DEED EXECUTED BETWEEN PURCHASER OF THE PREMISE S AND THE ASSESSEE IS ALSO DESCRIBED AS DEED OF SURRENDER OF TENANCY. THUS, THE ASSESSEE WAS ENJOYING A RIGHT OVER THE PROPERTY IN THE NATURE OF BEING TENANT OF THE SAME FOR THE LAST SO MANY YEARS AND THAT RIGHT OF THE ASSESSEE CANNOT BE CONSIDERED OR EVAL UATED MUCH LESS THAN THE RIGHT OF TENANCY. 17. IN VIEW OF THE ABOVE DISCUSSION, IT IS TO BE HELD THAT THE ASSESSEE, IN FACT, WAS ENJOYING POSSESSION OF THE IMPUGNED PROPERTY AND FOR PEACEFUL VACATION THEREOF IT HAD RECEIVED THE IMPUGNED AMOUNT WHICH WAS DE SCRIBED BY BOTH PARTIES AS AMOUNT PAID FOR SURRENDER OF TENANCY RIGHTS. THE ASSESSEE HAD ACQUIRED THE SAID RIGHT LONG BACK AND THE LICENSOR TO THE ASSESSEE ALSO HAD RECOGNISED THE SAID RIGHT OF THE ASSESSEE. THE RIGHT OF THE ASSESSEE WAS UNDISPUTED AND THE NATURE THEREOF WAS 'PROPERTY OF ANY KIND' WHICH WAS HELD BY THE ASSESSEE AND WAS TO BE TERMED AS A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14) OF THE ACT. TENANCY RIGHTS HAVE ALSO BEEN RECOGNISED AS CAPITAL ASSET WITHIN THE MEANING OF SECTION 55(2)( A) OF THE ACT. THE CASE LAW AND DECISIONS RELIED UPON BY THE LEARNED AUTHORISED REPRESENTATIVE SUPPORTS THE CASE OF THE ASSESSEE. THEREFORE, WE HOLD THAT THE AMOUNT RECEIVED BY THE ASSESSEE IS ASSESSABLE UNDER THE HEAD 'CAPITAL GAINS'. THE SAME CANNOT BE A SSESSED AS INCOME FROM OTHER SOURCES. THUS, KEEPING IN VIEW OUR DETAILED DISCUSSIONS AS ABOVE, W E DO NOT FIND ANY INFIRMITY IN WELL REASONED APPELLATE ORDER DATED 13.09.2017 PASSED BY LEARNED CIT(A) WHICH WE CONFIRM /AFFIRM . T HE R EVENUE FAILS IN THIS AP PEAL . W E ORDER ACCORDINGLY. 8 . IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO. 6743/MUM/2017 STOOD DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 2 7 .02.2019. 2 7 .02.2019 S D / - S D / - (SAKTIJIT DEY) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 2 7 .02.2019 NISHANT VERMA SR. PRIVATE SECRETARY I.T.A. NO.6743/MUM/2017 38 COPY TO 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT(A) CONCERNED, MUMBAI 4 . THE CIT - CONCERNED, MUMBAI 5 . THE DR BENCH, 6 . MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI
Other Referred Cases
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Laws Referred To
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Expert Summary
A sub-tenancy right is also a capital asset within the meaning of section 2(14), and gains/income derived on surrender/transfer of a sub-tenancy right would be chargeable to tax under the head 'Income from Capital Gains'.
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