TMI Blog2014 (9) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... tains to only one transfer and gain, has been undone and negated by enactment of Section 45(5). There is no evidence that original compensation received by the assesse was not taxed and there is no such factual finding to that effect by any authority - each assessment year/order is separate and distinct - The assessee or Revenue cannot take advantage of a wrong computation or failure to tax or erroneous taxation in an earlier year – as decided in Commissioner of Income-Tax Versus DP Sandu Bros. Chembur P. Ltd. [2005 (1) TMI 13 - SUPREME Court] - it is possible to compute and calculate cost of acquisition of tenancy rights and gain on transfer of tenancy rights is taxable as capital gains - Income has been certainly earned is not exempt from tax – Decided in favour of revenue. - ITA No. 198/2001 - - - Dated:- 28-8-2014 - Sanjiv Khanna And V. Kameswar Rao,JJ. For the Appellant : Mr. Sanjay Kumar, Jr. Standing Counsel for Mr. Kamal Sawhney, Sr. Standing Counsel. For the Respondent : None ORDER Sanjiv Khanna,JJ. 1. This appeal by the Revenue which relates to assessment year 1988-89, was admitted for hearing vide order dated 18th May, 2004 on the followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing should be distributed inter se in the following manner:- A. Union of India 25% of the award money. B. Smt. Harnam Kaur Trust ₹ 1,20,000/- being 20 years capitalization of monthly rent of ₹ 500/-. C. Smt. G.S. Bapna(Respondent assessee) The Balance amount. 3. Aggrieved by the quantum awarded, respondent assessee filed a reference under Section 18 of the Land Acquisition Act, which was decided by the Additional District Judge on 20th February, 1987. Award for enhanced compensation was challenged by the Union of India before the Delhi High Court, in an appeal which was admitted but the respondent assessee was allowed to withdraw ₹ 94,89,304/- on furnishing security for restitution. The aforesaid amount was withdrawn on 30th July, 1987, by the respondent assessee by furnishing security/guarantee. 4. The Assessing Officer brought to tax ₹ 59,63,410/- after excluding 50% of the compensation so awarded in terms of Section 48(2) of the Act. The respondent assessee, however, succeeded before the Commissioner of Income tax (Appeals) who observed that she was only a sub-lessee of the land and her interest was only that of a tenant. As there was no co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bawa Shiv Charan (supra) was not accepted as a correct legal ratio and was overruled by the Supreme Court in CIT vs. D.P. Sandu Bros. Chembur (P) Ltd. [2005] 273 ITR 1 (SC). This was a case relating to Assessment Year 1987-88 and, therefore, Section 55(2) as amended by Finance Act, 1994 w.e.f. 1st April, 1995 was not applicable. It was held that tenancy right gets acquired with effect from a particular date and it would be possible that it was acquired at a cost and this was a question of fact. Reference was made to the decision of the Supreme Court in A.R. Krishnamurthy Anr. Vs. CIT [1989] 176 ITR 417 (SC), wherein it has been held that it cannot be said conceptually that there would be no cost of acquisition for grant of lease and cost of acquisition of lease hold rights could be determined. Thus, the Supreme Court in categorical terms has held that the judgment in the case of B.C. Srinivasa Setty s case (supra) would not be applicable to capital gains earned on surrender of tenancy rights. In the case of D.P. Sandu Bros. (supra), the Supreme Court did not interfere with the final outcome/decision as the Revenue‟s stand before the High Court was that the cost of acquisiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch amount is received by the assessee; (c) where in the assessment for any year, the capital gain arising from the transfer of a capital asset is computed by taking the compensation or consideration referred to in clause (a) or, as the case may be, enhanced compensation or consideration referred to in clause (b), and subsequently such compensation or consideration is reduced by any court, Tribunal or other authority, such assessed capital gain of that year shall be recomputed by taking the compensation or consideration as so reduced by such court, Tribunal or other authority to be the full value of the consideration. Explanation. For the purpose of this sub-section, (i) in relation to the amount referred to in clause (b), the cost of acquisition and the cost of improvement shall be taken to be nil; (ii) the provisions of this sub-section shall apply also in a case where the transfer took place prior to the 1st day of April, 1988; (iii) where by reason of the death of the person who made the transfer, or for any other reason, the enhanced compensation or consideration is received by any other person, the amount referred to in clause (b) shall be deemed to be the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cost of acquisition of tenancy right was determinable and thus, Section 45(5) cannot be invoked as the said Section is not applicable. It is further submitted that Section 45(5) stipulates how capital gains has to be charged and is not the computation provision. Reliance is placed on decision of the Punjab Haryana High Court in Commissioner of Income Tax vs. Leader Engg. Works,[2004] 269 ITR 542. 13. The aforesaid contentions are without merit and are fallacious. In D.P. Sandu s case (supra), Supreme Court in categorical terms has held that the cost of acquisition could be computed in case of acquisition of tenancy rights. Moreover, in the present case, sub-lease in question was for a period of 17 years and the respondent assessee also had constructed a super-structure, a factory, which was constructed by the predecessor of the respondent assessee. The respondent assessee had in the land acquisition proceedings, claimed that they were entitled to compensation on acquisition of their land under the sub-lease. Their rights had been acquired. Value of the sub-lease rights of the respondent assessee was ascertained and accordingly, the compensation was assessed and paid. Thus, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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