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2014 (9) TMI 59 - HC - Income TaxEnhanced compensation received – Taxability of amount u/s 45(5)(b) – Whether any capital gain arose on receipt of compensation because of the acquisition of land in which the assesse had tenancy rights only – Held that:- Section 45(5) has been interpreted by the Supreme Court in CIT vs. Ghanshyam (HUF) [2009 (7) TMI 12 - SUPREME COURT] - the profits and gains from transfer of a capital asset by compulsory acquisition was chargeable under the head “capital gains”- here the sub-lease was for a period of 17 years and the assessee also had constructed a super-structure, a factory, which was constructed by the predecessor of the assessee - once it was held that it was possible to ascertain the cost of acquisition of tenancy rights then it follows that capital gains could be computed and shall be payable - the compensation received in the year by the assessee has to be taxed - For the purpose of taxation of enhanced compensation received, cost of acquisition is to be taken as NIL as per the statutory mandate of Section 45(5) - The stand that the compensation received in any year pertains 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.
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