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2014 (9) TMI 394 - HC - Income TaxTransfer of tenancy right - long term asset or short term asset - AO treated the same as short term - The logic behind the finding of the Assessing Officer was that the tenancy after the initial period of 3 years by of a written instrument, was month-to-month. Thus, tenancy rights extinguished on the last day of each month and a fresh or new tenancy was created. - tribunal held the same as long term capital asset – Held that:- Assessee came into possession of the premises under a written agreement on 15th March, 1973 - The tenancy period specified was till 14th March, 1976 - assessee continued to use and occupy the premises as a tenant - The rent for the premises was paid and accepted by the landlord - “Long-term asset” has been defined in Section 2(29b) of the Act as an asset which is not a short-term capital asset and the expression “short-term capital asset” has been defined in Section 2(42A) of the Act to mean the capital asset held by an assessee for not more than 36 months immediately preceding the date of its transfer - The expression “held by the assessee” means the date from when the assessee acquired the right, got hold of and started enjoying the said asset - the assessee had acquired tenancy rights on 15th March, 1973 and since then they had held the said tenancy rights till the surrender was made on 18th February, 1997 - The transfer of tenancy had taken place on 18th February, 1977 and not before - The period of holding was from 15th March, 1973 till 18th February, 1997 - No third person, who had come into possession of the property during the period and it is not a case of the Revenue that respondent-assessee did not hold the property during the entire period of over 14 years. Relying upon CIT versus Ved Prakash & Sons (HUF) [1993 (7) TMI 45 - PUNJAB AND HARYANA High Court] - conversion of leasehold right into freehold by way of improving the title over the property would not affect the taxability of the gain from property, which is relatable to the period over which the property is held - Thus the asset, i.e. the tenancy rights were held for nearly 14 years and consideration received on surrender has been rightly treated as a long term capital gain – Decided against revenue.
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