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2014 (12) TMI 56 - AT - Income TaxTransfer of capital asset u/s 2(47) or u/s 45(3) – Addition under STCG – Held that:- The order of the CIT(A) on the issue of taxing capital gains are to be upheld - the property under consideration need not be immovable property - assessee is having certain rights and the bundle of rights are transferred - Even though assessee relied on provisions of section 2(47)(vi) of the I.T. Act, the provision is very clear that any transaction which has the effect of transferring or enabling the enjoyment of any immovable property is covered by the definition of ‘transfer’ even though assessee has argued that there is no immovable property, what the provision entitles is that of a transaction which has the effect of transferring or enabling the enjoyment of any immovable property - The argument that assessee has no transferable right and the agreement with KIADB does not give rise to any transferable rights is not correct in the sense that assessee is enjoying the property by virtue of allotment letter granted by the Industrial Area Development Board on 10.01.2001 and assessee by way of consortium agreement passed on the bundle of rights to the consortium - assessee has permitted mortgage of the said property by way of equitable mortgage in favour of ING Vysya Bank Ltd., to an extent of ₹ 36 crores for advance made to Dynasty Developers P. Ltd. - it cannot be stated that assessee has no right on the property when it admits and enters into agreement and even permits the Bank for an equitable mortgage of the property - all the contentions raised by assessee that it does not hold any capital asset, there are no transferable rights under the Transfer of Property Act and not transferred without registered document cannot be accepted. The extended definition as contained in section 2(47) even when a sale exchange or relinquishment or extinguishment of any right under a transaction, assessee is to be in possession of any immovable property or retained the same in part, performance of contract under section 53A of the Transfer of Property Act, it amounts to transfer - since assessee has given all rights in immovable property of which, consortium has taken approvals and constructed buildings, the contention that there is no capital asset no transfer cannot be accepted. Whether the capital gains arising in the transaction is that of short capital gain or long term capital gain – Held that:- The gain has to be considered as long term capital gain - assessee was allotted the property on 10.01.2001 - Even though the lease deed was registered on 02.09.2003, assessee has held it for more than three years by the time he has entered into an agreement on 10.12.2004 – Following the decision in Commissioner of Income-tax Versus A. Suresh Rao [2014 (1) TMI 1585 - KARNATAKA HIGH COURT] and Circular No. 471 and 474 of CBDT - there is no dishonest or improper motive on the part of the assessee in claiming exemption - when capital gain is accrued in him instead of paying tax to the Government, he has invested the money in the aforesaid manner, which gives him the benefit of exemption from payment of capital gains - the capital asset has to be considered as long term asset and capital gains thereon has to be assessed only under the head “Long Term Capital Gains” and A.O. is directed to modify the computation accordingly – Decided partly in favour of assessee.
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