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2018 (5) TMI 1887 - AT - Income TaxCompensation on surrender of flats - capital gain u/s 45 - Transfer of capital asset u/s 2(47) - extinguishment of rights in the capital asset - CIT-A directing the AO to assessee the same as capital gains and consequent allowance of claim of deduction u/s 54 - builder could not obtain permission to construct the building upto 17th floor and the assessee surrendered the right to receive the flats and the builder cancelled the allotment of the above flats and agreed to pay the compensation on account of surrender of such flats and transferred the initial advance of ₹ 50,00,000/- to new flat in the same project which the assessee agreed to buy - HELD THAT:- The facts clearly show that the extinguishment of assessee’s right in Flat No. 1703, 1704 and 1705 proposed building known as “shubh Residency” allotted vide allotment letter dated 20.06.2008 is actually extinguishment of any right in relation to capital asset in view of the provisions of section 47 of the Act and falls in the definition of transfer and hence, result in capital gain chargeable under section 45 of the Act. It is a fact that assessee held this right for more than 3 years for a reason that this flats were subject to allotment vide allotment letter dated 20.06.2008 and assessee received compensation of ₹ 1.10 crores and in lieu of that acquired flat No. 301 and 305 in the same project vide agreement dated 28.02.2012, which period is more than three years. The assessee has made payment of ₹ 1.10 crores on various dates mentioned above and this is eligible for the claim of deduction under section 54 of the Act also. CIT(A) has rightly deleted addition made by the AO in regard to disallowance of the claim of the assessee disallowing deduction of long term capital gain under section 54 of the Act on the premise that the compensation received is income from other sources. We noted that the CIT(A) has rightly allowed the claim of the assessee and we confirm the same. - Decided against revenue
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