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2015 (12) TMI 1836 - AT - Income TaxCapital gain - right of possession of the flat was a legal right which had to be extinguished by not only a process of law but also substantial payment by the other party - Addition u/s 68 - adverse possession of the disputed flat - ‘protective assessment - assessee has transferred the sundry creditor liability which was arising as a result of settlement with Ms/ Percept Advertisement Ltd. to its capital account - HELD THAT:- Any profit or gain arising out of this transfer is, thus, liable to be assessed to tax under the head ‘capital gains’ as has been done by the AO. However, this capital gain is required to be computed for tax purpose in accordance with the computation provisions of Sec. 48 of the Act. It may, however, be clearly seen that there was no cost of acquisition of the right of possessions of the said disputed flat, as the assessee did not spend anything for obtaining the said possession. Hence, the mechanism for Computation of capital gain with reference to ‘cost of acquisition’ of the asset transferred cleaerlyfails. The ultimate result is, thus, that the above mentioned ‘capital gains’ is not exigible to income tax, as has been held by the Hon'ble Supreme Court in the case of Srinivasa Setty [1981 (2) TMI 1 - SUPREME COURT] and PNB FINANCE LTD. [2008 (11) TMI 7 - SUPREME COURT] In the present case, assessee was having adverse charge on the property and charge of tax on such transaction has nowhere been definite under the Act. Therefore, we are holding that this transaction out of purview of tax. In our considered view, we reverse the orders of authorities below and delete the addition made by Assessing Officer - Decided in favour of assessee.
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