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2020 (5) TMI 13 - AT - Income TaxAddition u/s 68 - bogus proceeds on sale of tenancy rights - HELD THAT:- AO made investigation from the buyer of the property i.e. Pine Tree Estate Pvt. Ltd. The AO recorded that only income tax return for A.Y. 2016-17 was filed by the buyer in response to notice u/s 133(6). No further action or investigation about the creditworthy of buyer was conducted by AO. The income tax return always contained the PAN of the assessee, which is sufficient to carry out further enquiry against the said buyer. No such show-cause notice to prove the creditworthy of Pine Tree Estate Pvt. Ltd. was issued by the AO. Registered transfer deed of tenancy clearly shows that the payment of consideration for transfer of asset/tenancy right was paid to assessee through Demand Draft No. 407314 dated 28.05.2015 drawn on HDFC Bank. Thus, in the aforesaid transaction, no addition under section 68 can be made against the assessee. The assessee right from the beginning has categorically stated that consideration of ₹ 22.50 crore was received against the transfer of tenancy right. As we have noted earlier that it is settled position under the law, that tenancy right is a transferable asset. The assessee received consideration on transfer of said right - assessee has unambiguously proved that asset was in the possession of assessee for more than three year, thus, on the sale of tenancy right the assessee is entitled for LTCG. Therefore, the addition under section 68 against the proceeds of sale consideration is not unjustified. In the result, Ground No.1 of the appeal is allowed. Exemption u/s 54F - HELD THAT:- In the computation of income and working of Capital Gain the assessee has claimed exemption on the ground that assessee has invested the sale proceeds for acquisition of residential property/ flat No. 39 in Raheja Towers, Rajabhau Desai Marg, Prabhadevi, Mumbai. As the AO treated the sale proceeds of tenancy right as unexplained cash credit and resultantly not allowed the deduction/exemption under section 54F. Considering the fact that we have allowed LTCG by allowing Ground No.1 in favour of assessee. Thus, we direct the AO to verify the fact about the investment of sale consideration / gain in purchase of new residential house and allow exemption/deduction under section 54/54F in accordance with law. In the result, this ground of appeal is allowed for statistical purpose.
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