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2022 (3) TMI 38 - HC - Income TaxCorrect head of income - Treating the receipts of compensation for vacating tenancy to be assessable as “Capital Gains” instead of income under the head “Profit and Gains of Business or Profession" - HELD THAT:- In the decision of CIT Vs. D.P. Sandu Bros. Chembur (P) Ltd. [2005 (1) TMI 13 - SUPREME COURT] it was held that the tenancy right was a capital asset, surrender of tenancy right was a transfer and the consideration received thereof was a capital receipt within the meaning of Section 45. The Court noted the decision in the case of CIT Vs. B.C. Srinivasa Setty [1981 (2) TMI 1 - SUPREME COURT] which was followed by several High Courts and held that if the cost of acquisition of tenancy right cannot be determined, the consideration received by reason of surrender of such tenancy right could not be subjected to capital gains tax - The Court took note of the circular issued by the CBDT being Circular No. 684 dated 10th June, 1994, which was issued to meet the situation created by the decision in B. C. Srinivasa Setty (supra). By Finance Act, 1994, Section 55(2) was amended to provide the cost of acquisition, inter alia, the tenancy right could be taken as nil. By this amendment the judicial interpretation put on capital assets for the purposes of the provisions relating to capital gains was met. - Decided in favour of assessee.
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