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2022 (6) TMI 794 - AT - Income TaxCapital gain computation or Income from other sources - compensation received by the assessee on extinguishment of his right in property - transfer of asset u/s 2(47) - whether relinquishment of right in property is transfer within definition of section 2(47)? - HELD THAT:- In this case the assessee had acquired right in a property and said right has been extinguished in favour of the builder and received compensation. The builder has paid compensation through proper banking channel after deducting necessary TDS as per law. The parties have confirmed transactions. AO has never disputed these facts, however, denied benefit of long term capital gain only for reason that authenticity of stamp paper purchased by the assessee to enter into MOU is doubtful. In our considered view, reasons given by the AO to reject claim of the assessee on the basis of authenticity of stamp paper is not correct, because if at all, the AO is having any doubt on authenticity of stamp paper, the A.O. should have conducted necessary inquiries to ascertain facts whether stamp paper purchased by the assessee is genuine or fake one. In absence of any inquiry, the AO cannot come to a conclusion that stamp paper purchased is not genuine one and consequently, on that basis the transaction between the parties cannot be questioned, more particularly, when other evidences filed by the assessee, including confirmation from buyer reveals that transaction took place between the parties. Extinguishment of rights therein also includes within definition of capital asset and consequently, comes under transfer as defined u/s.2(47) Thus what was received by the assessee by virtue of MOU is consideration received for transfer of rights in property and thus, same is assessable under the head ‘income from capital gains’. The learned CIT(A), after considering relevant facts has rightly held that the Assessing Officer has erred in assessing compensation under the head ‘income from other sources’. Hence, we are inclined to uphold findings of the learned CIT(A) and dismiss appeal filed by the Revenue
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