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2024 (2) TMI 688 - AT - Income TaxTaxability as capital gain or not - surrender / transfer of tenancy rights - Applicability of section 50C for valuation - AO was of the opinion that the assessee had surrendered his rights in the properties and offered stamp duty value as sale consideration for both floors and calculated the Long Term Capital Gain - according to CIT(A) action of the AO confirmed by holding that “money paid to the tax-payers for regularizing the tenancy agreement is to be treated as income in the hands of the tax-payers in the nature of the tenancy rights” and as the cost of acquisition is nil, the excess amount need to be taxed as capital gain. HELD THAT:- We find that there is no material on record to find that the registered agreement between parties be treated as sale/transfer of properties in question. Assessee is one of four (4) co-owners of two flats and from the averments of the registered tenancy agreement, the DR could not show that title of the property has been passed on to the tenant. From the terms of the agreement between the assessee who was one of the four (4) owners of the facts in question, we find it is a tenancy agreement and the terms of the agreement shows that provisions of MRC Act, 1999 are incorporated and therefore applies to the agreement between parties. Moreover, there was no evidence of any consideration being passed between the assessee and Shri Chunnilal and Shri Tejaram. The agreement between parties was for giving the flats in question on rent. Thus, the Ld. CIT(A) erred to upholding the action of the as AO erroneously treated the transaction of tenancy/rental agreement to be that of transfer of property without any material to hold otherwise. Therefore, we are inclined to delete the addition made by AO, that also by applying section 50C of the Act, which deeming provision in no case is applicable to the facts of the case. Appeal of assessee allowed.
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