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2016 (4) TMI 901 - AT - Income TaxRevision u/s 263 - CIT was of the view that nature of income arising from the transaction is not from Long term capital gain but Income from House Property and the AO has erroneously allowed the exemption u/s 54EC - Held that:- The property constitute a bundle of rights and transfer by way of allotment of perpetual tenancy with right of occupancy and enjoyment of property perpetually in favour of tenant is also transfer of one of the right out of the bundle of rights which property carries with it and shall be chargeable to tax u/s 55(2)(a) read with Section 45 of the Act as Income from Capital Gains. No doubt the assessee-HUF has right to evict the tenant but that is only in the situation of tenant in default of monthly rent and that too with a notice of six months to tenant whereby the tenant can always rectify the default and continue enjoying the tenancy perpetually more so the tenant is protected tenant under Maharashtra Rent Control Act, 2000. The AO has made an inquiry before granting exemption under section 54 EC of the Act with respect to the grant of the tenancy right which was replied by the assessee-HUF vide letter dated 07-12-2011 filed with AO on 08-12-2011 and has also enclosed copies of agreements and details along with the said letter, In the instant case , proper and adequate enquiry has been duly made by the AO and after due application of mind has arrived at the instant decision of bringing to tax one time lumpsum payment received by the assessee-HUF on allotment of tenancy rights vide tenancy agreement dated 06-05-2008 as capital receipt chargeable to tax as Income from Capital Gains u/s 45 of the Act. Further, in the case of other co-owner Dushyant P Bobado(HUF), the CIT(A) has accepted this lumpsum payment on allotment of tenancy rights by the tax-payer in favour of the tenants received vide tenancy agreement dated 06-05-2008 as capital receipts chargeable to tax as Income from Capital Gains u/s 45 of the Act. Order passed u/s. 263 of the Act by the CIT is not sustainable under law as in our considered view the AO has made proper and adequate inquiries and has applied his mind and has taken decision after due application of mind and the view of the AO is one of the plausible and possible view and infact a correct view which is duly supported by provisions of the Act being Section 55(2)(a) and Section 45 of the Act and several judicial pronouncements and cannot by any stretch of imagination be categorized as erroneous view whereby in view of the AO one time premium for grant of tenancy is capital receipt and hence in our considered view, this order CIT passed u/s 263 of the Act is not sustainable in law and we hereby set aside - Decided in favour of assessee
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