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2018 (4) TMI 1121 - ITAT JAIPURAddition on account of Long Term Capital Gain on sale of mining lease - assessee's ownership of such capital asset - transfer u/s 2(47) - assessees are legal heirs of late Shri Kailash Chand Mangal who has leasehold rights of the mines in question and as per the family arrangement as well as will the ownership of the mining rights were given to Shri Sunil Agarwal [uncle of the assessee] - Held that:- In view of the admitted position by all the assessees that the real owner the mining rights is Shri Sunil Agarwal and the Revenue has not challenged that finding of the ld. CIT(A) in case of Shri Sunil Agarwal we do not find any substance or merits in the appeals of the Revenue in case of Shri Sanjay Managal and Shri Vijay Mangal. Assessment of capital gain - transfer of rights - Held that:- Though the mining rights per se are not transferred being subject to the renewal of the lease however, by virtue of the agreement dated 10.06.2010 the assessee has transferred and surrendered his rights in the said asset as on the date of agreement and is bound to transfer the leaseholds rights in favour of M/s J.K. Cements whenever the same are renewed by the Government. Hence, this agreement dated 10.06.2010 has definitely transfer a right in favour of the M/s J.K. Cements and relinquished right on the part of the assessee as he cannot transfer these leasehold mining rights in favour of any other persons then M/s J.K. Cements. The amount of ₹ 25 lacs received by the assessee for execution of the said agreement would be the income of the assessee. This consideration was received in relation to the rights in a capital asset therefore, the said amount is liable to be assessed as capital gain as considered by AO. Direct the AO to assess the capital gain in the hand of the assessee Shri Sunil Agarwal by considering ₹ 25 lacs as a consideration subject to allowable other deductions being cost of acquisition which we will deal with in the Cross Objection of the assessee. Disallowance of expenses u/s 57 - Held that:- AO as well as ld. CIT(A) decided this issue for want of any documentary evidence in support of the claim that the expenditure was incurred for earning the income from other sources. Nothing has been produced before us to show that the said alleged expenditure incurred by the assessee for earning of income from other sources accordingly, we do not find any error or illegality in the impugned order of the ld. CIT(A) qua this issue. Cost of acquisition of the capital asset being the Fair Market Value (FMV) as on 01.04.1981 - Held that:- As per provisions of Section 55(2)(a)(b) r.w.s. section 55(3) assessee has exercised his option that the cost of acquisition of the capital shall be the fair market value as on 01.04.1981 then, the cost of acquisition of capital asset of the previous owner becomes irrelevant for the purpose of computing the capital gain. The previous acquired the leasehold rights prior to 01.04.1981 therefore, the fair market value of the property as on 01.04.1981 has to be considered as cost of capital asset for the purpose of sections 48 and 49 - we direct the AO to compute the capital gain after allowing the cost of acquisition being the fair market value as on 01.04.1981. Once, this benefit is allowed against the capital gain in the year under consideration, the same will not be allowed at the time of transfer of the leasehold rights on renewal by the government.
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