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2020 (7) TMI 36 - AT - Income TaxIncome from other source OR Capital gain - Correct head of income - right acquired under the Agreement by the Assessee - claim of the Assessee that the said sum received is in the nature of capital gains and should be assessed under the head “capital gains (as long term capital gain (LTCG) - HELD THAT:- Giving up of a right to claim specific performance by conveyance in respect to an immovable property, amounts to relinquishment of the capital asset. Therefore, there was a transfer of capital asset within the meaning of the Act. The payment of consideration under the agreement of sale, for transfer of a capital asset, is the cost of acquisition of the capital asset. Therefore, in lieu of giving up the said right, any amount received, constitutes capital gain and it is exigible to tax. However, as is clear from s. 48, before the income chargeable under the head capital gains is computed, the deductions set out in s. 48 has to be given to the assessee. It is only the amount thus arrived at, after such deductions under s. 48, would be the income chargeable under the heading capital gains. It is not necessary that in all such cases there should have been a lis between the parties and in such is the right to specific performance has to be given up. The CIT(A), in our view, fell into an error in holding that the Assessee did not file a suit for specific performance and therefore cannot claim the benefit of the ratio laid down by the Hon’ble Karnataka High Court in the case of H.Anil Kumar 2011 (1) TMI 1159 - KARNATAKA HIGH COURT In the present case, there was no delivery of possession in part performance of the agreement for sale dated 09-02-2005 and therefore, there is no question of the agreement dated 09-02-2-005 being regarded as a document requiring compulsory registration. Therefore, the decision in the case of CIT Vs Balbir Singh Maini [2017 (10) TMI 323 - SUPREME COURT] is not applicable to the facts of the present case. For the reasons given above, we are of the view that the sum in question is chargeable to tax under the head ‘capital gains”. We are of the view that income from relinquishing rights under an agreement should be assessed under the head income from capital gains. We hold accordingly. We however find that the AO/CIT(A) have not examined the claim of the Assessee under the head “Capital Gain” in accordance with the provisions of Sec.48 of the Act and also claim for deduction u/s.54F of the Act. We therefore remand the question of computation of Capital Gain to the AO after due opportunity of being heard afforded to the Assessee. The Appeal of the Assessee is accordingly treated as allowed for statistical purpose.
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