TMI Blog2014 (6) TMI 575X X X X Extracts X X X X X X X X Extracts X X X X ..... render of tenancy rights is capital in nature and to be assessed as capital gain - the value of tenancy rights along with the construction cost was converted/substituted into the alternative accommodation to be provided by the builder in the year 2000 - the amount received against the transfer of tenancy is assessable as capital gain and not income from other sources - the amount received by the assessee is against the transfer of capital asset – there was no justification in treating the same as income from other sources - assessee has produced sufficient material to establish the tenancy rights and surrender of tenancy rights and creating the right to have alternative accommodation - the assessee surrendered the right in alternative accommodation and received the amount in question which is capital gain in nature – the amount has been invested in the prescribed units u/s 54EA – thus, the assessee is entitled for deduction u/s 54EA against the receipt – Decided in favour of Assessee. - ITA No. 6705/Mum/2013 - - - Dated:- 4-6-2014 - Shri Vijay Pal Rao And Shri Rajendra,JJ. For the Petitioner : Shri Vimal Punmiya For the Respondent : Shri Maurya Pratap ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entered into an MOU with M/s Shripati Group of Companies for surrender of tenanted premises and for an alternative accommodation to be constructed by the builder against the construction cost of Rs. 6,15,000/-. Assessee s share of construction cost is Rs. 3,50,000/-. The Ld. Authorized Representative has further submitted that as per the terms of MOU dated 5.12.1995 if the builder failed to provide alternative accommodation by 31.12.2000 or the accommodation not approved by the assessee then the builder shall give Rs. 60,00,000/- inclusive of cost of construction of Rs. 6,15,000/-. This amount of Rs. 60,00,000/- was to be paid to the assessee and his brother (HUF). On 25th March 2000, the assessee and his brother (HUF) received 60,00,000 from the builder in which the assessee s share was 36,00,000/-. The said amount has been invested by the assessee in the HDFC mutual fund to the extent of Rs. 12,00,000/- and remaining amount of Rs. 24,00,000/- at UTI MIP 2000. The assessee claimed exemption u/s 54EA in this regard. The Ld. Authorized Representative has submitted that the Assessing Officer denied the exemptin u/s 54EA on the ground that the tenancy was not genuine and treated the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more than three years and in lieu of the alternative accommodation, therefore,t he amount is capital receipt and should be assessed as capital gain in the hands of the assessee. When the assessee has invested the said capital gain as per the provisions of section 54EA, therefore the exemption cannot be denied. Alternatively the assessee has submitted that if the tenancy right is not considered as genuine then the gain is long term capital gain as the construction cost of Rs. 3,50,000/- was paid in the year 1995 for acquiring the alternative accommodation and the amount is received in the year 2000. Therefore, the said amount received is capital in nature and has to be assessed as long term capital gain. He has relied upon the following decisions:- (i) SSPDL Ltd. Vs. Deputy Commissioner of Income Tax. IT Appeal No. 976 of 2012 (HYD.) (ii) CIT Vs. Mrs. Grace Collies [2001] 248 ITR 323 (iii) B. Ramakrishnaiah Vs. ITO (39 SOT 379) (iv) Ajay C Mehta Vs. DCIT (114 ITD 6280(Ahd.) 5. By placing reliance on the above decisions, the Ld Authorized Representative of the assessee has submitted that the assessee has received the amount in question in lieu of relinquishment of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for which the rent was paid. The rent receipt coupled with the agreement in respect of the premises in question establish the fact that the assessee was having tenancy right in respect of the premises. The said tenancy right was surrendered by the assessee in lieu of alternative accommodation to be constructed by the developer under the redevelopment plan. In this respect an MOU was executed between the assessee and the developer on 5.12.1995. The relevant part of the MOU in para 6 and 7 of recitals and clause 7 of the terms and conditions of the agreement are as under:- 6. The owners hereby commit and agree with the tenant that a residential premises admeasuring approx. 840 .45 Sq. Ft. carpet area and ledge area of 14.85 Sq. ft. i.e. total build up area of 1145.67 sq. ft. shall be reserved for the tenant/occupant between 8th and 10th floor and same shall not be allotted or given possession of to anybody else. 7. The tenant/occupant hereby agrees to pay a nominal construction charge of Rs. 6,15,000/- to the said owners. Clasue 7 It is further agreed by and between the parties hereto that, on completion of all the cigvil works pertaining to the flat to be allotted be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts along with the construction cost was converted/substituted into the alternative accommodation to be provided by the builder in the year 2000. In stead of accepting the alternative accommodation, the assessee preferred to receive the agreed sum of Rs. 36,00,000/- inclusive of 3,50,000/- as construction cost paid by the assessee. Thus the assessee has finally surrendered its tenancy right as well as alternative accommodation rights only by way of the agreement dated 25th March 2000. Therefore, this amount was received after more than three years. The Hon ble Jurisdictional High Court in the case of CIT Vs. R. R. Chaturvedi in Income Tax Appeal No. 1196 of 2011 has accepted the status of the tenants as per the list of tenants certified by Mumbai Buildings Repairs and Reconstruction Board (MBRRB). Hon ble Jurisdictional High Court in the case of CIT Vs. Rejendra R. Chaturvedi (supra), the earlier tenant in respect of the building in question has observed in para 3 as under:- 3) This appeal filed by the revenue relates to consideration received by the tenants in respect of surrender of tenancy. Once, it is accepted that the amounts paid by M/s. R.R. Chaturvedi (AOP) to the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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