TMI Blog2014 (6) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and also appearing dates and month for which the rent was paid - The rent receipt coupled with the agreement in respect of the premises establish the fact that the assessee was having tenancy right in respect of the premises - tenancy right was surrendered by the assessee in lieu of alternative accommodation to be constructed by the developer under the redevelopment plan. The tenancy right has been recognized as the capital asset u/s 55(2) of the Income Tax Act - there is no doubt that the consideration to be received by the assessee against the surrender 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 alternativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nuine and cannot be termed as a colorable devise. b) Mere suspicion cannot take the place of evidence. c) List of tenants provided by MHADA cannot be ignored as MHADA 1S appropriate authority. d) In case of builder, tenancy right was accepted as genume by Hon'ble Bombay High Court. e) Even if Tenancy Right is not considered as genuine than also gain is long term capital gain as Constriction cost of Rs.2,65,000 I-was paid in 1995. Hence, acquiring alternate accommodation is a Right to acquire property . f) Right to acquire property is capital asset, hence taxable under the head capital gain and cannot be taxed under Income From Other Source. g) Capital Asset is held for more than 3 years therefore asset is long ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ender of right in the property to be developed by the developer and to be considered as capital gain or not. Authorities below held that this amount cannot be treated as capital gain as the entire transaction was just a colourable device to evade payment of tax. The Assessing Officer has refused to accept the rent receipt, the list of tenants provided by MHADA as well as BEST. The Assessing Officer has attempted to point out some deficiencies in the receipt as well as the agreement dated 10.4.1995 in which the name of the assessee was written in typing Bhogilal M. Mehta and then HUf has been inserted with pen. We find that the said typint mistake has been corrected at the time of signing the agreement and parties have endorsed by signing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 between 8th and 10th floor the said owners shall, intimate the said tenant/occupant to take the inspection of the said permanent alternate accommodation and if the tenant/occupant does not approve the said permanent alternate accommodation and declines to accept possession of the same then the said owners shall pay to the said tenant/occupant an amount of Rs. 60,00,000/- as compensation in lieu of the permanent alternate accommodation, inclusive of Rs. 6,15,000/- to be paid by the tenant/occupant. 8. It is clear from the MOU that in lie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of tenancy rights is capital in nature and to be assessed as capital gain. The question arises whether the capital gain is longer capital gain or short term capital gain. Since the assessee has agreed to surrender the tenancy right in the year 1995 and also paid the construction cost as agreed between the parites, therefore, 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. 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s by the authorities below. The assessee has produced sufficient material to establish the tenancy rights and surrender of tenancy rights and creating the right to have alternative accommodation. Finally the assessee surrendered the right in alternative accommodation and received the amount in question which is capital gain in nature. The CIT(A) has allowed the deduction of Rs. 3,50,000/- from the total receipt of Rs. 36,00,000/-. Since the amount has been invested in the prescribed units u/s 54EA, therefore, the assessee is entitled for deduction u/s 54EA against the said receipt. 3. In view of the finding in the assessee s brother (HUF) case the appeal of the assessee is treated as allowed. 4. In the result appeal of the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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