TMI Blog2014 (9) TMI 394X X X X Extracts X X X X X X X X Extracts X X X X ..... means the date from when the assessee acquired the right, got hold of and started enjoying the said asset - the assessee had acquired tenancy rights on 15th March, 1973 and since then they had held the said tenancy rights till the surrender was made on 18th February, 1997 - The transfer of tenancy had taken place on 18th February, 1977 and not before - The period of holding was from 15th March, 1973 till 18th February, 1997 - No third person, who had come into possession of the property during the period and it is not a case of the Revenue that respondent-assessee did not hold the property during the entire period of over 14 years. Relying upon CIT versus Ved Prakash & Sons (HUF) [1993 (7) TMI 45 - PUNJAB AND HARYANA High Court] - conversion of leasehold right into freehold by way of improving the title over the property would not affect the taxability of the gain from property, which is relatable to the period over which the property is held - Thus the asset, i.e. the tenancy rights were held for nearly 14 years and consideration received on surrender has been rightly treated as a long term capital gain – Decided against revenue. - ITA 146/2002 - - - Dated:- 2-9-2014 - Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in and not as a long-term capital gain. The logic behind the aforesaid finding of the Assessing Officer was that the tenancy after the initial period of 3 years by of a written instrument, was month-to-month. Thus, tenancy rights extinguished on the last day of each month and a fresh or new tenancy was created. A fresh tenancy had begun on 1st February, 1997 and was relinquished on 18th February, 1997. Therefore, the period of holding of the tenancy rights was only 18 days and thus, less than 36 months. 4. The Commissioner of Income Tax (Appeals) dismissed the appeal of the respondent-assessee agreeing with the reasons of the Assessing Officer that at the beginning of every month, a new tenancy was created and thus a new capital asset had come into existence on 1st February, 1997. This new tenancy was relinquished on 18th February, 1997, which meant that the period of holding was less than 36 months. The Commissioner of Income Tax (Appeals) further observed that unless the respondent-assessee had paid rent for each month, possession of the property would not have continued. 5. The Tribunal, however, reversed the said finding and decided the issue in favour of the respondent-a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epted, Section 106 of the Transfer of Property Act would apply and notice of termination has to be issued. Section 116 of the Transfer of Property Act also, therefore, makes Section 106 applicable once rent is accepted after determination or end of the tenure of the lease. The effect thereof on applicability of Section 106 of the Transfer of Property Act is the same in either case. Month-to-month tenancy cannot be confused with the right to occupy as a tenant as a notice under Section 106 of the Transfer of Property Act is required to be issued before ejectment proceedings are initiated. 9. Long-term asset has been defined in Section 2(29b) of the Act as an asset which is not a short-term capital asset and the expression short-term capital asset has been defined in Section 2(42A) of the Act to mean the capital asset held by an assessee for not more than 36 months immediately preceding the date of its transfer. The expression held by the assessee means the date from when the assessee acquired the right, got hold of and started enjoying the said asset. In the present case, the assessee had acquired tenancy rights on 15th March, 1973 and since then they had held the said tena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. xxx 8. To possess; to occupy; to be in possession and administration of; as to hold office. 9. To keep; to retain; to maintain possession of or authority over. As per clause 8, the word hold means to possesss or occupy, to be in possession and would also include to keep, retain and maintain possession or authority over an asset. 12. The word held thus can be interpreted to embrace the idea of actual possession of the assessee. In Budhan Singh versus Babi Bux, AIR 1970 SC 1880 (at page 1884) the word held was interpreted to mean lawfully held, to possess by legal title . The term legal title here not only includes ownership, but also title or right of a tenant, which will mean actual possession of the land and a right to hold the same and claim possession thereof as a tenant (we are not examining rights of a rank trespasser in the present decision and we express no opinion in that regard). 13. The Tribunal in our opinion has rightly relied upon the decision of the Punjab and Haryana High Court in CIT versus Ved Prakash Sons (HUF), (1994) 207 ITR 148 (P H) in which it has been held as under:- As is clear from a bare reading of Section 2(42A) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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