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The Commissioner of Income Tax -14 Versus M/s Kewal Silk Mills

2015 (6) TMI 768 - BOMBAY HIGH COURT

Compensation for surrender the tenancy right - Whether the assessee has not termed as tenant as per the Maharashtra rent control act? - whether amount received by assessee on account of transfer of capital assets occupied by assessee within the meaning of "capital gain" even otherwise the deed of surrender of tenancy stated that it is a compensation in connection with loss of business, profit and convenience and hardship due to shifting elsewhere? - Held that:- It is an undisputed position that .....

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of the premises on 1st February, 1973, he shall be deemed to have become the tenant of the landlord in respect of the premises or part thereof, in his occupation.

Thus, it follows that if the owner of the subject premises were to seek eviction of the Respondent Assessee on the basis of the contract, it would fail in view of the clear position in to Section 15A of the Rent Control Act. Thus, the Respondent Assessee is a deemed tenant of the subject premises. Consequently, such tenanc .....

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and surrender of the same was a transfer of a capital asset. - Decided against revenue. - Income Tax Appeal No. 1361/2013 - Dated:- 15-6-2015 - M. S. Sanklecha And N. M. Jamdar, JJ. For the Petitioner : Mr Charanjeet Chanderpal For the Respondent : Mr Percy Pardiwalla, Sr Adv. i/b Mr A K Jasani ORDER P.C. This Appeal under Section 260A of the Income Tax Act, 1961 (the Act), challenges the order dated 12th October, 2012 passed by the Income Tax Appellate Tribunal (the Tribunal) for the Assessmen .....

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law, the tribunal was justified in holding that amount received by assessee on account of transfer of capital assets occupied by assessee within the meaning of "capital gain" even otherwise the deed of surrender of tenancy stated that it is a compensation in connection with loss of business, profit and convenience and hardship due to shifting elsewhere?" 3. Briefly the facts leading to this appeal is that Respondent Assessee had entered into an agreement dated 13th June, 1972 with .....

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ect premises. In the subject Assessment Year, the Respondent Assessee under Agreement dated 7th October, 2008 surrendered its occupation of the subject premises to Pravin and Rajesh Makwana (Makwana) on receipt of consideration. The Respondent offered the consideration received on the surrender of its occupation of the subject premises as long term capital gain, claiming exemption under Section 54EC of the Act. The Assessing Officer did not accept the Respondent Assessee's contention that su .....

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1) and 15A of the Bombay Rent, Hotel &13 Lodging and House Rates Control Act, 1947 (the Rent Control Act), providing for deemed tenancy of premises in occupation of any person as on 1st February, 1973. On the above basis, the Tribunal concluded that surrender of occupation was surrender of tenancy i.e. capital asset and the amounts received was taxable under the head 'Capital gains' and not under the head 'Income from other sources'. Section 15A of the Rent Control Act provid .....

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ve derived title under a tenant [before the 1st day of February 1973;] [(aa) any person to whom interest in premises has been assigned or transferred as permitted or deemed to be permitted, under section 15;] (b) any person remaining, after the determination of the lease, in possession, with or without the assent of the landlord, of the premises leased to such person or his predecessor who has derived title [before the first day of February 1973]; [(bb) such licensees as are deemed, to be tenant .....

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of February 1973 in occupation of any premises, or any part thereof which is not less than a room, as a licensee, he shall on that date be deemed to have become; for the purposes of this Act, the tenant of the landlord, in respect of the premises or part thereof, in his occupation. (2) The provisions of subsection (1) shall not affect in any manner the operation of subsection (1) of section 15 after the date aforesaid." 6. The grievance of the Appellant Revenue is that the Respondent Asses .....

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. Therefore, it is submitted that Sections 5(11) and 15A of the Rent Control Act would not be of any avail to Respondent Assessee. Consequently, the amounts received on surrender of occupation of the subject premises has to be classified as 'Income from other sources' and not as 'Capital gains'. In the alternative, it was submitted that in any event, tenancy by itself is not a capital asset under Section 2(14) of the Act and, therefore, surrender of it will not result in capital .....

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