TMI Blog2012 (1) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... n50C whereas the exchange/surrender/transfer value is taken at ₹ 1,13,49,000/- by applying section 2(47) 45, 50C, 55 and section 112 and not just applying section 50C. 4. The Ld. CIT (A) erred in following the decision of Hon ble ITAT, Mumbai in the case of Kishori Gaitonde vs. ITO. 2. The first issue which arises from ground no.1 2 is whether the capital gain is taxable in the A.Y. 2007-08 if it is held that there is transfer within meaning of sec. 45(1) of the I. T. Act. 3. The facts which revealed from the record are as under. The assessee is an individual. The assessee filed the return of income declaring income at Nil . The assessee s case was selected for scrutiny on the basis of the AIR information as it was noticed by the A.O. that the assessee has registered transaction of immovable property worth ₹ 1,13,49,000/- on 22.02.2007. 4. Brief history of the property which is the subject matter of this assessment proceeding is as under. One Mr. M.K. Mohammed was in adverse possession/tenant of the land situated at Dr. Annie Besant Road, Worli, Bombay, admeasuring 1799.36 sq.yards bearing Cadastral Survey No.3 of Worli Division in the building known as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... co-owners and the assessee. Assessee paid ₹ 7 lakhs to the Court Receiver out of the agreed consideration of ₹ 9 lakhs as per agreement dt. 06.08.1986 with Mr. M. K. Mohammad. The Hon ble High Court set aside the Consent Decree dated 21.03.1988 in Suit No.1318 of 1980 and the assessee undertook to the Hon ble High Court to remove herself and all furniture, fixtures, articles and things from the property which was subject matter of the litigation of the said land admeasuring 1823.53. sq.mtrs. As per the consent terms, upon removing the structure standing thereon by the assessee and making the compliance of the terms of the Consent Decree, the Co-owners undertook to create a monthly tenancy in favour of the assessee or her nominee in respect of 14000 sq.ft. carpet area in Shriniketan Building (now known as Ceejay House) situated at Dr. Annie Besant Road, Worli, Mumbai 400018, on the third and fourth floors thereon together with six covered car parking spaces and one open car parking space, in the compound of the said building at a monthly rent of ₹ 10,000/- per month. The co-owners further undertook that upon the said premises would be converted in to ownership cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cating the said tenanted premises held by them as a tenant of the co-owners. Finally, the another Deed of Confirmation agreement was executed and registered on 22.02.2007 and for the purpose of payment of stamp duty and registration charges, the valuation of the property which was transferred to assessee and her sons was made at ₹ 1,13,49,000/-. 6. The A.O. was of the opinion that as the Deed of confirmation was registered on 22.02.2007, hence, there was a transfer within the meaning of section 45(1) r.w. sec. 2(47) of the I.T. Act as the assessee surrendered her tenancy right and acquired the ownership right to the extent of ₹ 1,13,49,000/- (as per the valuation made for the Stamp duty purpose) and same was taxable as long term capital gain (LTCG) in the A.Y. 2007-08. The A.O. gave the benefit of cost of acquisition i.e. amount paid by the assessee to Shri M.K. Mohammed of ₹ 9,00,000/- in 06.081986 for acquiring her rights and also gave the benefit of deduction in respect of the share of stamp duty and registration charges borne by the assessee and brought to tax ₹ 68,45,651/- as long term capital gain. The assessee seriously resisted action of the A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement dt.12.3.1999, the appellant had given the owners the right to carry out necessary repairs and restoration of the building to the builder, M/s. Millennium Developers Pvt. Ltd. who had to handover 14,000 sq.ft. carpet area with 6 covered and uncovered car parking spaces in the new building to the appellant. By an agreement dt.4.11.2004, the appellant who was tenant had vacated the building and had accepted alternate accommodation. It is the AO s contention that this alternate accommodation in Ceejay House whose stamp duty and registration charges were ₹ 1.13 crores should be considered as the sale value for rights purchased in 1986 from Mr. M.K. Mohd and should be assessed in this year as long term capital gain, taking the cost of acquisition as ₹ 9 lakhs paid to Mr. M.K. Mohd. It is the appellant s contention in this A.Y. 2007- 08, no property has been acquired by them and the tenancy rights were converted into ownership rights as per consent decree of the Hon ble Bombay High Court dt. 28.5.1999 in terms of consent suit No.1593 of 1999, copy of which has been filed. The contention of the appellant is correct. As per the copy of the consent decree, the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the controversy are already narrated in detail in upper part of this order. One Mr. M.K. Mohammed was in adverse possession of the land situated at Gurukripa Dr. Annie B. Road, Worli, Mumbai. The said Shri Mohammed was running the restaurant there as he has constructed the structure on the said property. It appears that there was a litigation between co-owners in the Hon ble High Court. The Hon ble High Court has appointed one Court Receiver namely Mr. D.B. Khade. As per facts on record Shri M.K. Mohammed and other occupants / tenants were in the said property. The Court Receiver filed the Suit against Shri M.K. Mohammed in the Hon ble High Court of Bombay seeking the relief by way of directions to get the vacant possession of the said property from Shri M.K. Mohammed. There was compromise or settlement between Shri M.K. Mohammed and Court Receiver and in pursuance of the Consent Terms filed in the Hon ble High Court in the Suit filed by the Court Receiver, the Hon ble High Court passed a Consent Decree. Meantime, the assessee entered into an agreement with Shri M.K. Mohammed for acquiring the rights in the property which was in his possession for the consideration of ₹ 9, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of controversy to be decided is whether the said transfer was in the A.Y. 2007-08. Admittedly, the assessee made the compliance on 4.11.2004 and in our opinion this issue has to go in favour of the assessee as the transfer took place on the date i.e. 4.11.2004 when the agreement in compliance with the Consent Decree was executed and the assessee vacated the property, which was subject matter of the litigation between her and the co-owners. 9. We are unable to accept the plea of the Ld. Counsel that at the most, the transfer could be in the year 1999 when the Consent Decree was passed for the reason that though the Consent Decree was passed it was subject to certain conditions and on compliance of the concessions only the assessee was to be conferred with the ownership of the alternate premises agreed to be given in the Shriniketan building by co-owners/landlords of the property. We, therefore, hold that the transfer took place on 04.11.2004 and not on 22.02.2007 even if the Deed of confirmation was registered on that date. We, accordingly, confirm the order of the Ld. CIT (A) on above reasons that capital gain cannot be brought to tax in this year and accordingly we decide quest ..... X X X X Extracts X X X X X X X X Extracts X X X X
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