TMI Blog2018 (6) TMI 1033X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore entitled for exemption u/s. 54F of the Act. This agreement was neither produced before us nor any proof of investment was furnished either before the Ld.CIT(A) or before us. Therefore, though in principle we agree with the view taken by the Ld.CIT(A) that the assessee is entitled for exemption u/s. 54F for the limited purpose of verification of the fact that the assessee acquired tenancy rights in the above referred property has to be examined with reference to the agreement and proper proof. - ITA NO.5016/MUM/2016 - - - Dated:- 15-6-2018 - SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI N.K. PRADHAN, HON'BLE ACCOUNTANT MEMBER For The Assessee : Shri Neelkanth Khandelwal For The Department : Shri V. Vidyadhar ORDER PER C.N. PRASAD 1. This appeal is filed by the Revenue against order of the Ld. Commissioner of Income-tax (Appeals) 29 Mumbai dated 25.05.2016 for the Assessment Year 2012-13. 2. Revenue has raised the following grounds in its appeal: - 1) On, the facts and in the circumstances of the case, the CIT(A) has erred in law as well as on facts in holding that the provision of section 55(2)(a) is not applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umbai. Smt. Rati Bhiwandiwala was occupying the property for more than 50 years. Photo copy of the rent received prior to 1966 was furnished as proof before the Assessing Officer. Shri. Harmuz M. Bhamgara had sold the tenancy rights during the relevant assessment year for ₹.60 lacs. The return of income was filed declaring NIL income. During the course of assessment, the AO noticed that the assessee has claimed exemption u/s. 54EC on account of investment made in certain funds and he asked the assessee to submit the proof of investment. However, the assessee failed to comply. Further, the assessee has submitted that they had invested ₹.40 lacs for acquiring tenancy rights in flat No.5, 2nd Fl., Bldg.No.11, Malcom Baug, S.V. Rd., Jogeshwari, Mumbai and submitted that they are entitled for exemption u/s.54F. Further the assessee submitted that she is entitled to consider Fair Market Value for tenancy rights as on 01.04.1981 as she is the tenant of the said premises prior to 1970. Rent received for Oct., 1966 was also furnished before the AO. The assessee has also furnished valuation report of tenancy rights as on 01.04.1981 and the working of the capital gain. The AO refu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4EC of the Act on account of investment in capital gains exemption bonds. According to the Assessing Officer, there is no cost of acquisition for the assessee who inherited the property because the case of the assessee falls under the provisions of section 55(2)(a) as the capital asset has been transferred by assessee is tenancy rights the cost of acquisition of the same for the purpose of section 48 and 49 which specifically mentioned under this provisions. According to the Assessing Officer section 55(2)(b) is in relation to any other capital asset which are not mentioned in section 55(2)(a) of the Act and therefore it has no relevance to the assessee s case. 7. We find that this aspect of the matter has been considered by the Ld.CIT(A) with reference to the submissions and the facts of the assessee s case and relevant case laws and held that the case of the assessee is falling under section 52(2)(b) of the Act. The Ld.CIT(A) following the decision of the Coordinate Bench of the Mumbai Tribunal in the case of Meher R. Surti v. ITO (supra) held that assessee s claim for adopting fair market value as on 01.04.1981 to compute the cost of acquisition is proper by observing as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Ajay I. Thakore, on identical facts held that the Fair Market Value as on 1.4.1981 for the property inherited by the assessee from his father has to be adopted. The jurisdictional ITAT in the case of Meher R. Surti vs. ITO, 61 SOT 5, Mumbai held as under: - Section 55 read with section 49 of the Income-tax Act, 1961 - capital gains - cost of acquisition - Assessment year 2009-10 - assessee transferred tenancy right in the property which was inherited from her grandfather who had acquired the same in 1944-45 - while computing capital gains, assessee claimed cost of acquisition being fair market value as on 1.4.1981 - AO held that there was no cost incurred for purchase /acquisition of tenancy rights and accordingly took cost of acquisition at nil - whether case of assessee fell u/s.49(l)(iii)(a) and once capital asset in question became property of assessee as per section 49(l)(iii)(a) and previous owner acquired property prior to 1.4.1981, then cost of acquisition of asset to previous owner or fair market value of asset as on 1.4.1981 at option of assessee provided under provisions of section 55 (2)(ii)(b) - Held, yes (paras 21 25) (in favour of the assessee ) 5 ..... 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