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2019 (8) TMI 615

..... h, there is no supporting evidences filed in support of contents of affidavit explaining reasons for not filing the appeal, but a sworn statement in form of affidavit cannot be ignored in total. Further, when we go through, the reasons given by the assessee for not filing appeal in time, we find that the assessee was hospitalized for sickness, which is evident from the fact that during the period from 24/07/2008 to 11/09/2009, he was in hospital for three occasions for different treatments. We, further noted that when health issues and income tax matter comes together, certainly the matter concerning health issues needs to be given preference. In this case, it is not in dispute that the assessee is aged more than 82 years and obviously, the age old related sickness/health issues will follow. Therefore, we do not find anything suspicious about reasons given by the assessee for condonation of delay in filing of appeal. Nature of assets sold - computation of Period of holding - Transferable Development Rights (TDR) issue in lieu of acquisition of immovable property by the Municipal Corporation of Pune - as per assessee right in TDRs is a capital asset as defined u/s 2(14) - assesse ha .....

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..... is appeal filed by the assessee is directed against the order of the Commissioner of Income Tax Appeals-12, Mumbai, dated 09/03/2009 and it pertains to the Assessment Year 2005-06. The assessee has raised the following grounds of appeal:- 1. The learned Commissioner of Income Tax (Appeals) erred in holding that the gains of ₹ 25,00,000/- were assessable as speculation gains and In doing so he amongst others failed to appreciate that a. the consideration received under the deed of transfer dated 14.6.2004 related to a capital asset (TDR rights) b. The TDR rights have been granted by the Government of Maharashtra for the city of Pune c. The appellant had not transferred the capital asset viz. TDR under the memorandum of understanding dated 17.8.1996. d. The amount received by the appellant under the 'deed of transfer' of TDR rights was in the nature of capital receipt not liable to income Tax. e. The capital asset transferred did not have any cost of acquisition and accordingly the gain arising on transfer of TDR was not assessable U/S. 45 of the Act. WITHOUT PREJUDICE TO THE ABOVE 2. The learned Commissioner of income Tax (Appeals) erred in riot assessing the income ar .....

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..... 09/2009, he was in hospital for three occasions for different treatments. We, further noted that when health issues and income tax matter comes together, certainly the matter concerning health issues needs to be given preference. In this case, it is not in dispute that the assessee is aged more than 82 years and obviously, the age old related sickness/health issues will follow. Therefore, we do not find anything suspicious about reasons given by the assessee for condonation of delay in filing of appeal. Therefore, we are of the considered view that there is a merit in condonation petition filed by the assessee and accordingly, condoned, the delay in filing in appeal and admit the appeal for hearing. This view expressed by us is fortified by the decision of Hon ble Supreme Court in the case of Ummer Vs. Pottengal Subida and others (supra), where in paragraph 17, the Hon ble Supreme Court categorically held that the Hon ble High Court should have taken liberal view in the matter and held the cause shown by the appellant as sufficient cause within the meaning of section 5 of the Limitation Act, and accordingly should be condoned, the delay in filing of the appeal. Therefore, consideri .....

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..... guments made before the AO. The sum and substance of arguments of the assessee before the Ld.CIT(A) are that right in TDRs is a capital asset as defined u/s 2(14) and hence, gain arose from transfer of capital asset is assessable under the head capital gains. The Ld. CIT(A) after considering the relevant submission of the assesee and also taken note of sale of TDR in the year 1996, repurchase the same on 14/06/2004 and subsequent sale to third party during the same financial year, came to the conclusion that the transactions is in the nature of speculative transactions as defined u/s 43(5) and accordingly, assessed surplus generated from sale of TDRs as speculative business profit. Similarly, in respect of exemption u/s 54EC of the I.T.Act, 1961, the Ld. CIT(A) held that when consideration received from sale of TDR does not fall under the head capital gains, the question of giving benefit u/s 54EC of the I.T.Act,1961, for the said amount does not arise. The relevant findings of the Ld. CIT(A) are as under:- 2.3 I have considered the submissions of the Appellant and the asstt. order. It is an undisputed fact that the Transferable Development Rights (TDR) was not inexistence when the .....

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..... n the actual delivery of the TDRs. The Appellant had contemplated to make profits out of transactions without the requirement of delivering the TDRs. In the instant case, the TDR has to be treated as a commodity like stock and shares, immovable properties, etc. The transactions carried out by the Appellant are within the meaning of speculative transactions as provided in section 43(5). In view of the above, it is held that the transactions made on account of the non-existing TDRs cannot be held as a transfer of capital asset. The transactions are nothing but a speculative business activity out by the Appellant and the profits made thereof are in the nature of speculative income. The Assessing Officer is directed to treat the gains of ₹ 25 lacs as speculative business Income of the Appellant. Accordingly, the ground nos. 1 & 2 are dismissed. 3. The ground no.3 is that the Assessing Officer erred in not granting deduction u/s 54EC for the consideration invested by the Appellant in NABARD Bonds. 3.1 As I have held that the consideration received amounting to ₹ 25 lacs hits not falling under the head Capita! Gains, the question of granting deduction u/s 54EC for the sai .....

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..... as got a new buyer for right in TDR and accordingly, one more MOU agreement dated 17/08/1996 was entered into and transferred right in TDR to third party for a consideration of ₹ 50 Lac. The fact that there was no TDR in hand, when original MOU was entered into in the year 1996 and also in the year 2004 was not disputed by both the parties. The Ld. AO has assessed surplus from sale of right in TDR under the head Short Term Capital Gain, for the reason that the period of holding of the asset is less than 36 months, because the assesse has sold right in TDR in the year 1996 and bought back, the same during the financial year 2004-05, therefore, he opined that the period of holding of the asset is less than 36 months and hence, the same is assessable under the head Short Term Capital Gain. The Ld. CIT(A) has altogether taken a different view and assessed surplus under the head speculative profits by taking note of provisions of section 43(5), for the reasons that the assessee is involved in repetitive transactions of buying and selling of TDR. Except this, the lower authorities had never disputed the fact that the assessee has transferred right in TDR to third party. In this fac .....

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..... s conferred on the assessee from the date of acquisition of the property. The subsequent cancellation and sale of TDR to third party cannot be considered as purchase of TDR from a third party. Therefore, we are of the considered view that, for the purpose of determination of period of holding, the period of holding of the asset from the date of acquisition of property by the municipal authorities has to be considered, but not from the date, when MOU was cancelled in the year 2004. If you take, the original date of acquisition of property, then the period of holding of the asset is more than 36 months and hence, surplus from transfer of asset is rightly assessable under the head long term capital gains. 11. Coming to exemption claimed u/s 54EC of the I.T.Act, 1961. The AO never discussed, the issue of exemption claimed u/s 54EC of the I.T.Act, 1961 for purchase of NABARD Bonds in his assessment order, although surplus generated from transfer of right in TDR has been assessed under the head income from capital gains. Although, the Ld. CIT(A) has admitted fact that the assessee has claimed benefit of exemption u/s 54EC of the I.T.Act, 1961, but exemption claimed was denied, because in .....

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