TMI Blog2020 (12) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... acquisition of an asset mentioned in clause (a) to Section 55(2) of the Act, then the cost shall be taken as Nil. Hence the Assessing Officer was legally incorrect in his view. Thus, we uphold the finding of the ld. CIT(A) on this issue. Deduction u/s. 54EC and 54F - As the main question as to whether the assessee has rightly offered the income from the surrender of tenancy rights, under the head Capital Gains has been held in favour of the assessee and as all the conditions prescribed for grant of claim of deduction u/s. 54EC and u/s. 54 of the Act, are met, in our view, the ld. CIT(A) has rightly granted relief to the assessee. Appeal of the revenue is dismissed. - ITA No. 1915/Kol/2019 - - - Dated:- 25-11-2020 - J. Sudhakar Reddy, Member (A) And S.S. Godara, Member (J) For the Appellant : S. K. Tulsiyan, Advocate For the Respondents : Imokaba Jamir, CIT D/R ORDER J. Sudhakar Reddy, Member (A) This appeal filed by the revenue is directed against the order of the Learned Commissioner of Income Tax (Appeals) - 1, (hereinafter the ld. CIT(A) ), passed u/s. 250 of the Income Tax Act, 1961 (the 'Act'), dt. 01/05/2019, for the Assessment Year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee had claimed that she would be entitled to interest after 10 years on the construction loan given by her to the landlord of ₹ 8,00,000/- but the supplementary deed shows that the interest would accrue to the assessee after 10 years. He argued that the assessee had not admitted any interest income thereon or furnished evidence of repayment of the construction loan. He argued that the assessee has not paid any price for purchasing of tenancy rights and hence the cost of acquisition is anyway -NIL-. He pointed out that the supplementary agreement dt. 08/04/1994 between the landlord and the tenant was not a registered document, and that the daughter-in-law of the landlord was the purchaser. He pointed out that the landlord had given a loan fund to the daughter-in-law, which was in turn paid to the assessee and hence it was only compensation paid for vacating the flat. He submitted that the cost of acquisition was claimed as the construction loan given and the interest accrued thereon. He submitted that the Assessing Officer was right in bringing to tax, the amount in question as business income. He drew the attention of the Bench to the order of the ld. CIT(A) and submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st acquisition of the tenancy rights and this tenancy in respect of this flat was acquired by the assessee from such date. The impugned construction loan of ₹ 8,00,000/- was given to the landlord for construction of the building which was given on monthly rent, to the assessee. The said construction loan of ₹ 8,00,000/- is directly linked with the acquisition of the Tenancy Rights. Although there was a clause in the Article of Agreement dated 08/12/1994 that the construction loan shall be repaid by the Landlord to the tenant with interest thereon of 4% p.a. after the expiry of 10 years, the said loan of ₹ 8,00,000/- or any interest thereon was never repaid by the landlord to the assessee. Hence, the said payment of ₹ 8,00,000/- was rightly claimed as Cost of Acquisition in computation of Capital Gains. Hence, the allegation of the Assessing Officer that the assessee had not paid any price for purchasing the tenancy rights, is not true. 8.1. On these facts, the issue is whether the transfer of tenancy rights is transfer of capital asset or not. 9. The Hon'ble Calcutta High Court in the case of A. Gasper vs. CIT reported in (1979) 117 ITR 581 (Cal.). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... embur (P) Ltd. [2005] 142 Taxman 713 (SC), held as follows:- Section 45 of the Income-tax Act, 1961 - Capital gains - Chargeable as - Assessment year 1987-88 - Respondent/assessee surrendered its tenancy right to lessor prematurely in consideration of which it received a sum of ₹ 35 lakhs - Assessing Officer held that amount in question was taxable as 'income from other sources' under section 56 read with section 10(3) - On appeal, Commissioner (Appeals) held that assessee was liable to pay capital gains on amount received after deducting certain amount as cost of acquisition - On cross appeals, Tribunal, however, came to conclusion that cost incurred by assessee to acquire leasehold rights was incapable of being ascertained and, therefore, capital gains could not be computed as envisaged in section 48, and, consequently, capital gains earned by assessee, if any, was not exigible to tax - High Court affirmed Tribunal's order - Whether since stand taken by department before High Court was that cost of acquisition of tenancy was incapable of being ascertained, High Court was correct in affirming order passed by Tribunal - Held, yes - Whether in view of finding ..... 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