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TMI Blog1981 (10) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... rights and also to spend a sum of Rs. 3,35,000 for the repairs of the building. The share of the assessee in these came to Rs. 40,661. The landlord sold his ownership rights to the society on 27-10-1970. On 16-2-1975, the assessee sold his shop room to another for Rs. 4,11,000. This was inclusive of the furniture and telephone in the premises, which were valued at Rs. 9,649 and also of 5 shares in the co-operative society valued at Rs. 250. Thus, the sale price of the shop premises came to Rs. 4,01,101. The assessee contended that the sale related to two separate rights, namely, the tenancy rights and the ownership rights, and that while the capital gains, if any, in respect of the tenancy rights will be long-term capital gains, those in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . On the formation of the society, there was merely an improvement in the interest of the assessee in the premises and the nature of the interest of the assessee continued to remain the same as before. The interest of the assessee as on 1-1-1954 was increased by only Rs. 44,600, being the payment made to the promoters of the society. The interest of the assessee was being held for more than 5 years and the gain was a long-term capital gain. The consideration received by the assessee for the transfer was for the right title and interest in the premises, which was only tenancy right, and for the membership rights in the society. The cost of acquisition of the tenancy value was nil and the portion of the consideration for the sale which is att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the landlord and for effecting certain repairs to the building. This payment is clearly traceable to the acquisition of the ownership rights by the assessee. The order of the ITO shows that before him even the assessee had split up his tenancy rights and ownership rights and had claimed that the gains in respect of the sale should be treated as long-term and short-term capital gains, respectively. We, therefore, reject the contention that the provisions relating to capital gains are not attracted to the transaction at all. 6. The next and the alternative contention of the learned counsel for the assessee was that in any case the sale consideration obtained by the assessee should be apportioned between his tenancy rights and his owners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Flat Owners Co-operative Society, a copy of which was made available. The changes, if any, made in these bye-laws while adopting the same for the co-operative society of the present building are not indicated. But it will be clear from the standard by-laws that the assessee cannot be equated to a tenant and the society to a landlord. The concept of ownership flats and the role of the co-operative society in managing the flats is well established and well-known. It may be that certain restrictions have been imposed on the occupants of the flats and they cannot sell away the flats as in the case of an absolute owner. But, once the flat is transferred with the permission of the society and the shares held by the owner of the flat in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the occupancy right in view of the decision of the Supreme Court referred to earlier. In any case, the capital gains with regard to the ownership right can be worked out as admittedly it has been acquired at a cost. It is also clear that the capital gains, if any, with regard to the occupancy right, will be long-term capital gains while that with regard to ownership right will be a short-term capital gain. As the necessary materials for working out the matter in the light of what is stated above are not available, the matter will be restored to the Commissioner (Appeals) for the limited purpose mentioned above. 9. In the result, the order of the Commissioner (Appeals) with regard to the matter raised in the present appeals is set asid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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