2017 (2) TMI 1467 - AT - Income Tax

Correct head of income - premium received on account of the tenancy rights - capital gain v/s income from other sources - AO taxed the premium on transfer of tenancy rights as capital gains and also allowed deduction u/s 54EC - LD THAT - Respectfully, following coordinate Bench decision in assessee s own case 2016 (5) TMI 1532 - ITAT MUMBAI and considering the facts of the case, we are of the view that the CIT(A) has rightly directed the AO to assess this receipt of premium as capital gain taxable in the hands of the assessee. Even otherwise, this issue is covered in favour of assessee by the principle of consistency in view of the decision of Radha Soami Satsang 1991 (11) TMI 2 - SUPREME COURT and Gopal Purohit 2010 (1) TMI 7 - BOMBAY HIGH COURT . We find no infirmity in the order of CIT(A) and hence the same is confirmed. These four appeals of Revenues are dismissed. Reopening of assessment u/s 147 - return was processed under section 143(1) - HELD THAT - Admittedly, the reopening was beyond four years and no assessment was framed under section 143(3) of the Act. The only processing was done under section 143(1) of the Act for these assessment years. Accordingly, we are of the view that no opinion was formed and assessee case does not fall under the proviso of section 147 of the Act. Accordingly, we confirm the finding of CIT(A) and this issue both the appeals of assessee is dismissed. The appeals of assessee are dismissed.

Summary

Issues:
1. Assessment of premium received on account of tenancy rights as capital gain or income from other sources.
2. Jurisdictional issue of reopening under section 147 read with section 148 of the Income Tax Act.

Issue 1: Assessment of Premium Received on Account of Tenancy Rights
The case involved six appeals, two by the assessee and four by the Revenue, arising from orders of CIT (A) regarding the assessment of premium received on tenancy rights. The primary dispute was whether the premium should be assessed as capital gain or income from other sources. The Revenue contended that the premium, though received by the landowner, should be taxed as income from other sources as the ownership did not change. The assessee argued for consistency, citing previous assessments where the premium was taxed as capital gain. The Tribunal referenced a similar case where a windfall gain was taxed as income from other sources. However, the Tribunal upheld the CIT (A)'s decision to assess the premium as capital gain, emphasizing the principle of consistency and previous assessments in favor of the assessee. The appeals by the Revenue were dismissed, affirming the assessment of the premium as capital gain.

Issue 2: Jurisdictional Issue of Reopening under Section 147 and Section 148
The second issue concerned the jurisdictional aspect of reopening under section 147 read with section 148 of the Income Tax Act for the assessment years 2007-08 and 2008-09. The AO reopened the assessment based on the treatment of premium on tenancy rights as capital gain in previous years. The assessee contested the reopening, arguing that no assessment was framed under section 143(3) and that the processing was done under section 143(1) for these years. The Tribunal agreed with the assessee, stating that since no assessment was framed under section 143(3) and the processing was under section 143(1), the reopening was beyond four years and did not meet the criteria under section 147. As a result, the Tribunal confirmed the CIT (A)'s finding and dismissed the appeals of the assessee on this jurisdictional issue.

In conclusion, the Tribunal upheld the assessment of premium received on tenancy rights as capital gain in the first issue, citing consistency and previous assessments in favor of the assessee. Additionally, the Tribunal dismissed the appeals on the jurisdictional issue of reopening, ruling that the criteria under section 147 were not met. The appeals of both the assessee and the Revenue were ultimately dismissed.