9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (4) TMI 346 - AT - Income TaxTaxability of sale of sub-tenancy rights - Income from Other Sources OR Income from Capital Gains - Acquiring of interest/title in the premises as subtenancy - transfer/assignment of tenancy/occupancy rights by wife of the assessee outgoing tenant in favour of incoming tenant - HELD THAT - we hold that amount received by the assessee from Dr Maninder Chhabra was on account of transfer of capital asset being interest held by the assessee in ground floor of said shop towards occupancy rights which was acquired by way of permission granted by landlord and also with the consent of his wife supported with uninterrupted possession and usage of ground floor of said shop by the assessee since 1994 for running his clinic till the date of agreement i.e. 24.06.2013 (almost 20 years or so) , which was further supported by payment of rent by assessee to his wife for such occupancy/usage of said premises and hence the said sum of ₹ 1,40,00,000/- received by the assessee was rightly been offered to income-tax by the assessee under the head Income from Capital Gains in the return of income filed with the Revenue. Under these circumstances, we donot find any reasons that when tenancy is recognised as capital asset within meaning of Section 55(2) , as to why sub-tenancy in favour of the assessee cannot be treated as capital asset more so , capital asset is so widely defined u/s 2(14) - decided against revenue
Issues Involved:
1. Whether the ?1,40,00,000 received by the assessee should be taxed under "Income from Other Sources" or "Capital Gains." Issue-wise Detailed Analysis: 1. Taxability of ?1,40,00,000 Received by Assessee: Facts of the Case: The assessee, a doctor by profession, received ?1,40,00,000 as a confirming party in a deed of transfer and assignment of tenancy/occupancy rights. The premises in question were initially rented by the assessee's wife, Dr. Rajul Shah, from M/s. Nathuram Ramnarayan Pvt. Ltd. since 1994. The assessee was allowed to run his clinic on the ground floor of the premises, while his wife operated her clinic from the mezzanine floor. The assessee paid rent to his wife for the ground floor, which she declared in her income tax returns. Arguments and Evidence: - The assessee claimed that the amount received was for the transfer of his occupancy rights, which he held since 1994, making it a capital asset. - The AO contended that the assessee did not have any tenancy rights and was merely allowed to use the premises, thus the amount should be taxed under "Income from Other Sources." - Evidence provided included tenancy agreements, rent receipts, telephone and utility bills, licenses, and certificates showing the assessee's long-term occupation and usage of the premises. CIT(A) Ruling: - The CIT(A) ruled in favor of the assessee, stating that the right to occupy the premises is a "capital asset" under Section 2(14) of the Income Tax Act. The ?1,40,00,000 received was for the transfer of this capital asset and should be taxed under "Capital Gains." - The CIT(A) cited various clauses from the agreement to support the contention that the payment was for giving up the occupancy rights, which is a capital asset. Tribunal's Observations: - The tribunal noted that the definition of "capital asset" under Section 2(14) is broad and includes property of any kind, including occupancy rights. - The tribunal referred to several judicial precedents, including the Supreme Court's decision in CIT v. D.P. Sandhu Bros. Chembur Pvt. Ltd. and the Gujarat High Court's decision in ACIT v. G.C. Shah & Co., which held that tenancy rights are capital assets. - The tribunal affirmed that the assessee's long-term, uninterrupted possession and usage of the premises, supported by rent payments and various licenses, constituted a capital asset. - The tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision that the ?1,40,00,000 received by the assessee was taxable under "Capital Gains." Conclusion: The tribunal concluded that the ?1,40,00,000 received by the assessee for transferring his occupancy rights was a capital receipt and should be taxed under "Capital Gains," not "Income from Other Sources." The Revenue's appeal was dismissed.
|
