Tenancy Rights, Income Tax

[PrateekKumar Khemka]

Mr. X is a tenant in Building XYZ which is in a dilapidated condition. He is a tenant from the last 10 years have tenancy rights in the property. He is in possession of 1000 sq.ft. as a tenant.

In the year 2018, the landlord wants to demolish the existing building and build a new building in the same place. The tenant enters into an agreement with the landlord for vacancy of tenancy in lieu of another flat of 1000 sq.ft. in the remodeled building. The tenant shall pay to landlord ₹ 1500/sq. ft. against this new flat to meet the cost of construction or additional expesnes.

In the year 2020 the landlord transfers 1000 sq.ft. to the tenant on ownership basis after receiving payment of ₹ 1500/sq ft. Stamp duty value of flat as on registry date is 5000/sq. ft.

Queries:

1. How shall the amount paid as Tenancy Right i.e., 3500/sqft be construed in the books of Landlord/Developer? Whether FMV or the amount received in consideration be considered as revenue. Considering Sec 43CA?

In this case, can any specific decision be referred?