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TMI Blog1999 (6) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal as this issue was restored back to the file of Assessing Officer for fresh consideration and after reassessment Assessing Officer has allowed the relief to the assessee. Ground No. 1 as such is dismissed as not pressed. 3. As regards ground Nos. 2.1 and 2.2 relevant facts are like this that in March, 1986, assessee had applied for a plot of industrial land at Panoli,Gujarat, and for that purpose made a security deposit of Rs. 51,168 with Gujarat Development Industrial Corporation (GIDC). GIDC allotted the said plot of land to the assessee for a total sum of Rs. 17,75,397 and directed it to make payment of Rs. 3,03,911 within 30 days from the date of letter and the balance of Rs. 14,20,318 after two years along with 14% interest in 32 quarterly instalments. The terms of allotment had specified that the said plot was to be used within a period of 3 years and the transfer of unutilised plot was not permitted. At the time of allotment of the plot, the assessee felt that it had no possible use for the land in near future and considered the payment of the price of the land at that moment to be against its business interest. Under the circumstances, the assessee thought it p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon by assessee's counsel is concerned it was submitted that in all these cases, ownership is a pre-condition whereas by mere issuance of letter of allotment, in the absence of any physical allotment or other documents, it cannot be said that assessee bought any asset or acquired any right in the capital asset and therefore, ratio of these decisions is not applicable to the facts of the case. Suo motu surrender of right or self-created surrender cannot amount to transfer or extinguishment of right. While relying upon Ahmedabad Bench decisions as in Patel Brass Works v. Asstt. CIT [1994] 50 ITD 322 and Delhi High Court decision as in CIT v. J. Dalmia [1984] 149 ITR 215/20 Taxman 86, it was pleaded for confirmation of order of authorities below. It was also submitted that statutory right to purchase is not a right in property and Delhi High Court as referred to supra has discussed in detail while relying upon certain Supreme Court decisions the meaning of right in property. Since there was no right in the property nor any agreement or any other document produced which conferred any right in the plot of land for which application was made by the assessee and only earnest mone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wearing apparel; (b) precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel; (iii) agricultural land inIndia, not being land situate (a) in any area which is comprised within the jurisdiction of municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before 1st day or previous year; or (b) in any area within such distance, not being more than eight kilometers from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanization of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette; (iv) 6 1/2 per cent Gold Bonds, 1977, or 7 per cent Gold Bonds, 1980, or National Defence Gold Bonds, 1980 issued by the Central Government; (v) Special Bearer Bonds, 1981, issued by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of rights and interests which a person may conceivably hold and enjoy such rights which a person may lawfully exercise to the exclusion of others or which he is entitled to use and enjoy as he pleases provided he does not infringe any law of the State. 12. The expression "property" would take in both tangible and intangible assets. 13. Property may be movable or immovable. In Transfer of Property Act, 1882, modes and incidence of certain transfers of property are laid down, such as (i) sale, mortgage and lease of immovable property, (ii) exchanges, (iii) gifts, and (iv) actionable claims. 14. Section 3(26) of General Clauses Act, 1897, lays down that "immovable property" shall include land, benefits to and arising out of land and things attached to earth or permanently fastened to anything attached to the earth and section 3(36) of said Act defines "movable property' to mean property of every description except immovable property. It does not define the word 'property' as such. 15. In section 2(6) of the Registration Act, 1908, "immovable property" has been defined as including land, building, hereditary allowances, rights to ways, lights, ferries, fisheries or any other be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 954 Trav. - Coch. 515 and (vi) tenant's interest in demised premises Bombay Corpn. v. Lal Pancham AIR 1965 SC 1008. 20. As regards the concept of "property" in relation to definition of "capital asset" in section 2(14) is concerned, it is justified out that as according to section 2(14) "capital asset means property of any kind"...It has been observed in Syndicate Bank Ltd. v. Addl. CIT [1985] 155 ITR 681/29 Taxman 32 (Kar.) that use of the word 'means' shows that the definition is a hard and fast definition and that no other meaning can be assigned to the expression that what is put down in the definition. Hence the expression "capital asset" must include property of any kind held by the assessee on the surface of the earth, except what has been expressly excluded by sub-clauses (i) to (v) thereunder. But for this exemption, statutorily provided, these exempted properties would also otherwise fall within the defined meaning. The term "capital asset" has thus an all embracing connotation and includes every kind of property as generally understood except those that are expressly excluded from the definition, so too, the meaning of the expression 'property' which includes every con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the lessor would be regarded to hold that property as owner while the lessee would be regarded to hold the leasehold right, which is also a kind of property. 23. Similarly, sub-clause (47) of Section 2 of the Income-tax Act reads as under: "Section 2(47)--- "Transfer" in relation to a capital asset, includes--- (i) the sale, exchange or relinquishment of the asset; or (ii) the extinguishment of any fights therein; or (iii) the compulsory acquisition thereof under any law; or (iv) in a case where the asset is converted by the owner thereof into, or is treated by him as, stock-in-trade of a business carried on by him such conversion or treatment; or (v) any transaction involving the allowing of the possession of any immovable property to be taken or retained impart performances of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882); or (vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while other modes, though not within the plain meaning of the said word are enumerated by extending the meaning artificially. 26. The expression "transfer" should be read widely and not narrowly. This definition gives an artificially extended meaning to the term by including within its scope and ambit certain kinds of transactions which would not ordinarily constitute "transfer" in the accepted connotation of that word, e.g. "relinquishment of the capital asset"' and "extinguishment" of any rights therein. In recent Supreme Court judgment in the case of Kartikeya V Sarabhai meaning of 'Transfer' has been defined as under: "Section 2(47) of the income-tax Act, 1961, defines "transfer" in relation to capital asset. It is an inclusive definition which inter alia provides that relinquishment of an asset or extinguishment of any rights therein amounts to a transfer of a capital asset. It is not necessary for a capital gain to arise, that there must be a sale of a capital asset.Saleis only one of the modes of transfer envisaged by section 2(47) of the Act. Relinquishment of the asset or extinguishment of any right in it, which may not amount to a sale, can also be considered as a tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arterly instalments. Since the terms of allotment had specified that plot was to be used within a period of three years and the transfer of unutilised plot was not permitted, so assessee felt at the time of allotment of plot that it had no possible use for the land in near future and considered the payment of price of the land at that moment to be against the business interest. Under these circumstances, the assessee thought it prudent not to go ahead with the purchase of the plot and requested the GIDC to refund the security amount. Considering the fact that assessee could not use the plot of land within three years and also considering the fact that it had to pay huge sum of money which would have remained blocked had the land been purchased, it was seen expedient by the assessee to revoke the offer and loose the security deposit amounting to Rs. 51,168. Thus this was claimed as bona fide short-term capital loss as deduction on relinquishment of rights in the land allotted to the assessee which came to be rejected by the Assessing Officer. Therefore, in this case allotment of plot of land by GIDC falls within the expression "property of any kind" used in section 2(14) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of to him. The earnest money was paid. In exercise of right to have the conveyance executed in the name of the nominee, the assessee was nominated. The assessee was constrained to file suit against the contractor for an injunction against selling the property and obtained the injunction. When the suit reached here, the parties agreed to go for arbitration and assessee gave up his claim for specific performance of the agreement and retained his right to claim damages. The arbitrator awarded damages in the sum of Rs. 1,02,500. The question before the Court was whether this amount could be assessed to be tax as capital gains. The High Court and the judgment of Bombay High Court in Tata Services Ltd.'s case distinguished it on facts. The Court said that in the case before it, it had to be determined that the damages received by the assessee were in respect of capital asset. There was a breach of contract and assessee received damages in satisfaction thereof. He had a mere right to sue for damages. Assuming the same to be property, it could not be transferred under section 6(e) of the Transfer of Property Act. The learned DR also placed reliance on one Tribunal judgment as in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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