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TMI Blog2010 (1) TMI 758X X X X Extracts X X X X X X X X Extracts X X X X ..... f leasehold land to MIDC and part transfer to Lucas TVS Ltd. on the ground that the assessee had never owned the capital asset. 2. Without prejudice to above, it is submitted that the learned CIT(A) should have considered the loss on transfer of leasehold rights to Lucas TVS Ltd. as allowable long-term capital loss. 3. The learned CIT(A) erred in disallowing a sum of Rs. 1,17,818 being 10 per cent of exempt income under section 14A of the Income-tax Act, 1961. 4. The learned CIT(A) erred in disallowing a sum of Rs. 20,60,000 under section 36(1)(iii) being entire interest on fund borrowed during the year." 2. At the time of hearing before us, the learned AR has not pressed Ground No. 3; therefore, the same is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to which it the land was allotted to it. The assessee vide letter dated 22-1-2003 surrendered the original documents, lease agreement and possession Receipt dated 27-1-1999 to MIDC. The assessee also requested to MIDC to sub-divide the plot as under:- (a) B1-72,000 sq.mtrs. (b) Bl/2- 1,28,000 sq.mtrs. Matter 1 The Assessing Officer was of the view that the assessee never became owner of the land nor any right in a capital asset had accrued to the assessee in this transaction because MIDC had entered into a conditional MoU with the assessee to the effect that the MIDC will be bound to lease the land to the assessee on a long leave basis provided the assessee fulfilled certain conditions which were specified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t required the appellant to submit the plans and commence construction of manufacturing facility thereon with a period of 48 months from the date of execution. However, due to uncertain market conditions the manufacturing facility was not set up. In view of the above on 22-1-2003 the appellant has surrendered the land along with the original documents in respect of plot at Chakan and possession receipt dated 27-1 -1999 to MIDC. From the details and material available on record and also from the MoU entered into by MIDC who agreed to transfer it to the appellant after fulfilling certain conditions imposed by the MIDC as per MoU entered into. As the appellant failed to observe and fulfil such conditions subject to which the land would have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from MIDC and while returning back the said plot of land to MIDC the appellant had incurred a capital loss amounting to Rs. 3,69,08,817 This ground is dismissed." 5. The learned AR submitted that lease or right is in the nature of capital assets. The land was acquired by the assessee by an agreement. The possession of the land was taken. Consideration was paid. This valuable right was surrendered by the assessee, therefore, there is Transfer of a capital asset, which is liable to capital gains or loss'. The land claimed by the assessee is in respect of long-term capital assets, therefore, the same is allowable as long-term capital loss. The learned AR in support of his contention relied upon the following judgments:- (a) A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h his business or profession, but does not include- (i) any stock-in-trade, consumable stores or raw materials held for the purposes of his business or profession; [(ii) personal effect, that is to say, movable property (including wearing apparel and furniture) held for personal use by the assessee or any member of his family dependent on him, but excludes- (a) jewellery; (b) archaeological collections; (c) drawings; (d) paintings; (e) sculptures; or (f) any work of art. Explanation.- For the purposes of this sub-clause, "jewellery" includes- (a) ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious met ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment;] "(47) ['transfer', in relation to a capital asset, includes,-(i) the sale, exchange or relinquishment of the asset; or (ii) the extinguishment of any rights 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] [(iva) the maturity pr redemption of a zero coupon bond; or] [(v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882); or & ..... X X X X Extracts X X X X X X X X Extracts X X X X
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