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TMI Blog2012 (9) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of the AO treating Rs.8 lakhs received by the assessee on relinquishment of tenancy rights as 'income from other sources' and not 'as capital gains' offered by the assessee and in not allowing the relief u/s 54EC of the Income-tax Act, though the assessee has deposited the said amount in specified investment in time. 3. The brief facts of the case are that the assessee is an individual having income from other sources and capital gains. For the relevant assessment year, the assessee filed his return of income admitting income of Rs.1,49,248/-. During the assessment proceedings u/s 143(3) of the Income-tax Act, the AO observed that as per the information available from the Annual Information Return filed with the Department, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ains' and treated the same as 'income from other sources' and brought it to tax and thus did not give any benefit u/s 54EC of the Act. 4. Aggrieved, the assessee preferred an appeal before the CIT(A), who confirmed the order of the AO and the assessee is in second appeal before us. 5. The learned counsel for the assessee, while reiterating the submissions made by the assessee before the AO, submitted that the assessee was a tenant of mezzanine floor of shop No.15 of Piplewala Building, Shaheed Bhagat Singh Road, Colaba, Bombay from1964 to October 1982. He submitted that the assessee carried on the business of an advertising agent at this premises and that ground floor of shop No.15 was occupied by one Shri Sonny Nainan who was carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per Memorandum of Understanding dated 20.12.2001, the assessee agreed to surrender his share of tenancy right to Shri Sunny Nainon for a sum of Rs.10 lakhs as consideration. He submitted that the assessee received a cash of Rs. 2 lakhs on the date of the agreement, while Rs.8 lakhs was received during the previous year 2005-06 relevant to the assessment year 2006-07 and the said amount has been invested in NABARD bond and claimed exemption u/s 54C of the Act. The learned counsel for the assessee submitted that the partnership firm existed only on paper for the purpose of securing tenancy right over the property in Mumbai and not with any intention of carrying on any business. He drew our attention to various clauses of partnership deed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estate business and there was common intention to contribute capital and share the revenue in the same proportion. According to her in such a situation, the partnership existed and tenant was the firm and not the individual partners. She submitted that when the individual partners did not have any right of tenancy, there is no question of any relinquishment of such right resulting in any capital receipt. Thus according to her, the amount received by the assessee was in fact 'income from other sources as rightly been assessed by the AO'. As regards the year of taxability, the learned DR submitted that the assessee has itself offered income on receipt basis in the assessment year 2006-07 and, therefore, the same has to be considered in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also not in dispute that even after 1982, the property was not occupied jointly and severally but was occupied individually and separately. Thus, the advantage of common occupation and enjoyment is absent. It is also worth noting that it was not necessary to mention that the tenancy right over the property could not be separated without mutual consent had it been the right of the firm. Thus the intention of the parties to hold the right of tenancy over the respective portion of the property was clear from the clauses of the lease deed itself. Thus in line with the said clause, when the assessee relinquished his right, it has resulted in capital receipt and thus the assessee has rightly claimed it to be a capital receipt and is also eligib ..... X X X X Extracts X X X X X X X X Extracts X X X X
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