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TMI Blog2013 (12) TMI 1101X X X X Extracts X X X X X X X X Extracts X X X X ..... n 55(2) – The issue was restored for fresh adjudication. - IT Appeal No. 8968 (Mum.) of 2010 - - - Dated:- 20-2-2013 - DINESH KUMAR AGARWAL AND D. KARUNAKARA RAO , JJ. For the Appellant : Rakesh Joshi. For the Respondent : Manoj Kumar. ORDER:- PER : D. Karunakara Rao This appeal filed by the assessee on February 22, 2010 is against the order of the Commissioner of Income-tax (Appeals)-23 Mumbai, dated October 25, 2010 for the assessment year 2007-08. 2. In this appeal, the assessee raised the following grounds which read as under : "1. The learned Commissioner of Income-tax (Appeals) has erred in law and in facts in upholding the order passed by the Assessing Officer under section 143(3) of the Income-tax Act, 1961, which is illegal and bad in law. 2. The learned Commissioner of Income-tax (Appeals) has erred in law and in facts in concurring with the assessment of Rs. 85,00,000 received from surrender of tenancy/occupancy rights as 'income from other sources' instead of the declared head of income, i.e., 'long-term capital gain'. 3. Without prejudice to the above, the learned Commissioner of Income-tax (Appeals) ought to have held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the rights sold by him are not tenancy rights, consequentially provisions of section 55(2) does not have any application to the present case. What is sold by the assessee is the "right of litigation" and the income was brought to tax under the head "Income from other sources". The assessee was not given a benefit of the provisions of section 54 in respect of residential house purchased by him at Vadala High. 5. During the first appellate proceedings, the assessee could not succeed and the Commissioner of Income-tax (Appeals) confirmed the views of the Assessing Officer and relevant discussion is given in para 2.3 of the impugned order. In support of his views, the Commissioner of Income-tax (Appeals) relied on the Special Bench decision of the Tribunal in the case of Cadell Weaving Mill Co. (P.) Ltd. v. Asstt. CIT [1995] 55 ITD 137 (Bom.) (SB) for the proposition that the tenancy right is merely a personal right and it is not a property right over the premises in such a case, there is no capital asset as per decision given to the capital asset in the Act. Relying on the said decision of the Tribunal, the Commissioner of Income-tax (Appeals) came to conclusion that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of section 55(2) of the Act, learned counsel submitted that the said provisions were subsequently amended. Consequentially, right to remain in possession being one of the different shades of tenancy right, constitutes a capital right in the asset and the same is liable to be taxed under the head "Capital gains" as per the amended provisions of section 55(2) of the Act. Further, he drew the analogy of the facts with that of the Cadell Weaving Mill Co. (P.) Ltd. (supra) and mentioned that this is also a case where the lease agreements were renewed after 1975 and the assessee continue to occupy the premises legally. That the assessee was also having a right to remain in possession and the hon'ble High Court in the absence of amended provisions of section 55(2) held it as a "personal right". It is a fact that the assessee never paid any rent since 1975. 7. Per contra, the learned Departmental representative heavily relied on the orders of the Assessing Officer as well as the Commissioner of Income-tax (Appeals). He has nothing to say with reference to the mistaken rights that the agreement dated August 14, 2006 was struck with M/s. Amur Real Estate Pvt. Ltd. Further, he argued th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, which is the fact in this case, there must a Court order declaring the occupant as a tenant. The assessee has not furnished copies of the orders which contain the direction to the occupants of the premises to make payment to the landlord and there is no clarity on the nature of such payment. It is a fact that the said amount was not paid by the assessee to the landlord. There is need for perusal of the said orders/awards to determine the exact nature of the assessee if he is a tenant and earned tenancy rights. In the remand proceedings, the Commissioner of Income-tax (Appeals) shall also adjudicate how the "right to remain in possession of the premises or right to litigate" are different from "the right to tenancy" as both the rights allow the assessee to reside in the premises. Further, he shall also consider the fact that the sum of Rs. 84 lakhs was not paid by the landlord to qualify the normal practice in surrender of tenancy right. In this case, the assessee received sum from one Shri Rajan Kirthanlal Shah, who is undisputedly not the landlord. It is unknown if Shri Shah has surrendered the right in favour of the M/s. Amur Real Estate (P.) Ltd. In our opinion, the transa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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