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TMI Blog2014 (5) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... ied in confirming the action of the Assessing Officer in charging the long term capital gain at Rs. 27,44,173, without considering the cost of the property at the time of acquisition. 2. Facts in brief:- The assessee is an individual who has shown sale of flat on which she has received sale consideration of Rs. 38,78,375. The cost of acquisition of the property has been taken by the assessee at Rs. 3,64,000. 3. The assessee, before the Assessing Officer had submitted that the flat which has been sold during the year was allotted to the assessee on 6th May 1982, as an alternate accommodation for surrendering her tenancy rights in the old structure by the builder. The assessee was an old tenant along with her son in the old building admeasu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... handed over by the builder to the society. Hence, the Assessing Officer took the cost of acquisition of Rs. 2,000 only. The Assessing Officer relied upon the decision of the Hon'ble Supreme Court in Varghese (K.P.) v/s ITO, [1981] 131 ITR 597 (SC) and held that notional value cannot be accepted. He also distinguished the case laws relied upon by the assessee in CIT v/s Irani (D.A.)(Dr.), [1981] 234 ITR 850 (SC) and the decision of Jurisdictional High Court in CIT v/s Abrar Alvi, [2001] 247 ITR 312 (Bom.). Accordingly, he rejected the cost of acquisition of the flat at Rs. 3,64,000 and the same was taken at Rs. 2,000. Thus, the long term capital gain was worked out in the following manner:- Sale consideration as per market value under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; iv) Atul G. Purnaik v/s ITO, [2011[ 132 ITD 499 (Mum.) 7. As regards the value of the flat of Rs. 3,64,000, he submitted that the assessee has taken the said value on the basis of similar transactions undertaken by the builder in the month May 1982, therefore, such a basis cannot be rejected. 8. The learned Departmental Representative, on the other hand, relied upon the findings of the Assessing Officer and the learned Commissioner (Appeals) and submitted that the assessee has not incurred any money on the acquisition of the flat and, therefore, the A.O. has rightly denied the cost of acquisition of flat of Rs. 3,64,000. 9. We have carefully considered the rival contentions and perused the relevant findings of the authorities below. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,64,000. It is now quite settled that for the purpose of cost of acquisition under section 48 and 49, the tenancy rights is to be taken into consideration. This is evident from sub-section (2) of section 55. The builder has given the alternate flat to the assessee only by virtue of surrender of tenancy rights by the assessee. Had there been no tenancy right, the builder would have not offered any flat to the assessee, on ownership basis. Thus, it is a valuable right on which cost of acquisition has to be determined. It is not a case that the cost of acquisition cannot be determined in lieu of the surrender of tenancy right at all. Once the cost of acquisition is determinable, the benefit of such acquisition has to be given while computing t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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