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TMI Blog2018 (5) TMI 1887X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2012-13 vide even date dated 20.03.2015 under section 143(3) of the Income Tax Act, 1961 (hereinafter 'the Act'). 2. The only issue in this appeal of Revenue is against the order of CIT(A) accepting the claim of the assessee that extinguishment of rights in the capital asset is a transfer of capital asset and directing the AO to assessee the same as capital gains and consequent allowance of claim of deduction under section 54 of the Act. For this Revenue has raised the following grounds: - "a. Whether the Ld. CIT(A) has erred on facts and in law in allowing the appeal of the assessee by accepting the claim of the assessee that there involved a transfer of a Capital Asset, without appreciating that for creating any right in a Capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee on 14.2.2012, treating the amount paid by its sister concern as the compensation for the said flats, when there was no necessity or legal requirement to pay any such compensation as the rights, if any, had already been surrendered by the assessee without seeking any compensation for the same. e. Without prejudice to the above, whether the Ld.CIT(A) has erred on facts and in law in allowing the appeal of the assessee by accepting the claim of the assessee u/s 54 of the Act, without realizing that provisions of section 54 applies to the transfer in a non-existing asset. f. Whether the Ld. CIT(A) has erred on facts and in law in allowing the appeal of the assessee and thereby failing to consider the substance of the case where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oject at 3 floor in the 8-Wing of Shubh Residency admeasuring 1500 sq. ft. @ 10200/sq. ft. at Rs. 1,53,03,800/- vide agreement dated 28.02.2012 registered on 29.02.2012. The above facts result in extinguishment of assessee's right in Flat No. 1703/1704/1705. As per Sec 2(47) of the Act, extinguishment of any right in relation to capital asset falls in the definition of transfer and hence will result in the Capital Gain chargeable to tax under section 45 of the Act. Since the above right was held for more than 3 years the assessee has treated the gain on extinguishment of right as long term. The AO has not accepted the claim of the assessee and treated the compensation on surrender of flats amounting to Rs. 1.10 crores as income of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der capital gain. Appellant is of the view that AO's observation that as builder has not build the flats it does not come under the purview of extinguishment of rights u/s 2(47)(ii) of the act is erroneous and according to the appellant as he has paid advance for the flats and acquired right to the proposed flats, this will come under the purview of acquiring right to the property. Appellant has relied on CBDT Circular No.471 dated 15.10.1986 where it is held that property acquired by allotment letter was considered as capital asset for the purpose of exemption from capital gains. Further appellant had relied on Delhi High Court decision in the case of CIT vs Ram Gopal [2015] 55 taxmann.com 536 (Delhi) in which it is held as under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed exemption u/s 54 for Rs. 92,56,014/-. In view of the above Delhi High Court decision, appellant is eligible for claiming of exemption u/s 54 of the Act. Hence, AO is directed to compute the surplus amount received from surrender of flat as capita' gain and also allow exemption claimed by the appellant u/s 54 in view of the above case Law and CBDT's circular. Hence, AO's addition of Rs. 1,10,00,000/- is deleted. Grounds of appeal are allowed." Aggrieved, now Revenue is in appeal before us. 4. We have heard rival contentions and gone through the facts and circumstances of the case. We have noted that the above narrated facts are undisputed. The facts clearly show that the extinguishment of assessee's right in Flat No. 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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