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TMI Blog2020 (7) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... A No.161, survey no.5, Srinivgilu Amanikere Village, Begur Hobli, Bangalore South Taluk, measuring 6900 sq.ft (herein after referred to as 'the property'). The consideration agreed between the Assessee and Shri Channakesava, owner of the property was a sum of Rs. 27,60,000/-. The Assessee paid an advance of Rs. 2,75,000/- and agreed to pay the remaining sum at the time of registration of sale deed. The vendor of the property was required to make out a marketable title to the property. The Assessee under clause-8 of the agreement had a right to enforce the terms by way of specific performance. 4. On 08-12-2011 Shri Channakeshava, as vendor and the Assessee as confirming party sold the property to a third party for a consideration of Rs. 82,80,000/-. As per the preamble to the sale deed it has been mentioned that the Assessee has been added as a confirming party as he was agreement holder who had a right to obtain conveyance of the property from the owner. The preamble further recites that the conforming party nominated the purchaser to purchase the property and that out of the sale consideration of Rs. 1200/- agreed between the parties as sale consideration, a sum of Rs. 500/- per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/- (Rs.Eight two lakhs and eighty thousand only) from the purchaser before the attested witnesses herein the aforesaid manner and discharges the purchaser any further liability towards sale consideration and also in consideration of the covenants herein contained, the vendor do as sole, true and beneficial owner of the schedule property sells, assigns, conveys and sets over possession of the schedule property to the purchaser from all encumbrances. Henceforth, the purchaser shall be the absolute owner of the schedule property". 5. For assessment year 2012-13 the Asessee filed return of income declaring the sum received under the sale deed as giving rise to the capital gain and claimed deduction u/s 54F of the Income Tax Act, 1961 (Act). The AO was of the view that under the agreement for sale the Assessee did not have any right over the property except a right to get refund of advance paid under the agreement dated 09-05-2005. According to the AO the Assessee did not possess any right over the property and there is no question of relinquishing or surrendering of such right and receipt of Rs. 48,300/- under the sale deed had to be taken under the head " income from other source ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the aforesaid decision placed reliance on similar decisions rendered by several Hon'ble High Courts in the case of CIT vs. Tata Services Ltd. (1980) 122 ITR 594 (Bom), CIT vs. Vijay Flexible Containers (1990) 186 ITR 693 (Bom), CIT vs. Abbasbhoy A. Dehgamwalla & Ors. (1992) 195 ITR 28 (Bom), Rustom Spinners Ltd. vs. CIT (1992) 198 ITR 351 (Guj), CIT vs. Smt. Laxmidevi Ratani & Ors. (2008) 296 ITR 363 (MP) and CIT vs. J. Dalmia (1984) 149 ITR 215 (Del). 7. The ld. CIT(A) however, confirmed the order of the AO by observing that in the case before the Hon'ble Karnataka High Court the Assessee had given up right for specific performance whereas in the case of the Assessee in this appeal, the Assessee did not file any suit for specific performance and did not have any right over the capital asset. 8. Aggrieved by the order of the ld. CIT(A) the Assessee is in appeal before the Tribunal. The ld counsel for the Asessee apart from relying on the decision of the Hon'ble Karnataka High Court in the case of H Anil Kumar (supra) also placed reliance on the decision of the Hon'ble Bombay High Court in the case of CIT Vs Vijay Flexible Containers 186 ITR 693(Bom.) and the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attracting the rigor of s. 2(14) r/w s. 2(47). Giving up of a right to claim specific performance by conveyance in respect to an immovable property, amounts to relinquishment of the capital asset. Therefore, there was a transfer of capital asset within the meaning of the Act. The payment of consideration under the agreement of sale, for transfer of a capital asset, is the cost of acquisition of the capital asset. Therefore, in lieu of giving up the said right, any amount received, constitutes capital gain and it is exigible to tax. However, as is clear from s. 48, before the income chargeable under the head capital gains is computed, the deductions set out in s. 48 has to be given to the assessee. It is only the amount thus arrived at, after such deductions under s. 48, would be the income chargeable under the heading capital gains. It is not necessary that in all such cases there should have been a lis between the parties and in such is the right to specific performance has to be given up. The CIT(A), in our view, fell into an error in holding that the Assessee did not file a suit for specific performance and therefore cannot claim the benefit of the ratio laid down by the Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y shall have no effect for the purposes of the said section 53A. 12. A perusal of the aforesaid provisions would show that these provisions are applicable only in the case of a claim made for application of the doctrine of part performance enshrined in Section 53A of the Transfer of Property Act, 1882. In the present case, there was no delivery of possession in part performance of the agreement for sale dated 09-02-2005 and therefore, there is no question of the agreement dated 09-02-2-005 being regarded as a document requiring compulsory registration. Therefore, the decision of the Hon'ble Supreme Court in the case of CIT Vs Balbir Singh Maini 398 ITR 531(SC) is not applicable to the facts of the present case. For the reasons given above, we are of the view that the sum in question is chargeable to tax under the head 'capital gains". 13. Taking into consideration the facts and circumstances of the present case, we are of the view that income from relinquishing rights under an agreement should be assessed under the head income from capital gains. We hold accordingly. We however find that the AO/CIT(A) have not examined the claim of the Assessee under the head "Capital Gain" in ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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