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TMI Blog2020 (7) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- for not interfering possessions of M/s H.M. Enterprises. The distillation of precedents must now be applied to the facts of the present case. CIT(A) erred in confirming addition on account of relinquishment of right. CIT(A) erred in treating capital receipt as capital gain - Decided in favour of assessee. - ITA No. 5419/MUM/2018 - - - Dated:- 27-7-2020 - Shri Saktijit Dey (Judicial Member) And Shri N.K. Pradhan (Accountant Member For the Assessee : Mr. Himanshu Gandhi, AR For the Revenue : Mr. Michael Jerald, DR ORDER PER N.K. PRADHAN, A.M. This is an appeal filed by the assessee. The relevant assessment year is 2013-14. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-4, Mumbai [in short CIT(A) ] and arises out of the assessment completed u/s 143(3) of the Income Tax Act 1961, (the Act ). 2. The grounds of appeal filed by the assessee read as under: 1. On the facts and circumstances of the case, the Ld. CIT(A) erred in confirming addition of ₹ 25,00,000/- on account of relinquishment of right. 2. On the facts and circumstances of the case, the Ld. CIT(A) erred in treating capital receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO came to a finding that the amount of ₹ 25,00,000/- is nothing but capital gains, which has accrued to the assessee in lieu of relinquishment of rights in the said premises. Accordingly, the AO brought to tax ₹ 25,00,000/- in the hands of the assessee as long term capital gains. 4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). We find that vide order dated 07.08.2018, the Ld. CIT(A) has held that (i) simply based on the argument that the appellant did not have any right to relinquish, the receipt of money cannot be considered capital in nature, rather it would be considered as receipt of money without consideration by the assessee and provisions of section 56 would accordingly apply, (ii) that the appellant did not have right in the said property in terms of the oral family settlement and it is in respect of this right that M/s H.M. Enterprises anticipated certain interference in occupying the said property smoothly that the occupiers of the said building together with the assessee were paid sums as a result of an out of Court settlement, (iii) the appellant was not occupier of the property, but as a part of family settlem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person and the same cannot be transferred to any other person or inherited by legal heir. In this regard, reliance is place in the decision in Associated Hotels of India Ltd. v. R.N. Kapoor (AIR 1959 SC 1262) stating that under the aforesaid section, if a document gives only a right to use the property in a particular way or under certain terms while it remains in possession and control of the owner thereof, it will be a license. The legal possession, therefore, continues to be with the owner of the property, but the licensee is permitted to make use of the premises for a particular purpose . It is stated that in the present case, the license was given to Smt. Saraswati Sahita and therefore, the appellant did not have any right in the said flat. It is also clarified by him that the appellant did not reside in the said flat. Then reliance is placed by him on the decision in CIT v. M. Appukutty 253 ITR 159 (Ker) stating that the amounts received by the assessee as consideration for transfer of possessory rights was not chargeable to tax as capital gains and cannot be termed as transfer of tenancy rights. Also a catena of decisions including B.C. Srinivas Setty (1981) 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missions and perused the relevant materials on record. The reasons for our decision are given below. At this moment, we refer to the case laws relied on by the Ld. counsel. In the case of Star Chemicals (Bom) Pvt. Ltd. (supra), the issue before the Hon ble Bombay High Court was in the context of title which was acquired by adverse possession, which did not involve any acquisition costs. It was held therein that for want of acquisition cost, capital gain tax would not arise. In the case of Smt. Seetha S. Shetty (supra), 62 acres of land was allotted by the Government of Maharashtra to Nagari Nivara Parishad a public trust for construction of houses for the members after the formation of one or more Co-operative Housing Societies. The assessee along with two others Shri Bhujang Babu Shetty and Smt. Rathna B. Shetty encroached upon the above piece of land. Nagari Nivara Parishad, the owner of the land filed Civil Suit No. 1251, 1252 1253 of 1991 against the above stated three persons. A consent decree dated 13.07.1999 was passed by Bombay City Civil Court, whereby the said three persons got absolute rights over 2000 sq. meters of land out of 62 acres allotted to Naga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to tax in relation to assets acquired by way of adverse possession. In the case of Sonal A. Zaveri (supra), the assessee along with her brother and sister was in possession of a flat which was owned by company known as Industrial Jewels P. Ltd. The said flat came in possession of the assessee, her brother and sister by virtue of Deed of Family Settlement dated 09.11.2006. There were certain disputes in the larger family of which the assessee was part of and the said family controlled companies known as Industrial Jewels Pvt. Ltd., Hindustan Jewels Pvt. Ltd. and Acrysil Ltd. A family arrangement was entered into between the parties vide Family Settlement Agreement dated 09.11.2006. As per clause 6(xvi) of the said family settlement, the assessee along with her brother and sister have to surrender their occupancy/possessory rights in the said flat and handover the vacant and peaceful possession of the said flat within a period of 90 days from the date of execution of the Family Settlement Deed . In lieu of the surrender of their occupancy/possessory rights, the assessee along with her brother and sister was to receive a lump sum amount of ₹ 4,08,00,000/- as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome from capital gains . As the assessee was having adverse charge on the property and charge of tax on such transaction has nowhere been definite under the Act, the Tribunal deleted the addition made by the AO. 7.1 At this juncture, we turn to the Consent Terms dated 16.03.2013 between the Plaintiffs (1) Smt. Dhairyabala Ashok Parikh, (2) Smt. Sarla Jayantkumar Mistry, (3) M/s H.M. Enterprises and Defendants (1) Smt. Yogini Mohit Kumar Sayta (the appellant), (2) Amit Mohitkumar Sayta, (3) Vidyut V. Sayta and (4) Sauras S. Sayta. We will now refer to the Consent Terms and the place of the appellant therein. As per it, the defendants admit and acknowledge that the original defendant viz. Mrs. Saraswati Vithaldas Sayta was only a licensee in respect of the flat on the 2nd floor in the building known as Ganga Sagar ( the Suit Premises ) and did not have any other right, title or interest in the Suit Premises. The original defendant died on 25.09.1993. After the demise of the original defendant, Vidyut V. Sayta and the members of his family have been in use and occupation of the Suit Premises to the exclusion of the other heirs and next-of-kin of the original defendant. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There is a marked distinction between a lease and a licence. Section 105 of the Transfer of Property Act defines a lease of immoveable property as a transfer of a right to enjoy such property made for a certain time in consideration for a price paid or promised. Under s. 108 of the said Act, the lessee is entitled to be put in possession of the property. A lease is therefore a transfer of an interest in land. The interest, transferred is called the leasehold interest. The lessor parts with his right to enjoy the property during the term of the lease, and it follows from it that the lessee gets that right to the exclusion of the lessor. Whereas s. 52 of the Indian Easements Act defines a licence thus : Where one person grants to another, or to a definite number of other persons, a right to do or continue to do in or upon the immoveable property of the grantor, something which would, in the absence of such right, be unlawful, and such right does not amount to an easement or an interest in the property, the right is called a licence. Under the aforesaid section, if a document gives only a right to use the property in a particular way or under certain terms while it remain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cence; and (4) if under the document a party gets exclusive possession of the property, prima facie, he is considered to be a tenant; but circumstances may be established which negative the intention to create a lease. Judged by the said tests, it is not possible to hold that the document is one of licence. Certainly it does not confer only a bare personal privilege on the respondent to make use of the rooms. It puts him in exclusive possession of them, untrammeled by the control and free from the directions of the appellants. The covenants are those that are usually found or expected to be included in a lease deed. The right of the respondent to transfer his interest under the document, although with the consent of the appellants, is destructive of any theory of licence. The solitary circumstance that the rooms let out in the present case are situated in a building wherein a hotel is run cannot make any difference in the character of the holding. The intention of the parties is clearly manifest, and the clever phraseology used or the ingenuity of the document- writer hardly conceals the real intent. In the case of Sardar Pruthisingh vrs . Kanchanlal Purushottamdas Desai in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that occupier could not interfere with possession of M/s H.M. Enterprises. The appellant being daughter-in-law of Smt. Saraswati Vithaldas Sahita received ₹ 25,00,000/- for not interfering possessions of M/s H.M. Enterprises. The distillation of precedents must now be applied to the facts of the present case. We are of the considered view that the ratio laid down in the decisions mentioned at para 7 7.3 hereinabove is applicable to the instant case. Following the same, we set aside the order of the Ld. CIT(A). 8. However, before we part with the matter, we must deal with one procedural issue as well. While hearing of these appeals was concluded on 06.03.2020, this order thereon is being pronounced today, much after the expiry of 90 days from the date of conclusion of hearing. We are also alive to the fact that rule 34(5) of the Income Tax Appellate Tribunal Rules 1963, which deals with pronouncement of orders. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, a nationwide lockdown was imposed for 21 days to prevent the spread of Covid-19 epidemic, and this lockdown was extended from time to time. As a matter of fact, e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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