9911796707
TMI Blog2023 (2) TMI 848X X X X Extracts X X X X X X X X Extracts X X X X ..... tter dated 11/11/2019 and accordingly notice U/s. 142(1) of the Act was issued through ITBA on different dates. The scrutiny under CASS was selected for the reason "large deduction / exemption claimed from capital gains" by the assessee during the relevant assessment year. It was noticed by the Ld. AO that the assessee has claimed a deduction U/s. 54F of the Act for Rs. 2,90,30,172/ and the Ld. AO issued a notice U/s. 142(1) of the Act calling for the details of the residential properties owned by the assessee. In response, the assessee filed its reply through ITBA on 20/11/2019. The assessee also submitted the detailed calculation of the capital gains and deduction claimed U/s. 54F of the Act. Considering the above submissions, the Ld. AO issued a notice U/s. 142(1) of the Act on 5/12/2019 requesting the assessee to substantiate the claim of deduction U/s. 54F of the Act as the assessee was in possession of two residential houses. The assessee vide letter dated 6/12/2019 submitted the details called for. The Ld. AO then issued a show cause notice dated 14/12/2019 stating that "countering the claim of the assessee the Ld. AO requested the assessee to show cause the reason for treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of his son and registered the will with SRO, Dwarakanagar, Visakhapatnam. The same property was sold to another five vendees during 2017 by the legatee. The Ld. DR further submitted that the assessee has sought specific performance of the contract or damages for breach of contract from the legatee. The Ld. DR further submitted that the assessee initially treated the compensation received as capital gains and accordingly claimed deduction U/s. 54F of the Act. The Ld. DR further submitted that subsequently, before the Ld. CIT (A), the assessee changed its stand and argued that the receipt of Rs. 3 Crs was in accordance with compromise settlement for breach of contract and hence it is a capital receipt. The Ld. DR further submitted that the Ld. CIT(A) has erred in treating the capital gains as capital receipt. He therefore pleaded that the order of the Ld. AO be upheld. The Ld. DR placed heavy reliance on the following case laws: (i) CIT vs. Balbir Singh Maini [2017] 86 Taxmann.com 94 (SC) (ii) CIT vs. H. Anil Kumar [2012] 20 taxmann.com 430 (Karnataka) (iii) Decision of the ITAT, Delhi "F" Bench in the case of ACIT vs. Shri Ramit Vohra in ITA No. 4373/Del/2012, dated 19/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2/2001 by paying the amount of Rs. 3,50,000/- for the purchase of property admeasuring 2000 sq. yds. Since the seller Sri Narasimha Raju expired in 2007 who left a Will in favour of his son Mr. RSRK Raju which was registered in 2004 with SRO Dwarakanagar, Visakhapatnam. It was contended that Sri RSRK Raju was not aware of the agreement of his Father with the assessee and hence sold the property to various parties. In this regard, the assessee filed a suit against Mr. RSRK Raju in 2017 for specific performance of the contract which was already sold to the third parties. Alternatively, the assessee also sought for damages for breach of contract. Consequently, a compromise settlement was entered into between Mr. RSRK Raju and the assessee by filing a compromise petition on 14/2/2017 where both the parties agree to pay and receive Rs. 3 Crs in lieu of the property. It is the contention of the assessee that since the amount received by her is in the kind of compensation / damages and hence shall be treated as a capital receipt. It was argued by the Ld. AR that there is no transfer of capital asset and the receipt is purely arising out of the damages for breach of contract which is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court further held that in lieu of giving up of the said right any amount received constitutes capital gains and it is exigible to tax subject to the deductions as set out in section 48 of the Act. Further, in the above case, the Hon'ble Karnataka High court held that since the word "transfer" in relation to capital asset is defined under the IT Act, 1961 it is not necessary to import the meaning assigned to them under the provisions of the Transfer of Property Act. The word "Capital Asset" as defined in the IT Act, 1961 means any kind of property held by the assessee which is not necessarily be confined to the immovable property. Similarly, the definition of word "transfer" in relation to 'capital asset' includes 'sale, exchange or relinquishment of the asset'. The said asset need not necessarily be an immovable property. 9. The relevant paragraph of the ratio held by Hon'ble Karnataka High Court in the case of CIT vs. H. Anil Kumar (supra) is as follows: "23. From the aforesaid judgments it is clear that the right to obtain a conveyance of immovable property falls within the expression 'property of any kind' used in s. 2(14) of the Act and consequently it is a cap ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
