This Appeal under Section 260A of the Income Tax Act, 1961 (the Act), challenges the order dated 7th June, 2013 passed by the Income Tax Appellate Tribunal (the Tribunal. The impugned order is a common order for the Assessment Years 2004-05 and 2006-07. This Appeal relates to Assessment Year 2004-05.
2 The Revenue urges only the following question of law for our consideration:
"Whether the Tribunal was justified in law in holding that the assessee is entitled to claim deduction of consideration paid for surrender of tenancy rights of Rs. 4,25,00,000/on the basis of evidence of third party when the decision of the A. O. against the assessee on the same issue was confirmed by the CIT(A) wherein the evidence of genuineness of tenancy was not established beyond doubt?"
3 The Respondent-Assessee is a partnership firm, engaged in Real Estate Development. During the assessment proceedings for the subject Assessment Year, the Assessing Officer noticed that while computing the capital gains under Section 45(2) of the Act, the Respondent had claimed a deduction of Rs. 4.25 Crores paid to the tenant for the surrender of tenancy rights of its property. The Assessing Officer held that the payment was not genuine and, therefore, disallowed the entire payment of Rs. 4.25 Crores made to M/s. Magnum Ferromental Pvt. Ltd., while computing the cost of the property to arrive at capital gains under Section 45(2) of the Act.
4. Being aggrieved, the Respondent-Assessee filed an appeal to the Commissioner of Income Tax (Appeals) [CIT(A)]. In appeal, the CIT(A) by an order dated 8th November, 2007, dismissed the Respondent-Assessee's appeal. Consequently upholding the order of the Assessing Officer was upheld.
5. On further appeal, the Tribunal in the impugned order records the fact that when the payment of compensation of Rs. 4.25 Crores was received by
M/s. Magnum Ferromental Pvt. Ltd., for the surrender of tenancy rights in the previous year relevant to Assessment Year 1994-95. The Revenue sought to tax the amount in the hands of M/s. Magnum Ferromental Pvt. Ltd. This being the consideration received for surrender of tenancy rights. In fact, in the case of M/s. Magnum Ferromental Pvt. Ltd., the Assessment Order dated 18th March, 1997 passed under Section 143(3) of the Act as well as the CIT(A) had held that the amount received on account of the surrender of its tenancy right, was taxable under the head 'income from other sources'. Both the authorities rejected the claim of M/s. Magnum Ferromental Pvt. Ltd., that it is exempted. On further appeal, the Tribunal by an order dated 18th January, 2002 held that the amount received by M/s. Magnum Ferromental Pvt. Ltd., were entitled to an exemption as claimed by M/s. Magnum Ferromental Pvt. Ltd., and not chargeable to tax. In view of the above facts, the Tribunal in the impugned order has concluded that it was not the Revenue's case in the assessment of M/s. Magnum Ferromental Pvt. Ltd., that the payment received by it from the Respondent-Assessee for surrender of its tenancy rights, was not genuine.
6. In the above view, the impugned order held that once the Revenue has accepted that the transaction is genuine qua the recipient of the amounts, it must follow that it would be genuine in the case of the person making the payment. Accordingly, the appeal of the Respondent-Assessee was allowed. However, claim for deduction on account of cost of acquisition was restricted only to 2/3rd of Rs. 4.25 Crores as the property being sold for the subject Assessment Year was only 2/3rd of the property.
7. The grievance of the Revenue before us is that the surrender of tenancy rights by M/s. Magnum Ferromental Pvt. Ltd., on receipt of consideration in favour of the Respondent-Assessee is not a genuine transaction. Therefore, the said amount cannot be taken into account while arriving at the costs of the capital asset while computing the capital gains on sale of 2/3rd of its property.
8. We find that the impugned order of the Tribunal has rendered a finding of fact that the Revenue had itself accepted the transaction with regard to the recipient of the the amounts as surrender of tenancy to be a genuine transaction. Therefore, once the transaction is accepted by the Revenue to be a genuine in respect of one part of the transaction, is not open to the Revenue to urge that in respect of the other part i.e. person making the payment, the transaction is not genuine. This is not permissible as the payment and receipts are two sides of the same coin.
9. In view of the above, the question as framed does not give rise to any substantial question of law.
10. Accordingly, Appeal dismissed. No order as to costs.