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January 2015

Capital gain or income from other sources – Sections 10(3) and 56(1) – A. Y 1992-93 – Relinquishment of sub-tenancy rights – Receipt is capital gain and not income under the head “Income from other sources”-

By K. B. Bhujle Advocate
Reading Time 1 mins
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ACIT vs. G. C. Shah; 369 ITR 323 (Guj)

In the A. Y. 1992-93, the Assessing Officer found that the assessee had received Rs. 5 lakh as miscellaneous income from relinquishment of sub-tenancy rights of a property. He made an addition of Rs. 5 lakh as income under the head “Income from other sources”. The Tribunal held that the amount is taxable as “capital gain” and not as “income from other sources”.

On appeal by the Revenue the Gujarat High Court upheld the decision of the Tribunal and held as under:

“The Revenue could have taxed the amount of Rs. 5 lakh, which was received towards surrendering the tenancy rights from the lessor, under the head “Capital gains” and not under any other head. Therefore, the Tribunal had not committed any jurisdictional error in passing the order.”

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