INCOME TAX ACT, 1961

Section 2(14)

Capital gains - Capital assets - Leasehold rights in a plot granted as additional compensation in pursuance of compulsory acquisition of agricultural land belonging to assessee's deceased father -

Assessee had got allotment of leasehold rights in a plot of land as additional compensation granted by stated government towards compulsory acquisition of agricultural land owned by assessee's late father. During the year under consideration assessee sold above leasehold rights and claimed resulting capital gain as exempt on the ground of nature of land acquired being agricultural land. Held: Leasehold right in a plot allotted to assessee against right of agricultural land having belonged to assessee's late father could not be considered as agricultural land and, therefore, profit on transfer of such leasehold right was taxable under the head 'capital gains', however, AO was not correct in not allowing cost of acquisition to assessee while computing long-term capital gain on transfer of leasehold rights in land. Accordingly, AO was directed to re-compute long-term capital gain.

Followed:A.R. Dahiya v. Asstt. CIT (2004) 269 ITR 542 (P&H) : 2004 TaxPub(DT) 1777 (P&H-HC) and Atul G Puranik v. ITO (2011) 132 ITD 499 (Mum-Trib) : 2011 TaxPub(DT) 1021 (Mum-Trib).

REFERRED : AR Dahiya v. Asstt. CIT (2004) 269 ITR 542 (Punj. & Har.) : 2004 TaxPub(DT) 1777 (P&H-HC).

FAVOUR : Partly in assessee's favour.

A.Y. : 2007-08

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