Reading of section 54EA of the Act makes it very clear that in case, the whole or any part of the net consideration of sale is invested in Specified Securities within a period of six months after the date of transfer, the deduction under section 54EA is available. The Net Consideration has been defined in Explanation to section 54EA of the Act.

Since in this case, the land is acquired compulsorily and no amount of compensation has been received by the assessee and further, the matter is still pending before the Hon’ble Allahabad High Court and has not attained finality, therefore, the provisions of section 2(47) (iii) and (v) section 45(5) would not apply in the case of the assessee.

Apex Court held that till the amendment in 1995, the compensation received on surrendering the tenancy rights could not be assessed to capital gains. Thus, on the fact position as found by the Tribunal and which form the very basis of the order under Section 263 that the assessee was treated as tenants as per the document dated 25.02.1994, the genuineness of which was never questioned by the Revenue, we have no hesitation in confirming the order of the Tribunal. In the above circumstances, we reject the questions raised by the Revenue.

It is to be noted that in the instant case what has been transferred by the assessee is the tenancy right which is very much part of the capital asset as envisaged in sub-section (2)(a) of section 55. Sub-section (2)(a) of section 55 stipulates that cost of acquisition in relation to asset, inter alia, tenancy rights not falling under sub-clause (1)(iv) of sub-section (1) of section 49 shall be taken to be nil.

It is thus clear that ‘willingness to perform’ for the purposes of Section 53A is something more than a statement of intent; it is the unqualified and unconditional willingness on the part of the vendee to perform its obligations. Unless the party has performed or is willing to perform its obligations under the contract, and in the same sequence in which these are to be performed,

The owners have entered into an agreement for development of the property and certain rights were assigned to the developer who in turn had made the substantial payment and, consequently, entered into the property and, thereafter, if the transferee has taken steps in relation to construction of the flats, then it is to be considered as transfer under section 2(47)(v).

The E-Book written by CA Agarwal Sanjay ‘Voice of CA’ deals with almost all issues in Capital Gain Taxation. E-Book Mainly deals with following sections :- Section 45(1) – Charging Section, Section 2(14) – Capital Asset, Section 2(47) – Transfer, Section 47 Transaction Not regarded as Transfer, Section 48 Method of Computation of Capital Gain,

The reasoning of the Tribunal is premised upon the fact that capital assets were transferred on a particular date the assessee passed on the execution of the agreement. There is no material on the record or in the agreement suggesting that even if the entire consideration or part is not paid the title to the shares will revert to the seller. In that sense the controlling expression of ‘transfer’ in the instant case is conclusive as to the true nature of the transaction.

[a] The first test is whether the initial acquisition of the subject matter of transaction was with the intention of dealing in the item, or with a view to finding an investment. If the transaction, since the inception, appears to be impressed with the character of a commercial transaction entered into with a view to earn profit, it would furnish a valuable guideline.

Courts have laid down principles for deciding the question as to when income from sale of shares can be said to be income from business. The following are some of the important decisions in this regard: (a) Whether a transaction of sale and purchase of shares were trading transactions or whether they were in the nature of investments is mixed question of law and fact. Learned CIT(A) v. H. Holck Larsen, [1986] 60 ITR 67.