Case Law Details
Income from transfer of a leased premises amounts to extinguishment of taxpayer’s right in the capital asset and therefore taxable as ‘Capital Gains’ under the Income-tax Act.
Mumbai bench of Income-tax Appellate Tribunal (the Tribunal) in the case of ACIT Vs United Motors (I) Ltd. (2009-TIOL-693-ITAT-MUM) has held that income from transfer of a leased premises without transferring its own business amounts to extinguishment of the taxpayer’s right in the capital asset as per section 2(47) of the Income-tax-tax Act, 1961 (the Act).
The Tribunal also observed that such transfer of a leased premise without transferring the business cannot be considered as loss of source of income. Further, the source of income is always the business which is capable of producing some income and not the building from where the source of income is operated. Accordingly, the Tribunal held that the building itself cannot be considered as source of income.
Facts of the case
Please become a Premium member. If you are already a Premium member, login here to access the full content.