PER BENCH: These three set of appeals by the Revenue and Cross Objection by the assessees are directed against three separate orders of ld. CIT(A) in respect of three related assessees who are co-owners of the lease mines for the assessment year 2011-12. Common grounds are raised in these appeals as well as Cross Objections therefore, the grounds raised in ITA No. 276/JP/2017 and CO No. 13/JP/2017 are reproduced as under:- Revenues Ground

(i) Whether on the facts and in the circumstances of the case and in law, the CIT(Appeals) was justified in deleting the addition of Rs. 1,10,00,485/- on account of Long Term Capital Gain on sale of mining lease and holding the assessee not to be owner jof such capital asset.

(ii) The Appellant craves its rights to add, amend or alter any of the grounds on or before the hearing. Cross Objection Ground

1 Under the facts and circumstances, Ld. CIT(A) has erred by sustaining the initiations of proceedings u/s 147 of the Income Tax act, 1961. The initiation of proceeding is illegal and unjustified. ITA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 4

2. Under the facts and circumstances of the case and in law, Ld. CIT(A) has erred in not deciding the following grounds while Ld. A.O. has erred in:- (i) alleging that transaction entered is transfer within the meaning assigned to in section 2(47) of the Income Tax Act, 1961 (ii) not considering that the agreement under consideration has already been cancelled. (i) not considering the submission made during the course of assessment proceedings in right prospective and drawing inferences based on incorrect assumption of facts

3. Under the facts and circumstances of the case and in law, Ld. CIT(A) has erred in not deciding the following grounds while Ld. A.O. has erred in:- (i) not taking cost of acquisition of the asset under consideration correctly i.e. fair market value as on

01.04.1981 and also erred by not providing indexation accordingly . (ii) alleging that no cost was paid for acquisition of asset under consideration. (iii) alleging that cost of previous owner was NIL and thus in the case of assessee also the cost of acquisition is NIL.

4. Under the facts and circumstances of the case and in law, Ld. CIT(A) erred in not deciding while the action of Ld. A.O. is contradictory, as on one hand cost of acquisition has been taken as NIL whereas, on the other hand the alleged receipts has not considered as capital receipts.

5. The Cross objector craves to add, alter, amend and modify any ground of cross objections.

ITA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 5

2. For the purpose of recording the facts we take the appeal in ITA No. 276/JO2017 and CO No. 13/JP2017 as a lead case. The assessee is an individual and filed his return of income on 12.01.2012 declaring total income of Rs. 1,41,760/- under the head income from other sources. During the course of assessment proceedings, AO noted that the assessee along with two other brothers had sold leasehold rights of the limestone & Marble mines at Panch Pahadi to M/s J.K. Cement Ltd. for a consideration of Rs. 3,31,00,000/-. The AO propose to assess the capital gain in the hands of three brothers by taking 1/3 share of sales consideration. The assessment in case of two brothers were reopened by issuing notice u/s 148 of the on 12.06.2014. In response to the notice u/s 148 the assessee filed his return of income declaring a sum of Rs. 1,41,760/-. The assessee contended that there was no sale rather it was merely agreement subject to certain terms and conditions. It was further submitted that the renewal procedure of mines as per agreement was pending at the level of competent authority. The AO did not accept the contention of the assessee and noted that the said agreement was duly registered on 10.06.2010 for a value of Rs. 3,31,00,000/-. It was a clear understanding between the parties for transfer of mining lease under the said agreement against the amount ITA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 6 of consideration as agreed and method of acceptance has also been clarified in the agreement. A sum of Rs. 25 lacs has been taken as advance and further, a sum of Rs. 61 lacs was also paid by the M/s J.K. Cements. Therefore a total sum of Rs. 1,28,00,000/- was paid by M/s J.K. Cements under the sale agreement. The AO concluded that in view of the fact that the assessee has transferred the mining lease vide sale agreement dated 10.06.2010 for a consideration of Rs. 3,31,00,000/- out of which an advance of Rs. 25,00,000/- was received at the time of agreement and a sum of Rs. 1,03,000/- was also received, subsequently. Accordingly, the AO held that the transaction of transfer of mining lease completed within the meaning and purview of Section 2(47) of theread with explanation to section 2(47) of the. Accordingly, the AO made an addition of Rs. 1,10, 33,333/- being 1/3 share of each assessee. On appeal, the ld. CIT(A) held that the ownership of the mining lease vested with Shri Sunil Agarwal and therefore, no addition can be made in the hands of the other two brothers. As in the case of the Shri Sunil Agarwal the ld. CIT(A) further held that the sale agreement was executed without possession and therefore, no title or ownership whatsoever was conveyed in favour of M/s J.K. Cements Ltd. Further, M/s J.K. Cements Ltd. also sent a letter ITA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 7 for cancellation hence, there was no transferred within the meaning of section 2(47) of the. Accordingly, the ld. CIT(A) deleted the addition made by the AO.

3. Before us, the ld. DR has submitted that as per agreement dated

10.06.2010 Shir Sanjay Mangal, Shri Vijay Mangal & Shri Akshay Mangal sons of Late Kailash Chand Mangal were the owners of the mining lease as it was transferred in their names after the death of their father of Kailash Chand Mangal. He has further submitted that the parties have duly stated and accepted that the lease of the mines in question were transferred in the name of these three sons vide transfer order dated

03.01.1995 and 02.11.2006 and was renewed for a period of 10 years. Therefore, the ld. DR has submitted that the findings of the ld. CIT(A) that the ownership of mining lease is vested with Shri Sunil Agarwal is contrary to the record as admitted by the parties in the said agreement. As regards the transfer as per section 2(47) of thethe ld. DR has submitted that once the leasehold rights of mines were transferred under the agreement against the consideration and the parties have also performed their part by receiving party payment of Rs. 25 lacs then, the said right in the lease mines stands transferred in favour of M/s J.K. Cements Ltd. on the date of execution of the said agreement. ITA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 8 Though the renewal of lease was pending before the government authorities however, whatever rights in the lease mines held by the assessee were stand transferred in favour of M/s J.K. Cements Ltd. vide agreement dated 10.06.2010. He has relied upon the orders of the Assessing Officer.

4. On the other hand, ld. AR of the assessee has submitted that a Mining Lease was allotted being highest bidder to Shri Kailash Chand Mangal, father of Assessee vide order dated 10 th April,1969 for dead rent of Rs. 41,000/- P.A.. The said mine is situated at near Village Torda at Panch Pahari, Tehsil Bairath, District Jaipur. At the time of allotment, the father of the Assessee was living jointly with his brother Shri Deen Dayal Agarwal. Thereafter, a family settlement was arrived between the brothers of father of Assessee on 25.7.1973, wherein, the said Mining Lease was agreed between the brothers to be of Shri Deen Dayal Agarwal. Shri Deen Dayal Agarwal executed a registered WILL on 8th June, 2009, wherein, he made the WILL of this mine received through family settlement in favour of his son Shri Sunil Agarwal. Shri Sunil Agarwal during the assessment proceedings has also filed an affidavit conforming that he is the owner of the Mining Lease Right under consideration. The said mine was in the name of Shri Kailash Chand ITA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 9 Mangal in the Mining Department. Thereafter, upon death of Shri Kailash Chand Mangal, the mine was transferred to his legal heir i.e. his three sons namely : Shri Sanjay Mangal, Shri Vijay Mangal and Shri Ajay Mangal vide order dated 2.5.2006. On 11.6.2010, Assessee alongwith his two brothers enter into agreement with J.K. Cement Limited. The agreement was registered with Sub-Registrar. Th said agreement was without possession and accordingly, Stamp Duty was also paid, applicable to an agreement without possession. In clause No. 4 of this agreement, it is specifically mentioned that actually the mine under consideration is of Shri Sunil Agarwal and accordingly, he received the advance. Assessee and his brothers signed the agreement only due to pending change in name due to Mining Policies. He has strongly supported the order of the ld. CIT(A) on the point that there was no transfer within the meaning of section 2(47) of theas the transfer was subject to various conditions including the renewal of lease hold rights. Therefore, the consideration was payable only on the renewal of the lease holds rights by the Department of mining. Since, the mining Department did not renew the lease holds rights therefore, the transaction cannot be treated as transfer merely by entering into agreement dated 10.06.2010. He has relied upon the decision of theA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 10 Honble Supreme Court in case of CIT vs Shri Balbir Singh Maini 398 ITR 531 .

5. The ld. AR further submitted that perusal of the document shows that it is an agreement with certain obligations and rights and not conveying any title, ownership, or interest in the alleged leasehold rights to the second party and also not giving any right to receive any profit from such alleged leasehold rights. Conclusion of relinquishment of asset without giving possession on face itself is not sustainable. However, first party has not given up or withdraw and abandoned their rights, ownership or interest, whatsoever, in the property under consideration means they does not have relinquished the property. In view of these facts, the question of extinguishment of any rights also does not arise. Firstly, the first party itself does not have any legally operative alleged leasehold rights at the relevant time. Secondly, both the parties are open to cancel the agreement under consideration under certain circumstances. Thirdly, whatever the first party have alleged mining leased rights, are intact with the first party, since, second party is not authorized to do anything on its own behalf including mining, transfer, change of name, etc. Lastly, it is a time bound agreement; thereafter both the parties are free. The ITA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 11 agreement does not conveying even the single right in absolute term. The first party entitled to enjoy all the rights whatsoever they have, then question of extinguishment does not arises. The parties under consideration have agreed to affect transfer upon fulfillment of certain terms and conditions within stipulated period of time. Under the facts and circumstances, the second party neither has the possession nor has any right to carry out mining activity nor can enjoy the property as owner. He has also further placed reliance on the decision in the case of Smt. Moniben Hirji Jadavji Bhatt & Vs. Income Tax Officer decided on 31.01.1997 of ITAT (Ahm.), thus renewal of the leasehold right requires before conveying the sale deed apart from other important conditions as stated in the agreement.

6. We have considered the rival submissions as well as relevant material on record. The assessees are legal heirs of late Shri Kailash Chand Mangal who was father of the assessee namely Sanjay Mangal, Shri Vijay Mangal and uncle of the assessee namely Shri Sunil Agarwal. Though the leasehold rights of the mines in question were vested to Shri Kailash Chand Mangal however, as per the family arrangement as well as will the ownership of the mining rights were given to Shri Sunil Agarwal. The AO though assessed the capital gain ITA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 12 in the hands of the three brothers who are sons of Shri Kailash Chand Mangal and protective assessment in the hand of Shri Sunil Agarwal however, all these assessee have contended before the AO as well as ld. CIT(A) that the actual owner of the mining right is Shri Sunil Agarwal who has also accepted this fact that he is the real owner of the mining rights in question. The ld. CIT(A) has considered this issue of ownership of the mining rights in case of Sanjay Mangal and Vijay Mangal as well as in case of Shri Sunil Agarwal and held that Shri Sunil Agarwal is the owner of the mining rights and if any capital gain is liable to the assessed on transfer of mining rights it has to be in the hand of Shri Sunil Agarwal. The finding of the ld. CIT(A) in case of Shri Sunil Agarwal in para 5.4 is as under:- 5.4 While deciding the appeal of Shri Sanjay Mangal and Shri Vijay Mangal vide orders dated 17.01.2017, I have held

in view of the above discussion, I am of the considered view that the owner of the mining rights is, Shri Sunil Agarwal S/o Late Shri Deen Dayal Agarwal and appellant cannot be considered as owner. Accordingly, addition with respect to the income from mining rights, if any is required to be made in the hands of Shri Sunil Agarwal.

Therefore, for the purpose of computing capital gain in the hands of the appellant, on transfer of mining rights, if and when it takes place in future, the advance money received by the appellant, to the extent not returned back, shall be deducted from the cost/fair market value of the asset, in ITA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 13 computing the cost of acquisition, as per provision of section 51. This finding of the ld. CIT(A) has not been disputed by the assessee though the revenue has challenged the orders of the ld. CIT(A) in all the cases including in case of Shri Sunil Agarwal but the particular finding of the ld. CIT(A) in case of the Shri Sunil Agarwal has not been challenged by the Revenue. The ground raised by the Revenue in case of Shri Sunil Agarwal in ITA No. 277/JP/2017 are as under:- (i) Whether on the facts and in the circumstances of the case Ld. CIT(A) was justified in deleting the addition of Rs. 3,30,01,448/- on account of Long Term Capital Gain on sale of mining lease as the Transfer of the Capital Assets with meaning of Section 2(47) of the I.T. Act. (ii) Whether on the facts of the Ld. CIT(A) was justified in omitting the fact that the total amount of Rs. 25,00,000/- and monthly payments which was paid by J K Cement to the assessee in lieu of such transfer has not yet been paid back by the assessee. (iii) The appellant craves its rights to add, amend or alter any of the grounds on or before the hearing. Thus, it is clear that the Revenue has challenged the findings of the ld. CIT(A) only on the point that there was no transfer of any capital asset by virtue of agreement dated 10.06.2010 and consequently no long term capital gain is liable to tax. The alternative ground of the Revenue is regarding the amount of Rs. 25,00,000/- paid as per theA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 14 agreement as well as monthly payments which were paid by M/s J.K. Cements Ltd. to the assessee are to be assessed as income of the assessee. In view of the admitted position by all the assessees that the real owner the mining rights is Shri Sunil Agarwal and the Revenue has not challenged that finding of the ld. CIT(A) in case of Shri Sunil Agarwal we do not find any substance or merits in the appeals of the Revenue in case of Shri Sanjay Managal and Shri Vijay Mangal. ITAT No. 277/JP/2017

7. As regards the issue of capital gain arising from transfer of the mining lease vide agreement dated 10.06.2010 we finds that though by virtue of the said agreement the assessee transferred his right in the mining lease as on the date of agreement subject to the transfer of the rights to be vested with the assessee on renewal of lease by the government which was pending with the authorities. Therefore, the consideration of Rs. 3,31,00,000/- was agreed upon between the parties for transfer of lease rights including the rights after renewal of lease by the government. Hence, so far as the total consideration as agreed between the parties as per the agreement dated 10.06.2010 the same cannot be considered as full value consideration until and ITA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 15 unless the lease of the mines is renewed by the government in view of various conditions of the agreement ad it was necessary pre condition for the balance payment that the same will be paid by the transferee only after renewal of the lease and subsequent transfer of the same by the transferor in favour of the transferee. The Honble Supreme Court in case of CIT vs. Shri Balbir Singh Maini 398 ITR 531 while dealing with an issue of transfer under the JDA subject to various conditions to be fulfilled and finally concluded in para 27 to 29 are as under:-

27. In the facts of the present case, it is clear that the income from capital gain on a transaction which never materialized is, at best, a hypothetical income. It is admitted that, for want of permissions, the entire transaction of development envisaged in the JDA fell through. In point of fact, income did not result at all for the aforesaid reason. This being the case, it is clear that there is no profit or gain which arises from the transfer of a capital asset, which could be brought to tax under Section 45 read with Section 48 of the Income Tax Act.

28. In the present case, the assessee did not acquire any right to receive income, inasmuch as such alleged right was dependent upon the necessary permissions being obtained. This being the case, in the circumstances, there was no debt owed to the assessees by the developers and therefore, the assessees have not acquired any right to receive income under the JDA. This being so, no profits or gains "arose" from the transfer of a capital asset so as to attract Sections 45 and 48 of the Income Tax Act. ITA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 16

29. We are, therefore, of the view that the High Court was correct in its conclusion, but for the reasons stated by us hereinabove. The appeals are dismissed with no order as to costs.

Therefore, the Honble Supreme Court has observed that for want of permissions, the entire transaction of development envisaged in the JDA fell through and consequently no profit and gain which arises from the transfer of a capital asset could be brought to tax Under section 45 read with Section 48 of the Income Tax Act.

8. In the case in hand so far as the transfer of the leasehold rights are concerned the same are subject to renewal by the authorities however, by way of this agreement M/s J.K. Cements had acquired a right to get the mining lease rights to be transferred in its favour on renewal. It is not a case of transfer of immovable property but it is only mining rights under lease were agreed to be transferred for a consideration to M/s J.K. Cements had secured the right to get the mining leasehold rights transferred in its favour by way of this agreement dated 10.06.2010 and also paid a sum of Rs. 25 lacs to secure the said right. Thus, though prior to the renewal of the lease by the government there cannot be any real transfer of the mining rights however, the rights to get such lease transfer in its favour was ITA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 17 secured by the M/s J.K. Cements vide this agreement dated 10.06.2010 and against a consideration of Rs. 25 lacs which is not refundable. The relevant clause of the agreement is clause no. 10 reads as under:- 10- fd ge izFke i{k vius yht gksYM jkbZVl vki f}rh; i{k dks gLrkUrfjr djuk pkgrs gSa vkSj D;ksafd vHkh [kku ,oa HkwfoKku foHkkx esa gekjs izkFkZuki= fopkjk/khu gS rFkk [kljk uEcj 672 ds lEcU/k esa gekjs i{k esa ekuuh; mPp U;k;ky; esa okn yfEcr gksus rFkk i;kZoj.k Lohd`r [kku ,oa i;kZoj.k ea=ky; ls vkus ds ipkr~ uohuhdj.k [kku foHkkx }kjk gekjs i{k esa fuikfnr ,oa iathd`r gks tk;sxhA ;kfu ge pkgrs gS fd vHkh ls tks Hkh [kuu iV~Vk vf/kdkj izFke i{k ds ikl gS mls f}rh; i{k dks gLrkUrfjr djuk pkgrs gSa ,oa izFke i{k }kjk [kku izkIr djus ,oa mlds fodkl ij fd;s gq, [kpsZ ds cnys nksuksa i{kksa us fey cSBdj 3]31]00]000@& rhu djksM+ bxrhl yk[k :i;k r; dh xbZ gS tc rd iwjh dk;Zokgh gekjs i{k esa ugh gksrh rc rd vkids vkSj gekjs chp okrkZ gqbZ mlds vk/kkj ij geus vki f}rh; Ik{k ls 25]00]000@& iPphl yk[k :i;k vfxze tks fd geus ekbZUl dks lgh djus esa] mldk eSUVhusUl djus] yht ,sfj;k dks lqjf{kr j[kus rFkk vU; NksVk&eksVk [kpkZ gqvk mldk iV~Vk izkIr dj fy;k gS tSls gh yht MhM dk uohuhdj.k gks tkrk gS vkSj iV~Vk ge izFke i{k dks izkIr gks tkrk gS ge izFke i{k yht gksYM jkbZV~l ds ckcr nLrkost vki f}rh; i{k ds i{k esa gLrkUrfjr dj nsaxs vkSj cdk;k jde izkIr dj ysaxsA ;fn f}rh; i{k [kuu iV~Vk {ks= esa izksLisfDVax ds ipkr~ ;g fu.kZ; ysrk gS fd mUgsa [kuu iVVk gLrkUrfjr djkus esa :fp ugha gS rks izFke i{k }kjk izIr vfxze :i ls 25]00]000@& iPphl yk[k :i;k okil izkIr ugha dj ITA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 18 ldsaxsA nksuksa i{kksa ds chp r;kqnk jkfk Hkqxrku f}rh; i{k Jh lquhy vxzoky dks djsaxs tSlk fd isjk pkj esa mYysf[kr gS fd [kku ds okLrfod ekfyd Jh nhu n;ky th vxzoky ,oa Jh lquhy vxzoky gS ,oa izFke i{k blds fy, fdl izdkj dk mtz ugha djsaxsA vfxze jkfk :i;s 25 yk[k dk Hkqxrku tfj, pSd la[;k 144930 ls 144934 rd izR;sd 5&5 yk[k :i;s ds ikWap ds }kjk fnuakd 4 twu 2010 dks dj fn;k gSA Thus, it is clear that case in the parties subsequently decide not to proceed further for transfer of mining right under lease the said payment of Rs. 25 lacs is not refundable. Hence, we are of the view, that though the mining rights per se are not transferred being subject to the renewal of the lease however, by virtue of the agreement dated

10.06.2010 the assessee has transferred and surrendered his rights in the said asset as on the date of agreement and is bound to transfer the leaseholds rights in favour of M/s J.K. Cements whenever the same are renewed by the Government. Hence, this agreement dated 10.06.2010 has definitely transfer a right in favour of the M/s J.K. Cements and relinquished right on the part of the assessee as he cannot transfer these leasehold mining rights in favour of any other persons then M/s J.K. Cements. Accordingly, the amount of Rs. 25 lacs received by the assessee for execution of the said agreement would be the income of the assessee. Since, this consideration was received in relation to theA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 19 rights in a capital asset therefore, the said amount is liable to be assessed as capital gain as considered by AO. Accordingly, we direct the AO to assess the capital gain in the hand of the assessee Shri Sunil Agarwal by considering Rs. 25 lacs as a consideration subject to allowable other deductions being cost of acquisition which we will deal with in the Cross Objection of the assessee. As regards the CO filed by Shri Vijay Mangal and Shir Sanjay Mangal in CO No. 12 & 13/JP2017.

9. Ground No. 1 becomes infructuous in view of the finding of the appeal of the Revenue.

10. Ground No. 2 is regarding disallowance of expenses u/s 57 of the Income Tax Act.

11. We have heard the ld. AR as well as ld. DR and considered the relevant material on record. The ld. CIT(A) has considered and decided this issue in para 5.3 as under:-

5.3 I have gone through the assessment order, statement of facts, grounds of appeal and the submission of the appellant carefully. It is seen that the AO has discussed the issue at page 2 of the assessment order as under: ITA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 20 "I have considered the details filed and also the written submission filed in response to the show cause notice issued. In the assessees case it is noticed that the assessee has not furnished any independent evidence with regard to the commission income, other income and share of profit as such the receipt part is not subject to verification. In the absence of necessary details the assessees gross receipts on account of income from other sources not subject to verification. On the expenses part the assessee has not furnished any evidence with regard to the fixed assets on which depreciation has been claimed and also further more the use of assets for the purpose of earning the income from other sources. The assessee has not furnished any details as well as bills and vouchers in respect of other expense of Rs. 24,000/-. The assessee has not furnished any evidence with regard to the legal fee and purpose for which legal fees was paid. So far as the interest expenses are concerned the assessee has not furnished any co-relation with regard to the interest expenses incurred against the fund which were utilized for giving loans and advances for which interest has been received. As such the assessee s claim of expenses of Rs. 1,98,759/- is without any justification and also not supported with any documentary evidences. The assessee has not discharged his onus proving justification with the documentary evidences as well justification of the expenses claimed and according a sum, of Rs. 1,98,759/- is disallowed and added to the total income of the assessee." Either during the course of assessment proceedings or appellate proceedings, the appellant has not been able to prove with the help of documentary evidences that the expenses of Rs. 1,98,759/- claimed by him u/s 57 were incurred wholly and exclusively for the purpose of making or earning the income declared under the head "income from other sources" u/s 56. Therefore, the disallowance of theA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 21 expenses of Rs. 1,98,759/- made by the AO is hereby confirmed. Accordingly, this ground of appeal is dismissed.

Thus, the AO as well as ld. CIT(A) decided this issue for want of any documentary evidence in support of the claim that the expenditure was incurred for earning the income from other sources. Nothing has been produced before us to show that the said alleged expenditure incurred by the assessee for earning of income from other sources accordingly, we do not find any error or illegality in the impugned order of the ld. CIT(A) qua this issue. The Cross Objection No. 12& 13/JP/2017 of the assessee are dismissed.

12. CO No. 11/JP/2017:- The assessee has raised the following grounds:-

1.Under the facts and circumstances, Ld. CIT(A) has erred by sustaining the initiations of proceeding u/s 147 of the Income tax act, 1961. The initiation of proceeding is illegal and unjustified.

2. Under the facts and circumstances of the case and in law, ld. CIT(A) has erred in not deciding the following grounds while Ld. AO has erred in:- (i) not taking cost of acquisition of the asset under consideration correctly i.e. fair market value as on ITA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 22

01.04.1981 and also erred by not providing indexation accordingly. (ii) alleging that no cost was paid for acquisition of asset under consideration. (iii) alleging that cost of previsions owner was nil and thus in the case of assessee also the cost of acquisition is nill.

3. Under the facts and circumstances of the case and in law, Ld. CIT(A) erred in not deciding while the action of ld. A.O. is contradictory, as on one hand cost of acquisition has been taken as Nil whereas, on the other hand the alleged receipts has not considered as capital receipts.

4. The Cross Objector craves to add, alter, amend and modify and ground of cross objections.

13. Ground No. 1 is regarding the validity of reopening. The ld. AR of the assessee has not advanced any argument in respect of ground No. 1. Even otherwise we do not find any substance or merits in ground no. 1 of the CO. Accordingly, ground no. 1 of the CO is dismissed.

14. The only other issue raised in the CO is regarding the cost of acquisition of the capital asset being the Fair Market Value (FMV) as on 01.04.1981. ITA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 23

15. We have heard the ld. AR as well as ld. DR and considered the relevant material on record. There is no dispute that the leasehold rights were acquired by the predecessor of the assessee in the year 1969 and further, the assessee has inherited property which fall in the category of transfer of capital asset as per section 49(1)(i)(iii)(a) of the. Once the capital asset in question becomes the property of the assessee as per section 49(1)(i)or(iii) and the previous owner had acquired the property prior to 01.04.1981 then, the cost of acquisition of the capital asset for the purpose of section 48/49 shall be the cost of acquisition of the asset to the previous owner or the fair market value of the asset as on 01.04.1981 at the option of the assessee as provided u/s 55(2)(ii)(b) of the Income Tax Act. For ready reference we quote section 55(2)(a)(b) as well as section 55(3) as under:-

(2)[For the purposes of sections 48 and 49, "cost of acquisition" 25 , 26 [(a) in relation to a capital asset, being goodwill 25 of a business 27 [or a trade mark or brand name associated with a business] 28 [or 25 a right to manufacture, produce or process any article or thing] 29 [or right to carry on any business 30 [or profession]], tenancy rights, stage carriage permits or loom hours, ITA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 24 (i) in the case of acquisition of such asset by the assessee by purchase from a previous owner, means the amount of the purchase price ; and (ii) in any other case [not being a case falling under sub- clauses (i) to (iv) of sub-section (1) of section 49], shall be taken to be nil ; (aa) 31 [in a case where, by virtue of holding a capital asset, being a share or any other security 32 , within the meaning of clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of

1956) (hereafter in this clause referred to as the financial asset), the assessee (A) becomes entitled to subscribe to any additional financial asset ; or (B) is allotted any additional financial asset without any payment, then, subject to the provisions of sub-clauses (i) and (ii) of clause (b)], (i) in relation to the original financial asset, on the basis of which the assessee becomes entitled to any additional financial asset, means the amount actually paid for acquiring the original financial asset ; (ii) in relation to any right to renounce the said entitlement to subscribe to the financial asset, when such right is renounced by the assessee in favour of any person, shall be taken to be nil in the case of such assessee ; (iii) in relation to the financial asset, to which the assessee has subscribed on the basis of the said entitlement, means the amount actually paid by him for acquiring ITA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 25 such asset ; 33 [(iiia) in relation to the financial asset allotted to the assessee without any payment 34 and on the basis of holding of any other financial asset, shall be taken to be nil in the case of such assessee ;] and (iv) in relation to any financial asset purchased by any person in whose favour the right to subscribe to such asset has been renounced, means the aggregate of the amount of the purchase price paid by him to the person renouncing such right and the amount paid by him to the company or institution, as the case may be, for acquiring such financial asset ;] 35 [(ab) in relation to a capital asset, being equity share or shares allotted to a shareholder of a recognised stock exchange in India under a scheme for 36 [demutualisation or] corporatisation approved by the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), shall be the cost of acquisition of his original membership of the exchange:] 36 [Provided that the cost of a capital asset, being trading or clearing rights of the recognised stock exchange acquired by a shareholder who has been allotted equity share or shares under such scheme of demutualisation or corporatisation, shall be deemed to be nil;] (b) in relation to any other capital asset,] (i) where the capital asset became the property of the assessee 37 before the 38 [1st day of April, 39 [ 39a [1981]]], means the cost of acquisition of the asset to the assessee or the fair 40 market value of the asset on the 41 [1st day ITA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 26 of April, 42 [ 42a [1981]]], at the option of the assessee ; (ii) where the capital asset became the property of the assessee 43 by any of the modes specified in 44 [sub- section (1) of] section 49, and the capital asset became the property of the previous owner before the 45 [1st day of April, 46 [ 46a [1981]]], means the cost of the capital asset to the previous owner or the fair 47 market value of the asset on the 45 [1st day of April, 46 [ 46a [1981]]], at the option of the assessee ; (iii) where the capital asset became the property of the assessee 43 on the distribution of the capital assets of a company on its liquidation and the assessee has been assessed to income-tax under the head "Capital gains" in respect of that asset under section 46, means the fair 47 market value of the asset on the date of distribution ; (iv) 48 [***] 49 [(v) where the capital asset, being a share or a stock of a company, became the property of the assessee on (a) the consolidation and division of all or any of the share capital of the company into shares of larger amount than its existing shares, (b) the conversion of any shares of the company into stock, (c) the re-conversion of any stock of the company into shares, (d) the sub-division of any of the shares of the company into shares of smaller amount, or ITA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 27 (e) the conversion of one kind of shares of the company into another kind, means the cost of acquisition of the asset calculated with reference to the cost of acquisition of the shares or stock from which such asset is derived.] (3) where the cost for which the previous owner acquired the property cannot be ascertained, the cost of acquisition to the previous owner means the fair market value on the date on which the capital asset became the property of the previous owner.

Thus, it is clear from the provisions of Section 55(2)(a)(b) r.w.s. section 55(3) of thethat in case of assessee has exercised his option that the cost of acquisition of the capital shall be the fair market value as on 01.04.1981 then, the cost of acquisition of capital asset of the previous owner becomes irrelevant for the purpose of computing the capital gain. Undisputedly the previous acquired the leasehold rights prior to 01.04.1981 therefore, the fair market value of the property as on 01.04.1981 has to be considered as cost of capital asset for the purpose of sections 48 and 49 of the. Accordingly, we direct the AO to compute the capital gain after allowing the cost of acquisition being the fair market value as on 01.04.1981. Once, this benefit is allowed against the capital gain in the year under consideration, the same ITA No. 276 to 278 & CO.No. 11 to 13 /JP/2017 ITO vs. Shri Vijay Mangal and others 28 will not be allowed at the time of transfer of the leasehold rights on renewal by the government. In the result, the appeal of the Revenues in ITA No. 276 &278/JP2017 and CO of the assessee in CO No. 12 & 13/JP/2017 are dismissed. The appeal of the Revenue in ITA No. 277/JP2017 and CO of the assessee in CO No. 11/JP/2017 are partly allowed. Order pronounced in the open court on 18/04/2018. Sd/- Sd/- foe flag ;kno fot; iky jko (Vikram Singh Yadav) (Vijay Pal Rao) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 18/04/2018. *Santosh. vknsk dh izfrfyfi vxzsfkr@Copy of the order forwarded to:

1. vihykFkhZ@The Appellant- The ITO, Ward-6(1), Jaipur.

2. izR;FkhZ@ The Respondent- Shri Vijay Mangal, Shri Sunil Agarwal, & Shri Sanjay Mangal, Jaipur

3. vk;dj vk;qDr@ CIT

4. vk;dj vk;qDr@ CIT(A)

5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur.

6. xkMZ QkbZy@ Guard File {ITA No. 276 to 278/JP/2017 & CO No. 11 to 13/JP/2017} vknskkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar