2015 (10) TMI 240

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....Commissioner of Income Tax (Appeals) was not justified to taxing the compensation received." 3. Facts of the case in brief are that the assessee filed the return of income on 24.02.2011 declaring an income of Rs. 2,09,670/-. Later on, the case was selected for scrutiny. During the course of assessment proceedings, the AO noticed that the assessee received an amount of Rs. 4,75,041/- from Indian Oil Corporation Ltd. The AO asked the assessee to explain the nature of receipts, documentary evidence and as to why the said amount may not be added to its income. The assessee submitted that M/s Indian Oil Corporation laid down underground pipeline and paid the impugned amount for the damages done to the land, therefore, it was capital in nature.....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....aik V/s The Income Tax Officer, Ward-3(4), Surat (ITA No. 781/AHD/2010), it was held by the Hon'ble ITAT (Ahmadabad) that:- "Thus, only question before me is whether the capital receipt is chargeable to capital gain tax or not. As per section 45 any profit or gains arising from the transfer of capital asset is chargeable to tax. Thus, transfer of capital assets is a necessary condition for chargeability of capital gain tax. In the case before me, the assessee continued to be the owner of the agricultural land. There is no transfer of agricultural land, or any right in agricultural land by the assessee to GGCL. When there is no transfer of capital assets, in my opinion, the receipt cannot be charged to capital gain tax. In view of the abo....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....n to such person for such damage, loss or injury, the amount of which shall be determined by the competent authority in the first instance." It means that compensation is paid only when there is any damage done to the person interested in the land under which the pipeline has been laid. The amount paid is in the form of compensation for damages. In our case, M/s Indian Oil Corporation ltd. had paid Rs. 4,70,800/- as compensation for damages done to the land and Rs. 4,242/- as compensation for damages done to the Corporation. As these payments are in form of compensation for damages, hence it should be treated as capital receipt and not chargeable to tax." 5. The ld. CIT(A) after considering the submissions of the assessee confirmed ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....* Shri Thakorbhai V. Naik Vs ITO in ITA No. 781/Ahd/2010, order dated 30.07.2010 * Vijay Ishwarbhai Desai Vs ITO in ITA No. 544/Ahd/2010, order dated 16.12.2010 7. In his rival submissions the ld. DR strongly supported the orders of the authorities below. 8. I have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is an admitted fact that the assessee received a sum of Rs. 4,75,041/- towards the damages to the land belonging to it and the AO taxed it considering the same as revenue receipt, the ld. CIT(A) upheld the view taken by the AO. 9. On a similar issue their lordships of the Hon'ble Bombay High Court in the Case of Dr. (Ms) Avimay S. Hakim Vs....