TaxTMI 
TaxTMI 
2017 (4) TMI 766
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....ls)-21, New Delhi [briefly "the CIT(A)"] has erred in upholding the assessment of income at Rs. 14,03,626/- as against declared income of Rs. 3,28,260/-. The Appellant denies his liability to be assessed at the total income of Rs. 14,03,626/-. 2. That on the facts and circumstances of the case and in law, the CIT(A) has erred in holding that the mesne profit is a revenue receipt and as such, addition of Rs. 10,75,365/- on account of mesne profit was rightly made. 3. That on the facts and circumstances of the case and in law, the CIT(A) erred in not following the binding decision of this Hon'ble Tribunal in ITO vs. Late Shri Sandeep Goyal, IT A 2603/Del/2012 dated 5.4.2013. That the appellant craves leave to add, alter, amend or....
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....t to the Delhi High Court, the Hon'ble Court upheld the order of the Trial Court granting mesne profits C/iRs.40/- per sq. ft. However interest was reduced from 24% to 12% per annum. 22.09.2011 Appellant received Rs. 10.75.365/- from NTPC Ltd as Mesne profits. 09.07.2012 For the assessment year 2012-13, return declaring income of Rs. 3.28.260/- was I filed. Mesne profits of Rs. 10,75.365/- towards w rongful possession of property was I j treated as not taxable. Assessment proceedings Before the Assessing Officer, reliance was placed on Narang Overseas (P) Ltd. v. AC1T (2008) 111 ITD 1 (Mum-Special Bench). The Special Bench taking into consideration C1T v. P. Mariappa Gounder (1984) 147 ITR 676 (MadLand P. Mariappa Gounder v. C1....
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....te of Rs. 10 lakhs p.m. was on account of damages for j deprivation of use and occupation of the profits and therefore, the sum so received was capital in nature not chargeable to tax." In paragraph 50 to 55 (page 45-48), the Special Bench examined the issue of taxability of interest from the date of termination of lease. It was observed in paragraph 55 that: "The above discussion clearly reveals that if the interest is paid for deprivation of use of money fallen due to them it is revenue receipt chargeable to lax. On the other hand, if the interest is paid on account of the injury to the capital i.e.. deprivation of use and occupation of the property then it is capital receipt not chargeable to lax. In the present case, it has alread....
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....order of the Special Bench, it would be unfair of the Revenue to pick and choose assessee where it would follow the decision of Special Bench in Narang Overseas P. Ltd. (supra) III. The question whether mesne profits is a capital revenue receipt has not been considered Narang Overseas (P) Ltd (supra) by Hon'ble Delhi High Court either in Pal Properties (1) (P) Ltd. v. CIT f2002] 254 ITR 687 or in CIT v. Uberoi Sons (Machines) Ltd. (2012) 211 Taxman 123. In Pal Properties (supra) the questions before the Hon'ble Court were: "1. Whether the Tribunal was right in law in holding that damages or any part thereof for illegal occupation of the premises accrued to the appellant though the claim therefore was yet to be adjudicated finally ....
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.... reproduced herein below:- "Questions considered in Pal Properties (I) (P) Ltd. v. CIT [2002] 254 ITR 687 were as under: "1. Whether the Tribunal i vas right in law in holding that damages or any part thereof for illegal occupation of the premises accrued to the appellant though the claim therefore was yet to be adjudicated finally and was pending disposal before the High Court ? 2. Whether the Tribunal is right is law in holding that the amount received by the appellant under interim order of the High Court dated 6-1-1992 relevant to assessment year 1993-94 is taxable on month to month basis in assessment vears 1990-91 and 1991-92 as relatable thereto?" Factual matrix giving rise to the questions was that for the assessment yea....
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....ive up his right of mesne profit or even pay some amount from his pocket. It, therefore, cannot be said that only because the claim of the appellant by wav of mesne profit denotes a higher amount of the rent, the same can be divided into two parts, as has been sought to be done by the Tribunal. " In this background, the Hon'ble High Court answered the questions as under (page 696-697): "In that view of the matter, question No. 1 mast be answered in favour of the assessee and against the revenue. As a logical corollary, the quest ion No. 2 must also be answered in favour of the assessee and against the revenue. However, we may place on record that after a period of two years, by an interim order passed by the court, some amount had....