TaxTMI 
TaxTMI 
2019 (10) TMI 771
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 'the Act'. Heard both the parties. Case file(s) perused. 2. The assessee's former substantive grievance pleaded in the instant appeal seeks to reverse both the lower authorities' action treating the amount in question of Rs.56,83,006/- received form Punjab State Industrial Development Corporation "PSIDC" as income from house property. The CIT(A)'s detailed discussion to this effect reads as under:- "Ground No. 1 ,2 & 3 are directed against treatment of Rs. 20,89,710/- received by the assessee income from house property and Rs. 35,93,2961-received as interest as income from other sources. Brief fact of the case is that the appellant owned a property at A-1/26 Safdarjung Enclave, New Delhi-ll0029. The said prope....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g out the gross fare market rent of the property, The amount of award was not difference of fair market rent of Rs. 97,4101- per month minus actual rent of Rs. 25000/- tent per month paid by (PSIDC) for the period Nov, to Dec, 98 and Rs. 30,000/-paid from Jan. 99 to May, 99.. The A.O also held that interest receipt of Rs. 35,93,296/- is nothing but revenue receipt and should !e taxed under the head income from other sources. On the other hand the appellant has in grounds of appeal has mentioned that the money was received by way of a judicial order and the property was forcibly and illegally occupied and the relationship of land lord and tenant was not existing at that time and the receipt was manse profit and should be co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....8th April 1997: " On failure to vacate and hand over possession of the leased premises by 31st October, 1996, the claimants in terms of clause 2(g) as per lease agreement be awarded damage equivalent to the unpaid arrears of the fair gross monthly market rate of rent as ascertained by the valuer at the beginning of each calendar year or part thereof." Clause 2(g) of the lease agreement is reproduced hereunder: " If there is no concluded lease agreement for a further period, it is clearly understood and expressly agreed by both parties, that handing over of vacant and peaceful possession on 31st October 1996 is the essence of this agreement. If vacant possession of the demised premises is held up on 31st O....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 56,83,006/- cannot be termed as mesne profit in the hand of the assessee. Even Hon'ble Delhi High Court in the appeal filed by the appellant company against deduction of TDS bye PSIDC) on payments made to the appellant has declined to determine the taxability of so called Mesne Profit, as claimed by the appellant. From the facts of the case and also from the fact that the appellant was continuously receiving rent during the disputed period it is established that, the appellant never lost control of the property and (PSIDC) was never under unlawful occupation of the property. The money realized by him in terms of arbitration award is nothing but arrear rent which is taxable as per the provisions of section 25B of the Incom....
X X X X Extracts X X X X
X X X X Extracts X X X X
....licable to the present case, as the receipt is not mesne profit. However with the introduction of Section 25AA in the Income Tax Act by Finance Act, 2000 the subject matter regarding taxability of Unrealised rent has been put to rest, which specifically provides that, where the assessee cannot realize rent from a property let to a tenant and subsequently the assessee has realized any amount of such rent, the amount so realized shall deemed to be income chargeable under the head "Income from house property," in the previous year in which the income is so realized, whether or not the assessee is the owner of the property in that year. Regarding taxability of interest amount of Rs. 35,93,296/- is concerned it is nothing but a....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Talwar Brothers (P) Ltd., & hon'ble Delhi high court judgment dated 01.07.2009 regarding its dispute with the above stated tenant; running into 93 pages. The assessee's case accordingly is that it had received the impugned mesne profits not in the nature of rent but damages assessable to tax neither as income "from house property" regarding principal amount or income from other sources in relation to consequential interest awarded thereon. The Revenue's case on the other hand is that the impugned arbitration award granting relief to the assessee / landlord is in the nature of rent only as righty assessed by both the learned lower authorities u/s. 25A of the Act. 4. After giving our thoughtful consideration to rival contentions we fi....