TaxTMI 
TaxTMI 
2023 (3) TMI 317
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....ich is inclusive of interest of Rs. 4,29,915/- u/s. 244A of the Act. 2.1. On verification of the above assessment order, the Ld. PCIT found that the assessee received a compensation of Rs. 1,92,18,157/- from M/s. Adarsh Developers and Others on purchase of a villa at Bangalore. Since the developer failed to execute the contract and defaulted in completing the project thereby the assessee got this compensation through litigation at National Consumer Disputes Redressal Commission (NCDRC), New Delhi. 2.2. The Ld. PCIT issued a show cause notice that the compensation received by the assessee is required to be assessed as "Income from Other Sources" rather than "Income from Capital Gains" as per Section 2(14) of the Act. Since the assessee was not in a possession of capital asset, against the booking amount of a villa, the assessee got the compensation as there is no capital asset involved no question of invoking capital gains as per the provisions of section 45 of the Act. Therefore the assessment order passed by the Assessing Officer without making any enquiry is an erroneous order and prejudicial to the interest of Revenue and why the assessment order not be set aside and to do....
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....gnizance of the underlying asset the Villa, the Assessee took all precautions in declaring the Income under Capital gains an per the provisions of the Income Tax Act, 1961. In so doing the eligible Indexation were applied in arriving at the Long Term Capital Gain through the income received is exempt as in nature of Capital receipt. 2.6 Further the Assessee relies on the ITAT case "Chheda Housing Development Corporation Vs ACIT (ITAT Mumbai) (29-05-2019)". The decision in this "Where amount received by the Assessee in excess of Advance was on account of compensation for extinction of its right to sue the owner, the receipt was Capital receipt not chargeable to tax". 2.7 The Assessee also relies on the decision of the ITAT Ahmedabad in "Bhojison Infrastructure Pvt. Ltd. Vs ITO Ward-1(1)(2), Ahmedabad (17.09.2018)", which has delivered judgment on the Compensation as in the Nature of Capital receipt, no liable for tax. 2.8 In the Assessee case it was a clear case of Cheating by the Developers and had failed to honour the commitment to the said property and consequently the Assessee aggrieved had no other option other than to take to legal redressal and in t....
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....f contract with builder liable to be assessed as Income from other sources and not under the head Capital Gains as claimed by assessee, without appreciating that assessee had acquired a valuable right in an immovable property pursuant to the allotment letter dated 5/8/2005 and subsequent payment made to the builder and this fact has been upheld by NCDRC, and therefore the same was rightly offered to tax under the head Capital Gains; therefore the Pr. CIT under revisionary jurisdiction u/s, 263 ought not to have interfered with the assessment order dated 7/8/2017. 2. The learned Pr. CIT failed to appreciate that, assessee had acquired a valuable right in the property pursuant to the letter of allotment and subsequent payment, therefore to hold that assessee didn't had any rights in the underlying asset is incorrect and contrary to order of the National Consumer Disputes Redressal Commission, therefore to treat the assessment order as erroneous and prejudicial to the interest of revenue on the alleged grounds of non discussion of issue, failed to conduct proper inquiries, investigation and examination is not justified, therefore the order issued u/s. 263 of the Act is ba....
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.... has identified a particular property which he is intended to buy from the builder and the builder is also bound to provide the applicant with that property by accepting certain advance amount and making agreement for balance payment as scheduled in the agreement. Thus, going into the provisions, it is not necessary that to constitute a capital asset, the assessee must be the owner by way of a conveyance deed in respect of that asset for the purpose of computing capital gain. The assessee had acquired a right to get a particular villa from the builder and that right of the assessee itself is a capital asset. The word 'held' used in Section 2(14) as well as Explanation to Section 48 clearly depicts that assessee must have some right in the capital asset which is subject to transfer. By making the payment to the builder, the assessee will be holding capital asset and thus, the compensation received by virtue of the order of the NCDRC is nothing but a capital receipt. 3.3 The similar issue has been decided in the following judgment holding it a Long Term Capital Asset. The same is given hereunder: (I) ACIT VS Ashwin S. Bhalekar (ITAT Mumbai) Appeal Number: IT....
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.... Gurgaon [2021] 132 taxmann.com 231 on identical issue. 3.4. The Ld. Counsel further relied upon Bombay High Court judgment in ITA No. 707 of 2015 dated 02.08.2017 in the case of CIT vs. Vinod Kumar Goel HUF as follows : 7. It is a settled position of law that the Commissioner of Income Tax can exercise his power under Section 263 of the Act only on satisfaction of twin conditions i.e. the order being erroneous and also prejudicial to the interest of the Revenue. In the present facts, the view taken by the Assessing Officer on detailed examination of the issues, as is evident from the questionnaire posed to the respondent assessee and the response thereto during the assessment proceedings, on facts is a possible view. The view taken by the Assessing Officer does not became erroneous merely because the view of the Commissioner of Income Tax is different from the view taken by the Assessing Officer. This Court in Commissioner of Income Tax Vs. Gabriel India Ltd. 203 ITR 108 while discussing the meaning of the word "erroneous" for the purposes of exercising powers under Section 263 of the Act inter alia observed as under:- "From the aforesaid definitions it is cle....
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....bitrary on the basis of the evidence available before him. 9. In the above view, the impugned order of the Tribunal does not give rise to any substantial question of law. Thus, not entertained. 3.5. Thus the Ld. A.R. pleaded that the invocation of Revision proceedings u/s. 263 is bad in law and liable to be quashed. 4. Per contra, the Ld. D.R. appearing for the Revenue supported the order of the Ld. PCIT and submitted the Assessing Officer has not made proper enquiries on the claim of the assessee and simply granted the relief which is no doubt an erroneous order and prejudicial to the interest of Revenue, since huge refund is granted to the assessee. Therefore the Revision proceedings is required to be upheld. 5. We have given our thoughtful consideration and perused the materials available on record. During the assessment proceedings, the ld. AO. vide his notice u/s. 142(1) called for various details which were submitted by the assessee. The A.O. passed the assessment order after taking into consideration the submissions of the assessee and by verifying the documentary evidences produced before him. 5.1. Further it is seen from record as against the Revenue A....