TaxTMI 
TaxTMI 
TaxTMI 
2023 (5) TMI 66
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....s.76,55,841/- is rightly taxed by the A.O. as income from other source when said amount is otherwise deductible U/sec. 24(b) and hence can't travel to provisions of sec. 56. 3] The learned CIT(A) was not justified in holding that the refund of municipal tax of Rs.76,55,841/- constitutes income of the appellant by ignoring the fact that unjust enrichment cant result in earning of income. 4] The learned CIT(A) failed to appreciate that - a. The refund of municipal tax of Rs.76,55,841/- could not be assessed income U/sec. 56 of IT Act when it is related with income assessable U/sec.22. b. In the absence of any provision similar to section 41(1) while assessing income U/sec.22/23 refund of cannot be assessed as income in the hands of the appellant by overriding in another head of income. 5] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal." 2. At the outset, ld.Authorised Representative(ld.AR) for the assessee submitted that assessee would not like to press the Ground No.2, 3 and 4. Accordingly, Ground No's.2, 3 and 4 are dismissed as not pressed. Brief facts of the case: 3. Assessee is an individual, Director in several companie....
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....tes as "the income includes....". It lists out various sub sections which includes income under the Act. Therefore, the definition of income as per the I.T.Act is an inclusive definition and not an exhaustive one. It does not cover all instances in its list which can be determined as income under the Act. Similarly, the heads of income have been laid down u/s 14 of the Act as salaries, income from house property, profits and gains from business or profession, capital gains and income from other sources. Sec.56 of the Act states as under: "56(1). Income of every kind which is not to be excluded from the total income under this Act shall be chargeable to Income Tax under the head 'income from other sources', if it is not chargeable to income tax under any of the heads specified in section 14, Item A to E". 11. From the facts of the case as indicated above, the compensation received by the appellant is in lieu of the perceived loss of rental income as a result of sudden vacation of the leased premises. There is no doubt that had the licensee continued in the hired building, the lease rent payments would qualify as revenue receipts assessed under the head ' income from house proper....
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....r loss of agricultural income, but it does not 'mean that itself is agricultural income in nature...............In this case, admittedly, the agricultural operations by way of tapping stopped in November., 1982, and, therefore, the receipt under consideration did not relate to any agricultural operations carried on by the assessee after that date". 13. After stating as above, the Tribunal held that the source and basis of the amount obtained is obviously the agreement dt. 18th July, 1982. It was further held that the damages to be paid by the purchaser, M/s Supriya Enterprises, under cl. 17 of the agreement arose directly from the failure of the terms and conditions of the payment of the sale consideration by the purchaser to the assessee-company and the amount of Rs. 3,66,649.29 represented compensation for the delay in receiving the instalments of sale consideration from the purchaser. It was further found that the assessee-company, admittedly, stopped the agricultural operations by way of tapping in November, 1982, and the receipt under consideration did not relate to any agricultural operations carried on by the assessee after that date. In the light of the above findings....
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....ng that the said amount was a taxable receipt under the head "Income from other sources". 3.1 The ld.CIT(A) upheld the order of the AO. 4. Aggrieved by the order of the ld.CIT(A), the assessee filed appeal before this Tribunal. Submission of ld.AR : 5. The ld.AR filed a paper book containing copy of leave and license agreement, copy of termination agreement. The ld.AR vehemently relied on DATAR & Co., Vs. ITO [2000] 67 TTJ 546(Pune) and ITAT Mumbai's decision in the case of Addl.CIT Vs. Rama Leasing Co. P. Ltd., 20 SoT 505 and Avakash Holding Pvt. Ltd., in ITA No.475/PN/2010. Submission of ld.Departmental Representative : 6. The ld.DR of the Revenue submitted that the lessee terminated the agreement during lock in period. Therefore, lessee paid compensation to the assessee. Thus, in the termination agreement it is categorically mentioned as "Penalty/Compensation". Thus, the amount paid was compensation. Therefore, AO has rightly taxed it under the head Income from Other Sources. The ld.DR also relied on the order of Hon'ble Delhi High Court in the case of Skyland Builders (P.) Ltd., Vs. ITO [2021] 121 taxmann.com 251 (Delhi). Findings &Analysis : 7. We have heard both the p....
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....n Indian concern; but was not an employee of the said Indian concern. The salary was to be paid to him net of taxes. The taxes paid by the Indian concern were included as income from other sources in the hands of the assessee as there was no employer-employee relationship between the two. The taxes paid were taxed under section 56 of the Act as in the absence of employer employee relationship, there was no basis for including the same as salary income. 21. The facts of the present case are different from the facts of the case before the Hon'ble Supreme Court in Emil Webber's case (supra). The assessee herein received compensation for surrender of lease of property of which he is the owner. The ownership rights bring the receipts from such property under the ambit of specific head of income on account of property. It is an established rule of law that once the receipt is taxable under a specific head of income the same has to be included under such head of income and the same cannot be brought to tax under the residuary head of income. The assessee in addition to arrears of rent had received compensation for premature surrender of lease by the lessee. The compensation was relatabl....
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....Sidhwa (supra) and the decision of Supreme Court in the case of N.A. Mody (supra), it is held that the compensation received by the assessee can not be taxed." 23. The Ld. DR for the revenue had relying on the judgment of Hon'ble Supreme Court in Shriyans Prasad Jain's case (supra) stated that compensation received for premature termination of employment was taxable in the hands of the recipient. In view of the specific provisions of the Act, the ratio laid down by the Hon'ble Supreme Court is not applicable to the facts of the present case wherein the receipts arising from the property are not includible in the hands of the assessee as income from property in view of the restricted meaning of the minimum 'annual value' under section 23 of the Income-tax Act. 24. Respectfully following the ratio laid down by Pune Bench of Tribunal in Dattar & Co.'s case (supra), we hold that the compensation received by the assessee on premature termination of lease agreement is not chargeable to tax though it is a Revenue Receipt. We confirm the order of CIT(A) in holding that the said compensation amount is a non-taxable receipt in the hands of the assessee. 9. The facts of the present case ....