TaxTMI 
TaxTMI 
2024 (1) TMI 599
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....Homes for redevelopment of the society and as per the terms of the said agreement, the assessee has received an amount of Rs.. 52,88,045/- from the above said developer, but the assessee has filed return of income declaring total income of Rs.. 9,47.976/- for the current Assessment Year. Accordingly, the case of the assessee was reopened and notice u/s 148 of Income-tax Act, 1961 (in short "Act") was issued and served on the assessee. In response assessee filed return of income, subsequently notices u/s. 143(2) and 142(1) of the Act were issued and served on the assessee. In response, authorised representative of the assessee attended and submitted the relevant information as called for. 3. After considering the submissions of the assessee, the assessee was asked why the amount received from the developer should not be added to the total income of the assessee. In response, assessee has submitted as under: - ".......1. As per the Return of Income (ROI) filed by me on 31.07.2016 vide acknowledgement number 82182630310709, out of Rs. 52,88,045, though the Corpus amount of Rs. 21,77,069 is not taxable, the same is offered to tax in the ROI to avoid litigation and hence, th....
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....nsaction of redevelopment and receipt of consideration by the individual members is purely a commercial activity and he also held that it is in the nature of dividends in the hands of the members/shareholders of the Society. Therefore, he held that it has revenue character by applying the decision of the Hon'ble Karnataka High Court in the case of M/s Bangalore Club v. CIT, 156 Taxman 323. Accordingly, he held that it is in the nature of dividend and is therefore exigible to the income tax in the hands of the assessee under the head "income from other sources" 6. Further, he rejected claim of the assessee, as the above receipt is also capital receipt with the observation that the society under consideration was lawful owner of only leasehold rights by virtue of MHADA as Lessor had demised unto Society, for a period of 99 years w.e.f. 01.06.1978 at specified annual rent. The assessee, acquired additional FSI, the society/Developer had to pay lease premium to MHADA, with the above observation Assessing Officer treated the amount received from the developer as "income from other sources". 7. Aggrieved, assessee preferred an appeal before the Ld.CIT(A) and filed the detailed ....
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....essing Officer in adding INR 52,88,045/-. 2. The Ld. Commissioner of Income-tax (Appeal), NFAC, erred in upholding the action of Ld. Assessing Officer in adding INR 52,88,045/-, as income from other sources. 3. The Ld. Commissioner of Income-tax (Appeal), NFAC, erred in upholding the action of Ld. Assessing Officer in adding INR 52,88,045/-, without reducing the amount of compensation already offered to tax of Rs. 21,77,069/- offered to tax under the head capital gains. 4. The notice u/s 148 of the Act dated 29.03.2016 is bad in law and without jurisdiction and consequently entire reassessment proceedings are bad in law. 5. The Ld. AO has erred in levying interest u/s 234B and 234C of the Act. 6. The grounds of appeal raised are independent and without prejudice to each other. 7. The Appellant craves leave to add, to amend, alter/delete and/or modify the above grounds of appeal on or before the final hearing." 9. At the time of hearing, Ld. AR of the assessee submitted that the assessee has received certain sum from the developer as the shifting compensation and he brought to our notice findings of the Assessing Officer at Pa....
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.... gains being assessed to capital gains. The factual backdrop is noted by the Tribunal and thereafter the rival contentions. The Tribunal concluded and relying upon its order passed in two other cases that what the assessee sold was TDR received as additional FSI as per the DC. It was not a case of sale of development rights already embedded in the land acquired and owned by the assessee. The Tribunal concluded that the assessee had not incurred any cost of acquisition in respect of the right which emanated from 1991 Rules, making the assessee eligible to additional FSI. The land and building earlier in the possession of the assessee continued to remain with it. Even after the transfer of the right or the additional FSI, the position did not undergo any change. The revenue could not point out any particular asset as specified in sub-section (2) of section 55. The conclusion of the Tribunal in imminently possible and in the given facts. That is also possible in the light of the legal position as noted by language of section 55(2) and the judgment of the Supreme Court in CIT v. B.C. Srinivasa Shetty [1981] 128 ITR 294/5 Taxman 1, which is in the field. [Para 11]" 12. Further, with ....
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....elopment Agreement, assessee was compensated with the shifting compensation for personal belongings as well as accommodation for an initial period of 24 months including corpus amount. It clearly shows that the above payments made by the developer only to compensate the assessee towards the shifting as well as the additional burden on the corpus funds. Therefore, it clearly shows that it is a compensation towards hardship faced by the assessee. We observe that Coordinate Bench has considered the similar issue and adjudicated the same in the case of Smt Delilah Raj Mansukhani v. ITO in ITA.No. 3526/Mum/2017 dated 29.01.2021 and observed as under: - "5. After hearing the rival submissions and perusing the material on record, we find that compensation received by the assessee towards displacement in terms of Development Agreement is not a revenue receipt and constitute capital receipt as the property has gone into redevelopment. In such scenario, the compensation is normally paid by the builder on account of hardship faced by owner of the flat due to displacement of the occupants of the flat. The said payment is in the nature of hardship allowance / rehabilitation allowance a....