TaxTMI 
TaxTMI 
2024 (2) TMI 451
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.... addition of Rs. 25,21,508/- made by AO by treating the Hardship Compensation Fund as "Dividend Income" received from the residential society. 3. Brief facts are that the assessee is an individual (Retired Person) who has filed her return of income on 26.07.2011, declaring total income of Rs. 1,12,913/- for AY 2011-12. Later, the case of the assessee was reopened u/s 147 of the Income Tax Act, 1961 (hereinafter "the Act") for the reason that even though assessee received Rs. 25,21,508/- from developer/builder M/s. DB-MIG Realtors and Builders Pvt. Ltd. (hereinafter "Builder") have not offered for tax the said receipt, which according to the AO escaped assessment. The assessee replied to the AO that she had a flat (C- 12/96) in the resident....
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.... activity of entering into an agreement for re-development of the property and receipt of consideration by the society and diverting of the same at source to the individual members is purely a commercial activity". Therefore, he was of the opinion that amount given to the assessee (hardship compensation) is akin to dividend distributed by the housing society and therefore, its character is revenue in nature. And therefore, he added the same i.e. Rs. 25,21,508/- as revenue receipt in the form of dividend under the head "income from other sources". Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) who confirmed the action of the AO. Aggrieved, the assessee is before us. 4. We have heard the Ld. DR and perused the records. We ....
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....on the judicial precedent/decision of this Tribunal in ITA. No.2349/Mum/2011 in case of Kushal K. Bangia v ITO (2012) 50 SOT 1/18 taxmann.com 31 wherein Tribunal has held as under: - "3. We have heard the rival contentions, perused the material on record and duly considered factual matrix of the case as also the applicable legal position. 4. In our considered view, it is only elementary that the connotation of income howsoever wide and exhaustive, take into account only such capital receipts are specifically taxable under the provisions of the Income tax Act. Section 2(24)(vi) provides that income includes "any capital gains chargeable under section 45", and, thus, it is clear that a capital receipt simplicitor cannot be taken as income....
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....ative is that cash compensation received by the assessee is nothing but his share in profits earned by the developer which are essentially revenue items in nature. This argument however proceeds on the fallacy that the nature of payment in the hands of payer also ends up determining it's nature in the hands of the recipient. As observed by Hon'ble Supreme Court in the case of CIT vs. Kamal Behari Lal Singha (82 ITR 460), "it is now well settled that, in order to find out whether it is a capital receipt or revenue receipt, one has to see what it is in the hands of the receiver and not what it is in the hands of the payer". The consideration for which the amount has been paid by the developer are, therefore, not really relevant in determining....
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....elopment. We find that the issue as to whether the hardship compensation received by the assessee from builder in terms of the re-development agreement is no longer res- integra and we find that Co-ordinate Bench of this Tribunal in the case of Kushal K. Bangia (supra) have answered the question in favour of the assessee by holding it to be capital receipt not liable to tax. We find that the issue involved in the instant case is squarely covered by the decision of the Tribunal (supra) and therefore, we are of the opinion that "Hardship Compensation" given to the assessee pursuant to the re-development agreement is a capital receipt and cannot be treated as revenue receipt as held by the AO/Ld. CIT(A). The reliance placed by AO/Ld. CIT(A) on....