TaxTMI 
TaxTMI 
2025 (5) TMI 1479
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....nce all the issues involved in two three appeals are common and identical, therefore, they have been clubbed, heard together and consolidated order is being passed for the sake of convenience and brevity. We shall take ITA No. 417/Mum/2025, A.Y 2011-12 as lead case and facts narrated therein. 2. At the very outset, it is noticed that there is a delay in filing the present appeals and in this regard an affidavit has been filed by the assessee Therefore, after hearing the parties on condonation of delay and after going through the contents of the affidavit and keeping in view, the principles laid down by Hon'ble Supreme Court in the case of Land Acquisition Collector Vs. Mst. Katiji & Ors., [1987] AIR 1353 (SC), wherein it has been held th....
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.... 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 residential society [MIG Co-operative Housing Society Ltd, Bandra (East)] and as per terms of the re-development agreement dated 31.10.2010, she received Rs. 25,21,508/- from the developer/builder as "Hardship Compensation". According to the assessee, the amount received from the builder was capital receipt and therefore not liable to be tax. However, the AO did not agree. He noted that assessee was a member of the housing society, and that the society was the owner of the properties (flats); and it had entered into agreement for development of the pr....
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....". 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 note that the assessee was a resident of flat being member of the housing society (supra), who received Rs. 25,21,508/- from the developer as "Hardship Compensation" in terms of the redevelopment agreement dated 31.10.2010, by which the flat occupied by assessee was surrendered and handed over to builder for re-development, and would receive new flat over and above the hard-ship compensation paid to assessee. As per the terms of re-developed agreement, the assessee received the "Hardship Compensation" to the tune of Rs. 25,21,508/- whic....
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....er 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. Hon'ble Supreme Court in the case of Padmraje R. Kardambande vs CIT (195 ITR 877) has observed that "..., we hold that the amounts received by the assessee during the financial years in question have to be regarded as capital receipts, and, therefore, (emphasis supplied by us), are not income within meaning of section 2(24) of the Income tax Act...." This clearly implies, as is the settled legal position in our understanding, that a capital receipt in principle is outside the scope of income chargeable to tax and a re....
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....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 the nature of receipt in the hands of the assessee. In view of these discussion, in our considered view, the receipt of Rs. 11,75,000 by the assessee cannot be said to be of revenue nature, and, accordingly, the same is outside the ambit of income under section 2(24) of the Act. However, in our considered opinion and as learned counsel for the assessee fairly agrees, the impugned receipt ends up reducing the cost of acquisition of the asset, i.e. flat, and, therefore, the same will be taken into account a....
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....refore, 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 the case law of the Hon'ble Supreme Court in the case of M/s. Bangalore Club v CIT 156 Taxman 323 is not relevant on the issue in hand. Therefore, the AO/Ld. CIT(A) erred in law holding that hardship compensation received by the assessee from the builder was in nature of the dividend in the hands of the assessee/member of the housing society. In the light of the aforesaid discussion, we are of the considered view that receipt of "Hardship Compensation" of Rs. 25,02,508/- cannot be said t....