TaxTMI 
TaxTMI 
2025 (6) TMI 47
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.... as on facts in upholding the initiation of proceedings under section 148 in as much as there was no escapement of income leading to a reason to belief and as such the re-opening is illegal, arbitrary and unjustified. 2. That the Ld. Assessing Officer has erred in law as well as on facts in as much as there has been no reason to believe that there was an escapement of income in as much as the reasons recorded are based only on borrowed information and as such the assessment order passed is illegal, arbitrary and unjustified. 3. Without prejudice to the above, the Ld. Commissioner of Income Tax (Appeals) has erred in upholding the addition of Rs. 1,75,00,000/- made by assessing officer treating the extinguishment of the right in capital ....
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....nding over vacant possession and relinquishing rights. The buyer purchased the property only after resolving these claims. The assessee claimed deduction under Section 54 for reinvestment in a residential property and under Section 54EC through investment in NHAI bonds. 4. During the reassessment, the AO held that since the assessee lacked legal ownership, the amount could not be treated as consideration for the transfer of a capital asset. The AO treated it the same as a gift under Section 56(2) and assessed it as "income from other sources". 5. In appeal, the Ld. CIT(A) upheld the AO's action, observing that the assessee failed to file any conclusive documentary evidence of possession or ownership and that the agreement relied upon ....
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....t the assessee was not the owner of the property and therefore was not entitled to claim long term capital gain on the amount received by her. 10. We have considered the rival contentions and perused the material on record. The facts indicate that the assessee was in settled possession of the property for decades, and the receipt was not gratuitous but for relinquishing that possession and claim, which were acknowledged in the civil suit and agreement. 11. The possession and beneficial interest held by the assessee over a prolonged period, her assertion of rights through legal proceedings, and the receipt of consideration under a family settlement fall within the definition of "capital asset" under Section 2(14), and the act of relinquish....
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.... 15. We have considered the rivals submissions and perused the materials on records. We note that the assessee received compensation of Rs. 19,50,873/- from the developer when the building in which the assessee owned flat went for re-development as per the agreement between the developers and flat owners dated 28.03.2008. The said compensation was paid towards hardship Rs. 13,45,278/-; rehabilitation Rs. 5,90,625/- and for shifting Rs. 15,000/-. We also note that the assessee paid Rs. 18,63,000/- to Joys Developers for acquiring additional area of 138 Sq Ft. It was also noted that the assessee shifted to his own house when the building went for re-development. Now the question before is whether the compensation upon re-development of prop....
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....y meaning of Rent would be an amount which the Tenant / Licensee pays to the Landlord / Licensor. In the present proceedings, the term used is " Transit Rent", which is commonly referred to as Hardship Allowance / Rehabilitation Allowance / Displacement Allowance, which is paid by the Developer / Landlord to the tenant who suffers hardship due to dispossession. Hence, in my opinion,' Transit Renf is not to be considered as a revenue receipt and is not liable to be taxed, as a result, there will be no question of deduction of T.D.S. from the amount payable by the Developer to the tenant." 12. In view of the above, we are of the considered opinion that the assessee is entitled to the relief claim. The assessee has rightly claimed deducti....
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..... In our considered view, at best, the transaction reflects an application of income by the registered owner in favour of the possessors-her relatives-to perfect title and securing possession. Alternatively, the facts indicate that the purchaser himself paid the said amount to these possessors to obtain vacant possession and a clear title. In either scenario, the payment made does not constitute taxable income in the hands of the assessee. It either partakes the nature of a capital receipt received by the assessee for handing over the possession or was like a gratuitous transfer between close relatives-namely, the Bhabhi and Nanad (sisters-in-law)-which is exempt under the provisions of the Act. 16. It is now a well-settled proposition of ....