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TaxTMI 
TaxTMI 
TaxTMI 
2024 (7) TMI 1774
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....2)(4) erred in confirming addition of Hardship Compensation of Rs 25,21,508/- in the impugned assessment order. 3. The Learned CIT (A) has erred in confirming the addition at Rs 25, 21,508/- received by the Appellant as hardship Compensation. He has further erred in confirming the said addition to the income under the head income from other sources. Regard being had to the facts and circumstances of the case, the said addition ought to have been deleted, being in the nature of Capital Receipt. 4. Without prejudice to ground no 2 & 3, and as an alternative ground of appeal, the Learned CIT (A) has erred in confirming addition of Rs 25,21,508/- received by the appellant as hardship compensation under the head income from other sources, instead of long-term capital gain. Regard being had to the facts and circumstances of the case, the said addition ought to have been assessed under the head long term capital gain in which transfer of capital asset is complete. 5. On Facts and Circumstances of the Case and in Law, the Ld. CIT(A) has erred in appreciating the fact that on identical issue in case of appellant Ld.AO (NFAC) had accepted that Hardship Compensation....
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....8,40,580/- and passed the order u/sec 143 r.w.s 147 of the Act date 27.12.2018. 4. Aggrieved by the order the assessee has filed an appeal before the CIT(A), whereas the CIT(A) considered the grounds of appeal, submissions of the assessee and findings of the AO but has confirmed the action of the AO and dismissed the assessee appeal. Aggrieved by the order the assessee has filed appeal before the Hon'ble Tribunal. 5. At the time of hearing, the Ld. AR submitted that the CIT(A) has erred in confirming the action of the AO overlooking the submissions and the information filed in the assessment proceedings and appellate proceedings. The contentions of the Ld. AR that the amount received by the assessee is towards hardship compensation / displacement compensation and is a capital receipt and not liable to tax. Further the Ld.AR substantiated the submissions with the factual paper book, synopsis and judicial decisions and prayed for allowing the appeal. Per Contra, the Ld. DR submitted that the nature of compensation is a revenue receipt/ income and the Ld. DR relied on the order of the CIT(A). 6. We heard the rival submissions and perused the material on record. The sole matri....
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....ns and perused the material available on record. The assessee is a member of the MIG Co-operative Housing Society Ltd. The society, who was the owner of the property, entered into an agreement for the development of the property, and to achieve this, the society and its members awarded a contract to M/s DB MIG Realtors and Builders Private Limited vide agreement dated 31/10/2010. As per the terms of the said agreement, the developer shall develop the property in such a manner that each member of the society shall receive a new flat in exchange of the surrender of the old flat depending upon the size of the old flat along with interest in the additional FSI allotted by MHADA. It is further to be noted that the property and the additional FSI are in the name of the society. Further, as per the said agreement, all the expenses, costs, and charges for the proposed project of redevelopment of the said property including for the purchase of additional FSI from MHADA, etc. shall be borne by the developers alone and the society and/or members shall not be liable to pay or contribute any amount toward the same. The developer, as per the agreement has paid to the society being the lawful own....
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....here the assessee being a flat owner in a housing society receives certain sum from developer as corpus fund towards hardship caused to flat owners on redevelopment, impugned amount has to be treated as capital receipt simplicitor which as per Section 2(24)(vi) of the Act is not taxable as income of the assessee. In this regard, we find it profitable to reproduce para 3.2 of the order of ITAT Mumbai Bench in the case of Jitendra Kumar Soneja (supra), which reads as under:- "3.2 Nothing contrary was brought to my knowledge on behalf of Revenue. Facts being similar, so following same reasoning, I find that consideration for which the amount has been paid by the developer are, therefore, not relevant in determining the nature of receipt in the hands of the assessee. In view of these discussion, in my considered view, assessee could not be said to be of revenue nature, and, accordingly, the same is outside the ambit of income under section 2(24) of the Act. 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 as such, as and when occasion arises for computing capital gains in respect of the s....
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.... 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 and is not liable to tax. The case of the assessee is squarely supported by the decision of the Co-ordinate Bench in the case of Shri Devshi Lakhamshi Dedhia vs. ACIT in ITA No.5350/Mum/2012 wherein similar issue has been decided in favour of the assessee, the relevant operative portion is reproduced hereunder:- 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/- ....