TaxTMI 
TaxTMI 
2026 (9) TMI 1955
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....titute capital receipts not chargeable to tax. 2. Under facts and circumstances of the case the Learned Commissioner of Income Tax (Appeal) has erred in law and on facts by treating the Leave and License Agreement as "defective" and "unreliable". The officer failed to appreciate that the agreement is a duly registered document executed before the Office of the Joint Sub-Registrar, supported by biometric verification of both parties, which carries a statutory presumption of genuineness that cannot be dismissed on mere surmise or conjecture. 3. Under facts and circumstances of the case the Learned Commissioner of Income Tax (Appeal) has erred in not granting relief for actual rent outgo of Rs. 11,97,900/- established by the Appellant, despite independent third-party corroboration from landlords, rent agreements and bank statements. 4. Under the facts and circumstances of the case the Learned Commissioner of Income Tax (Appeal) has erred in confirming the addition of Rs. 8,87,904/- by mechanically adopting gross figures from Form 26AS and Form 16, while ignoring statutory exemptions under Section 10 (LTC, Gratuity, etc.) correctly computed by the employers a....
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....ition of Rs. 8,87,904/- was made on account of the difference between the salary income offered by the assessee and the amounts reflected in Form No. 26AS and Form No. 16 issued by the concerned employers. The third addition of Rs. 8,775/- represented disallowance of deductions claimed by the assessee for want of supporting evidence. 7. Aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A) on 10.06.2023. The learned CIT(A), by the impugned order dated 25.02.2026, sustained all the three additions and dismissed the appeal of the assessee. The assessee is, therefore, in further appeal before us. 8. Before us, the learned Authorised Representative (AR) submitted that all the three additions sustained by the learned CIT(A) are liable to be deleted on the basis of the documentary evidence placed in the paper books. 9. Adverting first to Grounds Nos. 1 to 3, the learned AR submitted that the assessee received an aggregate amount of Rs. 13,50,216/- from M/s Keystone Realtors Pvt. Ltd. pursuant to a registered tripartite redevelopment agreement entered into in relation to MIG Co-operative Housing Society, Bandra (East), Group IV Ltd. He refe....
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....he learned AR contended that the taxability of the amount received from the developer did not depend upon whether the assessee had incurred an equivalent amount towards alternative accommodation. He submitted that once the receipt was found to be compensation for hardship and displacement arising from redevelopment of a capital asset, the receipt retained its character as a capital receipt irrespective of its subsequent application. In support of this proposition, the learned AR relied upon the decision of the coordinate bench in Ajay Parasmal Kothari v. ITO-30(1)(1), ITA No. 2823/Mum/2022, order dated 03.04.2023, for assessment year 2013-14. He particularly relied upon paragraph 12 of the said order, the relevant portion of which reads as under: "compensation received by the assessee towards displacement in terms of Development Agreement is not a revenue receipt and constitute capital receipt" 13. The learned AR submitted that the aforesaid decision squarely covered the controversy because the receipt in the present case also arose from displacement of the assessee pursuant to redevelopment of his residential premises. He, therefore, prayed that the receipt be treated ....
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..... As regards Ground No. 5, the learned AR submitted that the assessee had claimed an aggregate deduction of Rs. 1,58,775/- under Chapter VI-A of the Act. The Assessing Officer accepted the investment of Rs. 1,50,000/- in the Public Provident Fund under section 80C of the Act but disallowed the balance amount of Rs. 8,775/- claimed under sections 80G and 80TTA for want of supporting evidence. The learned AR submitted that the assessee had offered the savings-bank interest under the head "Income from Other Sources" and was, consequently, entitled to the corresponding deduction under section 80TTA of the Act, subject to the statutory limit. He further submitted that the donation qualifying for deduction under section 80G was supported by the donation receipt and the corresponding debit entry in the assessee's bank account. He referred to the supporting documents placed at pages 161 and 162 of Paper Book No. 2. It was accordingly contended that the claim of Rs. 8,775/- was supported by the relevant documentary evidence and that the disallowance sustained by the learned CIT(A) was liable to be deleted. 19. Per contra, the learned DR relied upon the assessment order as well as the imp....
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.... of the landlords and the amount of rent paid to each of them. 24. In our considered view, the approach adopted by the lower authorities proceeds on an erroneous premise. Before examining the application of the receipt or the quantum of actual rent expenditure, it was necessary to first determine the intrinsic character of the amount received from the developer. If the receipt represents compensation for hardship and displacement arising from the redevelopment of the assessee's residential premises, its character cannot be determined by the amount actually expended by the assessee on alternative accommodation. 25. The coordinate bench considered an identical controversy in Ajay Parasmal Kothari v. ITO-30(1)(1), ITA No. 2823/Mum/2022, order dated 03.04.2023, for assessment year 2013-14. In that case also, the assessee had received monthly rental compensation from the developer but had not utilised the amount for taking separate premises on rent. The coordinate bench held in paragraph 12 as under: 12. Considered the rival submissions and material placed on record, it is fact on record that assessee has received Rs..3,73,191/- from the builder for alternate accommodatio....
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....the land. In the present case the assessee who was flat owner in the building was member of the society, As per the agreement each member of the society including the assessee was to be given a flat in lieu of the old one and the each member including the assessee was given compensation. We also note that In the decisions in ITA No 72/Mum/2012 assessment year 2008-09 Bench E and ITA No 5271/Mum/2012 assessment year 2008-09 Bench "D" the Tribunal held that the amounts received as compensation for hardship, rehabilitation and for shifting are not liable to tax We, therefore, respectfully, the above decisions are of the considered view that the amounts received by the assessee as hardship compensation, rehabilitation compensation and for shifting are not liable to tax and the order passed by the first appellate authority cannot be sustained. Thus the order of CIT(A) is reversed and ground is allowed in favour of the assessee. 16. In the result, appeal of the assessee is partly allowed, as above. 6. Respectfully following the co-ordinate Bench decision, we set aside the findings of the ld. CIT(A) on this issue and direct the AO to delete the addition made of Rs. 2,60,....
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.... of Rs. 8,87,904/- representing the difference between the salary reflected in Form No. 26AS and the taxable salary offered by the assessee. The assessee's case is that the difference consists of exempt components, including leave travel allowance, medical reimbursement, gratuity, leave encashment and conveyance allowance, as computed by the respective employers and reflected in Form No. 16. 32. The assessment order reveals that one of the principal reasons for rejecting the claim was the conclusion of the Assessing Officer that the maximum permissible amount of gratuity under section 4(3) of the Payment of Gratuity Act, 1972 was Rs. 3,50,000/-. On that basis, the Assessing Officer held that the exemption of Rs. 5,19,738/- reflected in Form No. 16 could not be accepted. 33. The aforesaid conclusion of the Assessing Officer is contrary to the statutory provision applicable to the year under consideration. Section 4(3) of the Payment of Gratuity Act, 1972 was amended by the Payment of Gratuity (Amendment) Act, 2010, Act No. 15 of 2010, whereby the ceiling of Rs. 3,50,000/- was substituted by Rs. 10,00,000/-. The amended ceiling was operative during the previous year relevant to....
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....ance, were separately disclosed in Form No. 16 and the full and final settlement statement. The Assessing Officer did not undertake any component-wise examination or record any specific finding that a particular receipt was taxable, that the applicable statutory conditions were not satisfied, or that any amount exceeded the prescribed limit. No enquiry was made from either employer and no material was brought on record to demonstrate that the certificates issued by them contained incorrect particulars. Instead, after noticing the gratuity figure, the Assessing Officer rejected the entire computation on a general observation that the figures appearing in Form No. 16 were unreliable. Such an omnibus rejection cannot be sustained. 38. The learned CIT(A) also proceeded on the same erroneous premise and affirmed the addition without examining the effect of the amended gratuity ceiling or the evidentiary value of the employer-issued documents. The contemporaneous documentary evidence placed on record sufficiently reconciles the gross salary with the taxable salary offered by the assessee. In the absence of any contrary material, there is no justification for taxing the entire differen....