Case Law Details
ACIT Vs Shri Anil Gulabdas Shah (ITAT Mumbai)
The undisputed position that emerges is the fact that the property under consideration was subject matter of extensive litigation which ultimate got culminated into sale of the property by the assessee in terms of consent terms dated 03/01/2012 between the assessee and certain other parties. The assessee, along with others, has executed deed of conveyance on 31/12/2011 in favor of Hubtown Limited for aggregate sale consideration of Rs.4 Crores. The additional compensation of Rs.9 Crores was payable to the assessee only pursuant to consent terms dated 03/01/2012 filed before Hon’ble Supreme Court. As per Clause-5 of the consent terms, the assessee was to be paid the said compensation for time, money and effort put in by him to challenge the acquisition of the suit property and for pursuing litigation before the Authorities, Hon’ble Bombay High Court and Hon’ble Supreme Court. The additional compensation was towards time, cost and effort of the assessee in pursuing the litigation. This being so, we are unable to concur with the submissions of Ld. DR that the said compensation was part and parcel for the sale transaction and received by the assessee as a consideration of sale of property. On the other hand, the learned CIT(A), in our considered opinion, has clinched the issue in the proper perspective. As rightly held, there could not be any transfer of a “right to sue” under Indian Law and any capital receipt arising from a right to sue cannot thus be considered capital gains under Section 45.
FULL TEXT OF THE ITAT JUDGEMENT
1. Aforesaid appeal by revenue for Assessment Year [in short referred to as ‘AY’] 2012-13 contest the order of Ld. Commissioner of Income-Tax (Appeals)-36, Mumbai, [in short referred to as ‘CIT(A)’], Appeal No. CIT(A)-36/IT-217/ACIT-24(1)/15-16 dated 26/05/2017 on following grounds of appeal: –
1. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) is justified in deleting the addition of Rs.9,00,00,000/- by stating that it is in the nature of compensation, while the fact is that the assessee gave away the conveyance of the land only after the receipt of this amount and acceptance of the consent terms by the court.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
