Compensation for “Right to Sue” not taxable as capital gains: ITAT Mumbai

DCIT Vs Kekin Kunverji Chheda (ITAT Mumbai) Revenue filed appeals against CIT(A)’s orders deleting additions made on account of compensation received by the assessees (Kekin Chheda and Kaushal Agarwal) from a real estate developer pursuant to a Bombay High Court consent decree, which AO treated as capital gains. Assessees had entered into MoUs in 2010 with Aadi Properties LLP for commercial space booking. The project was later aborted. Assessees filed suits for damages before the Bombay High Court. A Consent Decree dated 10.07.2017 awarded compensation (e.g., ₹7.19 Cr to Kekin Chheda) ...