Case Law Details
Chheda Housing Development Corporation Vs ACIT (ITAT Mumbai)
Conclusion: Where amount received by assessee in excess of advance was on account of compensation for extinction of its right to sue the owner, the receipt was a Capital receipt not chargeable to tax.
Held: During the assessment proceeding, AO noted that assessee had received Rs. 20 Crore as compensation, which was inclusive of advance of Rs.2.50 Crore paid by assessee. Assessee claimed the receipt of Rs. 20 Crore as capital receipt not chargeable to tax. Assessee received the said compensation under agreement for relinquishing his right to sue in a development agreement. AO treated the receipt of Rs. 20 Crore as income and taxed the same as Long Term Capital Gain (LTCG). It was held amount received by assessee in excess of advance was on account of compensation for extinction of its right to sue the owner, the receipt was a Capital receipt not chargeable to tax. Since assessee had not received the amount in excess of advance in the course of his business it must be construed as capital receipt and not business receipt.
FULL TEXT OF THE ITAT JUDGEMENT
1. This appeal by assessee is directed against the order of ld. Commissioner of Income-tax (Appeals)-44 [hereinafter referred as ld CIT (A)], Mumbai dated 29.03.2016 for Assessment Year 2012-13. The assessee has raised the following grounds of appeal:
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