Case Law Details
Pushpa R. Chawla Vs ITO (ITAT Mumbai)
ITAT Mumbai held that payments/compensation paid by developer is in the nature of hardship allowance / rehabilitation allowance is capital receipt and is not liable to tax.
Facts- The assessee is an individual and she has filed her return of income declaring total income at ₹.9,47,976/-. AO received information from the Income Tax Officer, Mumbai that the assessee is a member of Middle Income Group III Co-operative Housing Society Ltd. The said society had entered into an agreement with M/s. Suyog Happy Homes for redevelopment of the society and as per the terms of the said agreement, the assessee has received an amount of ₹.52,88,045/- from the developer, but the assessee has filed a return of income declaring a total income of ₹.9,47.976/- for the current A.Y.
The case of the assessee was reopened and notice u/s. 148 was issued and served. AO held that the transaction of redevelopment and receipt of consideration by the individual members is purely a commercial activity and he also held that it is in the nature of dividends in the hands of the members/shareholders of the Society. Therefore, AO held that it has revenue character. Accordingly, AO held that it is in the nature of dividend and is therefore exigible to the income tax in the hands of the assessee under the head “income from other sources”.
CIT(A) rejected the appeal. Being aggrieved, the present appeal is filed.
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