Sonal Samit Vartak Vs ITO (ITAT Mumbai)
In the case of Sonal Samit Vartak vs. ITO (ITAT Mumbai), the Income Tax Appellate Tribunal (ITAT) ruled that the hardship allowance received by the assessee from a developer for vacating a flat during redevelopment is not taxable as revenue. The appeal was filed against the appellate order of the National Faceless Appeal Centre, which upheld the reassessment order under Section 143(3) read with Section 147 of the Income Tax Act. The assessee contended that the Rs. 25,21,508 received was a capital receipt, not income, and cited judicial precedents, including a decision by the Bombay High Court in Sarfaraz S. Furniturewalla, which held that hardship allowances from developers should not be taxed as revenue. The ITAT agreed, stating that such payments are not taxable, and directed the Assessing Officer to delete the addition made in the assessee’s income. Consequently, the assessee’s appeal was allowed. Also Read: Compensation received for hardship is capital receipt hence not taxable
FULL TEXT OF THE ORDER OF ITAT MUMBAI
1. ITA 1 139/Mum/2024 is filed by Sonal Samit Vartak for A.Y. 2011-12 against the appellate order passed by the National Faceless Appeal Centre, Delhi (id. CIT(A)’) dated 17.12.20 18 wherein the appeal filed by the assessee against the reassessment order passed u/s 143(3) r.w.s. 147 of the Act by the Income Tax Officer, Ward-35(3)(3) (‘the ld. AO’) was dismissed.
