Monica Parmanand Mirchandani Vs ITO (ITAT Mumbai)
ITAT Mumbai held that hardship compensation is not a revenue receipt but constitute a capital receipt. Accordingly, AO directed to delete addition made towards the same.
Facts- The assessee is an individual and is a tuition teacher by profession. AO had passed the assessment order u/s. 143(3) r.w.s. 147 of the Act on 30.11.2019, determining total income at Rs.74,12,272/-, after making an addition of Rs.71,34,472/- on the amount received from DB MIG Realtors & Builders Pvt. Ltd. as ‘revenue receipt’. First appellate authority upheld the addition made by AO. Being aggrieved, the present appeal is filed.
Conclusion- Hon’ble Jurisdictional High Court in the case of Sarfaraz S Furniturewalla vs. Afshan Sharfalu Ashok Kumar & Others held that the hardship allowance which is also termed as ‘transit rent’ received by the assessee from the developer as ‘compensation towards displacement’ as per the development agreement is not a ‘revenue receipt’ but constitute a ‘capital receipt’.
Held that merely because the assessee has received the said amount from its builder, the same will not come under the purview of the income of the assessee within the meaning of section 2(24) of the I. T. Act unless it is a revenue receipt. As it is the settled proposition of law that the hardship compensation is a ‘capital receipt’.
