Hardship Pay in Redevelopment is Capital Receipt, Not Taxable Income: ITAT Mumbai

Kunnama V Balakrishna Vs ITO (ITAT Mumbai)

Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has delivered a significant ruling affirming that “Hardship Compensation” received by flat owners from developers during property redevelopment is a capital receipt and not taxable income. This decision, in the case of Kunnama V Balakrishna Vs ITO (ITAT Mumbai) for Assessment Year 2011-12, provides clarity on the tax treatment of such payments, a common feature in urban renewal projects.

The Tribunal’s order, though delivered in the absence of the assessee’s

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