Ashok Ramchandra Naik Vs ITO (ITAT Mumbai)
The Mumbai ITAT held that hardship compensation received by a society member under a redevelopment agreement is a capital receipt and not taxable. The assessee had received compensation and corpus fund from the developer and had already offered part of the income to tax over multiple years on a proportionate basis.
The Assessing Officer, however, taxed a portion of such compensation again in the year of receipt, resulting in double taxation of the same income. The Tribunal noted that the issue of taxability of such compensation is already settled in favour of the assessee by earlier decisions, holding that such receipts are capital in nature.
It was further observed that since the assessee had already offered the amount in subsequent years, taxing it again in the impugned year was unjustified. Accordingly, the ITAT set aside the order of the CIT(A) and deleted the addition, granting full relief to the assessee.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The instant appeal of the assessee filed against the order of the NFAC, Delhi [for brevity the “Ld. CIT(A)”], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for Assessment Year 2016-17, date of order 11.09.2025. The impugned order emanated from the order of the Assessment Unit Income Tax Department (for brevity the ‘Ld. AO’) order passed under section 147r.w.s. 144(B) of the Act date of order 26.03.2023.
