Vile Parle Prarthana CHS Ltd Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that Mesne profit is treated as capital receipt not chargeable to tax. Accordingly, appeal of the assessee allowed and impugned order is quashed.
Facts- The assessee is a cooperative housing society located in Vile Parle, Mumbai and has been deriving rental income from commercial premises on the ground floor and partly in the basement. Notably, total amount of Rs. 2.40 Crores was granted by the Small Causes court as Mesne Profits to the assessee’s society. AO after considering the assessee’s submissions held that the Mesne Profits cannot be considered as capital receipt.
CIT(A) has upheld the order of the ld. AO after giving partial relief. Being aggrieved, the present appeal is filed.
Conclusion- This Tribunal in the case of ACIT vs. Amrut Enterprises, has discussed this issue of Mesne profits, whether it is a capital or revenue receipt after discussing the judgment of the Hon’ble Madras High Court in the case of CIT vs. P Mariappa Gounder reported in 147 ITR 176 and judgment of Hon’ble Delhi High Court in the case of Skyland Builders (P) Ltd., reported in 429 ITR 255. The Tribunal finally referring to various judgments held holding that it is a capital receipt.
