Dr. Girish Suresh Walavalkar Vs ITO (ITAT Mumbai)
Summary: For assessment year 2017-18, the ITAT Mumbai considered an appeal against reassessment proceedings in which three additions were sustained: Rs.4,05,896/- relating to redevelopment compensation/transit rent, Rs.8,87,904/- representing the difference between salary offered and amounts reflected in Forms 26AS and 16, and Rs.8,775/- disallowed under sections 80G and 80TTA.
The assessee had received Rs.13,50,216/- from M/s Keystone Realtors Pvt. Ltd. under a registered tripartite redevelopment agreement concerning the housing society in which he owned a residential flat. He had claimed alternative-accommodation rent expenditure of Rs.11,97,900/- and offered Rs.1,52,316/- to tax. The Tribunal held that the first question was the intrinsic character of the redevelopment receipt, rather than the precise amount of rent actually spent. Following the coordinate-bench reasoning in Ajay Parasmal Kothari v. ITO-30(1)(1) and the earlier decision in Smt Delilah Raj Mansukhani v. ITO, it held that compensation for hardship and displacement arising from redevelopment is a capital receipt and that its taxability does not depend upon actual utilisation for alternative accommodation. The Tribunal therefore directed deletion of the Rs.4,05,896/- addition without remanding the matter for rent verification.
On salary, the Tribunal found that the Assessing Officer had rejected Form No. 16 principally because gratuity was treated as subject to an obsolete Rs.3,50,000/- ceiling. The Tribunal noted the amendment of section 4(3) of the Payment of Gratuity Act, 1972, by the Payment of Gratuity (Amendment) Act, 2010, which substituted Rs.10,00,000/- for the earlier ceiling, and held that the Rs.5,19,738/- gratuity exemption was within the applicable ceiling for AY 2017-18. It further held that gross figures in Form 26AS could not, by themselves, be treated as taxable salary and that the employer-issued Form No. 16 and full and final settlement statement could not be rejected without identifying a specific false or impermissible component. The Rs.8,87,904/- salary addition was accordingly directed to be deleted.
