Case Law Details
DCIT Vs Keezhayur Sowrirajan Sreenivasan (ITAT Chennai)
Consideration received for relinquishment of right in property is assessable under the head ‘income from capital gains’.
Facts-
During the course of assessment proceedings, AO noticed that the assessee has computed LTCG towards compensation received for relinquishment of his right in a property in favour of M/s.Landmark Construction and claimed deduction u/s 54F. AO has called upon the assessee to explain the said transaction. In response, the assessee submitted that he had entered into MOU with M/s. Landmark Construction, a proprietary concern, on 28.11.2006 for purchase of 20,000 sqft of saleable area together with proportionate undivided share at pre-launch price of Rs.3000/- per sq.ft and has also paid Rs.1,00,000/- advance in cash. It was further submitted that due to delay in implementation of project, the assessee has relinquished his right in the property to be constructed by M/s. Landmark Construction and received compensation of Rs.5 crores in cheque after deducting necessary TDS applicable as per law.
AO, however, was not convinced with the explanation furnished by the assessee and according to A.O., except MOU, no other reliable document was submitted in support of his claim. Further, the MOU between the parties dated 28.11.2006 is unregistered and there is no witness signature on the document. Although, the assessee claims to have paid Rs.10,25,000/- on various dates, but could not substantiate his claim with necessary evidences. Therefore, AO has rejected claim of the assessee and assessed compensation received by the assessee in lieu of surrender of his rights in property under the head ‘income from other sources’.
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