Sherlyn Dias Vs ITO (ITAT Mumbai)
The appeal before the ITAT Mumbai arose from the order of the Commissioner of Income-tax (Appeals) dated 09.09.2025 for Assessment Year 2011-12. During the pendency of the appeal, the original assessee died on 02.02.2026. Based on an affidavit, death certificate, no-objection from the other legal heir, and in the absence of any objection from the Revenue, the Tribunal permitted the deceased assessee’s daughter to prosecute the appeal as legal representative.
The assessee had originally filed a return declaring income of ₹2,64,260 and disclosed capital gains while claiming exemption under Section 54EC on investment in REC Bonds. The assessment was reopened under Sections 147 and 148. During reassessment, the Assessing Officer noticed that the assessee had received ₹50,00,000 under a Development Agreement dated 02.08.2010 relating to redevelopment of the property “Katy Kunj”. The assessee contended that the amount represented consideration for transfer of development rights, which constituted a capital asset under Section 2(14), and that the investment in REC Bonds qualified for exemption under Section 54EC. The Assessing Officer accepted that the document was an agreement for development and that Section 50C was inapplicable, but held that the receipt was taxable as “Income from Other Sources” under Section 56 instead of “Capital Gains”.
