Case Law Details
Sarfaraz S. Furniturewalla Vs Afshan Sharfali Ashok Kumar & Ors (Bombay High Court)
The petitioner, represented by Pardiwala, sought clarity on the wording of a court order regarding the payment of interest. Subsequently, the issue of TDS deduction on ‘Transit Rent’ was raised by Dhanani, to which Pardiwala contested citing precedents from the Income Tax Appellate Tribunal (ITAT).
The court delved into the provisions of Section 194I of the Income Tax Act, which pertains to rent, and provided an explanation for the term ‘rent’. It referenced previous judgments of the ITAT, specifically the cases of Smt. Delilah Raj Mansukhani and Ajay Parasmal Kothari, which concluded that compensation received towards displacement in redevelopment scenarios is not liable to tax.
The court emphasized that ‘Transit Rent’, often referred to as hardship allowance or rehabilitation allowance, is not considered a revenue receipt and hence not subject to taxation. Therefore, there is no requirement for TDS deduction on ‘Transit Rent’ payable by the developer to the tenant.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
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