The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the compensation for delay in property handover by builder is not taxable under Income Tax Act.
The bench of Sudhir Kumar (Judicial Member) and Shamim Yahya (Accountant Member) has observed that the compensation received by the assessee from Jaypee Greens Greater Noida for cancelling the allotment of unit due to not handed over within time in the sum of Rs 5947980/-is not chargeable to tax in the hands of the assessee.
The appellant/assessee is an advocate by profession, in addition to carrying on business in his own name the assessee is also a partner in M/s. Link Legal, carrying on the profession of advocate & solicitors. The return of income for A.Y. 2014-15 was filed by the assessee on 30.11.2024 declaring income at Rs 6501934/-.
A notice was issued under Section 143(2) of the Act was issued on 31-08-2015 and again notice u/s 142(1) of the Act along with questionnaire was issued to the assessee. The authorized representative of the assessee has attended the assessment proceedings. According to AO the assessee has not shown the interest income of Rs 59,47,942/- received from Jai Prakash Associates Ltd. The assessing officer has made the total additions of Rs.5995462/- as undisclosed interest Rs.59,47,942/-and undisclosed receipt of interest income from DLF utilities Ltd Rs.47520/-.
The assessee has filed the appeal before the CIT(A) partly allowed the appeal and directed the AO to re-compute the “Income From Other Sources” after deducting the amount of Rs 24,25,426 under section 57(iii) of the Act, against which the assesses is in appeal.
The issue raised was whether the compensation received by the assessee from Jaypee Greens Greater Noida for non-delivery of property in time could be construed as capital receipt not chargeable to income-tax or not.
The court held that the interest received in the form of compensation as capital receipt and not liable to be taxed.
Case Details
Case Title: Atul Sharma Versus ACIT
Case No.: ITA No.6055/Del/2018
Date: 13/11/2024
Counsel For Appellant: Yudhisthir Mehtani
Counsel For Respondent: N.K. Bansal
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