KUNNAMA V BALAKRISHNA,MUMBAI vs. INCOME TAX OFFICER 23(2)(2), MUMBAI

ITA 2577/MUM/2023Status: DisposedITAT Mumbai12 December 2023AY 2011-20128 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the hardship compensation received by the assessee is a capital receipt and not taxable as revenue income. The amount received reduces the cost of acquisition of the asset for future capital gains computation.

What were the facts?

The assessee received Rs. 25,21,508/- as 'Hardship Compensation' from a developer for surrendering her flat for redevelopment. The Assessing Officer treated this as dividend income, while the assessee claimed it as a capital receipt.

What were the issues?

Whether hardship compensation received by a flat owner from a developer during redevelopment is a capital receipt or revenue receipt.

Which sections of the Income-tax Act were involved?

Section 2(24)

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Income Tax Appellate Tribunal, “SMC” BENCH,

Before: SHRI ABY T. VARKEY, JM & SHRI S RIFAUR RAHMAN, AM

Hearing: 29/11/2023Pronounced: 12/12/2023

PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)/(NFAC), Delhi dated 27.05.2023 for the assessment year 2011-12. 2. None appeared for the assessee, despite the fact that the appeal has been fixed for hearing on previous five (5) occasions. The main grievance of the assessee is against the action of the Ld. CIT(A) confirming the addition of Rs.25,21,508/- made by AO by treating the Hardship Compensation Fund as “Dividend Income” received from the residential society.

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