SADIKALI MOHAMMEDALI NOORANI,MUMBAI vs. COMMISSIONER OF INCOME TAX (APPEAL)-NFAC, MUMBAI
IN THE INCOME-TAX APPELLATE TRIBUNAL “G” BENCH,
MUMBAI
BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER
&
SMT. RENU JAUHRI, ACCOUNTANT MEMBER
Sadikali
Mohamedali
Noorani
1st Floor, Esplande Mansion,
24/36, Near Session Court,
Kala
Ghoda,
Mumbai-
00023. Vs.
Commissioner of Income-Tax
(Appeals)
(NAFC) Delhi.
थायी लेखा सं./जीआइआर सं./PAN/GIR No:AADPN9711C
Appellant
..
Respondent
Appellant by :
Ms. Sahana M. Ladiawala-Adv.
Respondent by :
Shri Swapnil Choudhary- Sr. AR
Date of Hearing
23.09.2025
Date of Pronouncement
06.10.2025
आदेश / O R D E R
PER RENU JAUHRI [A.M.]:-
This appeal is filed by the assessee against the order of the National
Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”]
dated 22.02.2024 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for the Assessment Year [A.Y.] 2012-13. 2. The grounds of appeal are as under:
“1. The Ld. Commissioner of Income-tax (appeals) has erred in confirming the additions of the sum of Rs. 3,10,00,000/- (rupees three crore ten lac only) on account of the amount received by the appellants' son Mr. shabanali sadikali noorani, on surrender of joint tenanted premises at chowpaty, Mumbai as per the terms of the consent terms signed and registered with the city civil court at Mumbai.
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ITA NO. 1888/mum/2024. 2. The appellant craves, leave to add, amend, alter, substitute or delete any or all of the foregoing grounds of appeal before or during the hearing of the appeal.”
The brief fact of the case are that the assessee filed return for AY 2012- 13 on 22.03.2014, declaring total income of Rs. 59,55,380/-. The assessee had shown sale of tenanted residential flat on account of surrender of tenancy rights therein for which a consideration of 5 crore was shown as received and invested in purchase of a residential house to claim deduction u/s. 54F of the Act. The case was selected for scrutiny and assessment was completed u/s. 143(3) of the Act after making an addition of Rs. 3,10,00,000/- on account of capital gains for the part consideration received by the son of the assessee for surrender of tenancy rights in the aforesaid residential premises. The Ld. AO considered the same as an application of income by the assessee and made the impugned addition in the hands of the assessee. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A). However, Ld. CIT(A) did not accept the assessee’s claim that as per consent terms signed between the assessee and landlord, the son of the assessee had been paid Rs. 3,10,00,000/- separately for surrendering his tenancy rights. The appeal was, accordingly dismissed vide order dated 22.02.2024. The assessee has now filed an appeal before the Tribunal.
Before us, Ld. AR has submitted that the assessee and his son were jointly in occupation of the said premises in chowpaty, Mumbai since last many years. The landlord filed an eviction suit against the appellant in the Court of Small Causes in 2010. Subsequently, an out of court settlement was P a g e | 3 ITA NO. 1888/mum/2024. made by landlord with assessee and his son as per which the landlord paid a sum of Rs. 5 cr to the assessee and Rs. 3.10 cr to his son. The Consent Terms agreement was filed and registered before the Hon’ble Court of Small Causes. However, only the assessee’s name was mentioned therein as the suit was filed against him alone as head of the family. It has further been submitted by the Ld. AR that the assessee did not receive the said amount of Rs. 3.10 cr which was directly paid by the landlord to the assessee’s son, Mr. Shabanali Sadiqali Noorani. Further, this amount has also been shown by the son in his return as long term capital gains. Hence, taxing the same in assessee’s hands now would result in double taxation of the amount. Ld. AR has cited several decisions in support of his arguments including that of the Juri ictional High Court in the case of CIT vs. Raman Kumar Suri (2023) 21 taxmann.com 411 (Bom) wherein it was held that the assessment can be done only on the actual amount received by the assessee and he cannot be taxed on deemed income for the purpose of capital gain tax based on the perception of the AO that the assessee should have received certain sum as sale consideration.
2. Ld. DR, on the other hand, strongly relied on the orders of lower authorities. It was argued by him that the consent argument was made between the landlord and the assessee since he was the sole tenant. Payment made to the assessee’s son by the landlord has rightly been considered as an application of income and therefore liability to pay the tax on the impugned amount is that of the assessee.
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ITA NO. 1888/mum/2024. 5. We have considered the rival submissions and perused the material placed on record. From the registered consent agreement filed before the court of Small Causes, it is clear that the assessee alone is the tenant of the said premises. The fact that his son is residing therein alongwith the assessee does not make him a co-tenant. The agreement clearly mentions in para 3 that the defendant (i.e. assessee) is in ‘exclusive use, occupation and possession of the suit premises’. Further, paras 8, 9, 10 & 11 of the agreement read as under:
“8) As agreed, the Plaintiffs has paid sum of Rs 8,10,00,000/- (Rupees Eight
Crore Ten Lakhs only) to Defendant, (the receipt whereof the Defendant acknowledges) vide two Pay Orders dated 29th March 2010- drawn on Corporation Bank, Mumbai Service Branch bearing no 549749 for Rs
5,00,00,000/- (Rupees Five Crore only) in favour of Defendant and bearing no 549748 for Rs 3,10,00,000/- (Rupees, Three Crore Ten Lakhs only) in favour of Defendant's son Shabanali Sadiqali Noorani. Simultaneously the Defendant on receipt of the said amount has handed over quiet, vacant and peaceful possession of the suit premises to Plaintiffs.
9) The Defendant hereby confirms and declares that he has removed all his articles and belongings from the suit premises and handed over vacant and peaceful possession of the suit premises to Plaintiffs.
10) The Defendant confirms that save and except Defendant, no other person is entitled to tenancy rights in respect of the suit premisés. It is expressly agreed by and between Plaintiff and Defendant that the present consent terms are being arrived at on express understanding that if any claim is made by any person to the tenancy rights of the suit premises against the Plaintiffs claiming through the Defendant, then the Defendant shall alone be liable and responsible to settle the said claim and Defendant hereby undertakes to this Hon'ble Court to indemnify the Plaintiff against any such claim made by any person or persons claiming through or under Defendant in respect of the suit premises or any portion thereof.
11) The Defendant undertakes to this Hon'ble Court that he and/or any person/s claiming through or under him shall not make any claim right, title or interest of whatsoever nature in respect of the suit premises or part thereof.”
From the above terms and conditions of the agreement, it is clear that the assessee was the sole tenant of the said premises and therefore entire consideration of Rs. 8.10 crore is taxable as capital gains in his hands only.
Merely because a part of the consideration has been paid vide pay order in his
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ITA NO. 1888/mum/2024. son’s name does not alter the legal position. Further, the fact that the son of the assessee had declared the amount of Rs. 3.10 crore as capital gain in his hands and further claimed deduction u/s. 54F thereon will not affect the taxability of the entire consideration in the hands of the assessee.
2. With regard to the decision of the Hon’ble Juri ictional High Court in the case of Raman Kumar Suri (supra) relied upon by the Ld. AR, we note that the facts of that case are entirely different. In that case, the settlement agreement specifically mentioned the share of the assessee and his brother in the jointly inherited property as Rs. 6 crore and Rs. 8 crore respectively. Ld. AO had held that the assessee should have received equal share from the property inherited by him and his brother and added 1 crore as deemed capital gains in the hands of the assessee. In this background, Hon’ble Juri ictional High Court had held that the assessment can be done by the revenue only on the actual amount received by the assessee and he cannot be taxed on the basis of deemed income. However, in the present case, assessee is the sole tenant and the agreement also clearly records this fact and hence he alone is liable to the capital gain tax on the entire consideration.
In view of above facts, we are of the considered opinion that Ld. CIT(A) has rightly upheld the addition of Rs. 3.10 crore made by the Ld. AO in the hands of the assessee to be taxed as long term capital of gains.
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ITA NO. 1888/mum/2024. 7. In the result, assessee’s appeal is dismissed.
Order Pronounced in Open Court on 06.10.2025 (PAWAN SINGH)
(RENU JAUHRI)
(JUDICIAL MEMBER)
(ACCOUNTANT MEMBER)
Place: Mumbai
Date 06.10.2025
Divya R. Nandgaonkar /STENO
आदेश की ितिलिप अेिषत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. थ / The Respondent.
3. आयकर आयु / CIT
4. िवभागीय
ितिनिध, आयकर अपीलीय अिधकरण DR, ITAT,
Mumbai
5. गाड फाईल / Guard file.
स ािपत
ित ////
आदेशानुसार/ BY ORDER,
उप/सहायक पंजीकार (Dy./Asstt.