KISHOR JAMNADAS MORZARIA,MUMBAI vs. INCOME TAX OFFICER, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL“J(SMC)” BENCH, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER ITA No. 6004/MUM/2026 (AY: 2018-19) (Physicalhearing) Kishor Jamnadas Morzaria ITO, Mumbai A-201, Kailash Gegency Plot No. vs IT-Office, Vashi Railway Station 4508, M.G. Road, Mumbai – 400077. Building, Navi Mumbai – 400703. [PAN: AAAAN2444A] Appellant / Assessee Respondent / Revenue Assessee by Shri Nilesh Joshi, CA Revenue by Ms. Jayshree Thakur, Sr. DR Date of hearing 21.08.2026 Date of pronouncement 21.08.2026 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by assessee is directed against the order of ld. CIT(A)dated 19.05.2026 for Assessment Year (AY) 2018-19. The assessee has raised following grounds of appeal: “1) The learned Assessing Officer has erred in treating the sum of Rs.4,59,506/-received by the appellant as Corpus/Hardship Compensation towards utilisation of additional FSI/TDR as revenue receipt instead of capital receipt, which action was further upheld by the learned CIT(A). 2) The learned Assessing Officer has erred in making the addition of Rs.4,59,506/-under the head "Income from Other Sources" in respect of Corpus/Hardship Compensation received from the developer towards utilisation of additional FSI/TDR, which addition was upheld by the learned CIT(A). 3) The learned Assessing Officer failed to consider that the said receipt was capital in nature being compensation towards utilisation of additional FSI/TDR and not towards vacating the premises or rendering any services to the developer, which finding was wrongly confirmed by the learned CIT(A). 4) The learned Assessing Officer and the learned CIT(A) failed to consider that the judicial pronouncements relied upon by the appellant, wherein

ITA No.6004/Mum/2026 (AY: 2018-19) Kishor JamnadasMorzaria similar corpus compensation received on redevelopment was held to be capital receipt not chargeable to tax. 5) The learned Assessing Officer has erred in levy of interest under section 234A, 2348, 234C and 234D of the Income Tax Act, 1961. 6) The appellant craves leave to add, amend and/or alter any of the foregoing grounds of appeal as and when required.” 2. Rival submissions of both the parties have been heard and record perused. The learned Authorised Representative (ld. AR) of the assessee submitted that the assessee has received hardship compensation of Rs. 4,59,506/- form Dharmi Properties Private Limited. The receipt of compensation is capital receipt. There are a series of decisions of the Tribunal holding that rehabilitation compensation is a capital receipt and cannot be brought to tax. In support of his submission, the learned AR relied upon the decision of Hon’ble Mumbai Tribunal in Smt. Delilah Raj Mansukhani in ITA No. 3526/Mum/2017. 3. On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) for the Revenue supported the orders of the lower authorities. 4. We have considered the rival submissions of both the parties and have gone through the orders of the lower authorities carefully. We find that the assessee has received Rs. 4,59,506/-. The Assessing Officer treated such receipt as income from ‘other sources’. The learned AR confirmed the action of the AO. We find that there is no dispute that the assessee has received such amount on hardship rehabilitation compensation. Such fact has been accepted by the AO in para 3 on page -2 of the assessment order. We find that the coordinate Bench of the Tribunal in Smt. Delilah Raj Mansukhani in ITA No. 3526/Mum/2017(supra) while relying on earlier

ITA No.6004/Mum/2026 (AY: 2018-19) Kishor JamnadasMorzaria decision in Shri Devshi Laxmibhai Vs in ITA No. 5350/Mum2012 has held that compensation received on account of hardship compensation for shifting in a development scheme is capital receipt and not taxable. Respectfully following the same, we delete the addition made by the Assessing Officer. In the result, the grounds of appeal raised by the assessee are allowed. 5. In the result, appeal filed by assessee is allowed. Order was pronounced in open court on 21/08/2026 at the time of hearing Sd/- Sd/- JAGADISH PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER

MUMBAI, Dated:21/08/2026 Biswajit Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order

Assistant RegistrarITAT, Mumbai