SNEHALATA HERAMB DHAYAGUDE,MUMBAI vs. JURISDICTIONAL AO WARD 16(3)(1), MUMBAI, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A” MUMBAI

BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI ANIKESH BANERJEE (JUDICIAL MEMBER)

ITA Nos. 258/MUM/2026 Assessment Year: 2018-19

Snchalata Heramb Dhayagude, Jurisdictional AO Ward 16(3)(1), Vs. 169/D, Savitri Niwas, Dr. Ambedkar Aayakar Bhawan, Mumbai, AO Road, Dadar T.T, Mumbai – 400014, Type W, AO Number 92, Range Maharashtra. Code 773, Mumbai – 400020, Maharashtra. PAN NO. AGXPD 3785 C APPELLANT RESPONDENT

: Shri Anil Sathe Assessee by : Shri Surendra Mohan, Sr. DR Department by (Virtually Appear) Date of Hearing : 08/04/2026 : 21/04/2026 Date of pronouncement

ORDER PER OM PRAKASH KANT, AM

This appeal by the assessee is directed against order dated 24.11.2025, passed by the Learned Commissioner of Income Tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for Assessment Year (in short ‘A.Y’) 2018-19, arising following grounds: -

Snchalata Heramb Dhayagude, Vs. Snchalata Heramb Dhayagude, 2 urisdictional Ward 16(3)(1), Jurisdictional Ward 16(3)(1), ITA No. 258/MUM/2026 ITA No.

“1. The learned Commissioner of Income Tax Appeals erred in not “1. The learned Commissioner of Income Tax Appeals erred in not “1. The learned Commissioner of Income Tax Appeals erred in not confirming the addition to the extent of Rs.1,20,40,750/-u/s 56(2)(x) confirming the addition to the extent of Rs.1,20,40,750/ confirming the addition to the extent of Rs.1,20,40,750/ of the Income Tax Act, 1961 made by the learned AO, by a gross of the Income Tax Act, 1961 made by the learned AO, by a gross of the Income Tax Act, 1961 made by the learned AO, by a gross misunderstanding of fact and total mis misunderstanding of fact and total misapplication of law. application of law. 2. The learned Comm learned Commissioner of Income Tax Appeals e issioner of Income Tax Appeals erred in not appreciation that in terms of the agreement with developers that the appreciation that in terms of the agreement with developers that the appreciation that in terms of the agreement with developers that the appellant had not received the permanent alternate accommodation appellant had not received the permanent alternate accommodation appellant had not received the permanent alternate accommodation at anytime during the relevant previous at anytime during the relevant previous year, and therefore the year, and therefore the provisions of section 56(2)(x) were not attracted during the previous provisions of section 56(2)(x) were not attracted during the previous provisions of section 56(2)(x) were not attracted during the previous year. 3. Strictly in the alternative and without prejudice to above, Strictly in the alternative and without prejudice to above, the Strictly in the alternative and without prejudice to above, learned Commissioner of Income Tax Appeals erred in fact and law learned Commissioner of Income Tax Appeals erred in fact and law learned Commissioner of Income Tax Appeals erred in fact and law by confirming an additi by confirming an addition of the stamp duty value said in the on of the stamp duty value said in the appellant’s total income without appreciating the fact that the stamp appellant’s total income without appreciating the fact that the stamp appellant’s total income without appreciating the fact that the stamp duty value is inclusive of rent compensation which has been duly duty value is inclusive of rent compensation which has been duly duty value is inclusive of rent compensation which has been duly offered to tax during the financial year. offered to tax during the financial year. 4. Strictly in the alternative and with 4. Strictly in the alternative and without prejudice to above, if one out prejudice to above, if one takes the view that the transfer takes the view that the transfer took place during the year under took place during the year under consideration and the same is exigible to tax then the computation consideration and the same is exigible to tax then the computation consideration and the same is exigible to tax then the computation would have to be made under the head "Capital Gains", and the would have to be made under the head "Capital Gains", and the would have to be made under the head "Capital Gains", and the Appellant would be entitled to Appellant would be entitled to exemption u/s 54F, as the exemption u/s 54F, as the "consideration" sought to be taxed would have been fully reinvested "consideration" sought to be taxed would have been fully reinvested "consideration" sought to be taxed would have been fully reinvested in the permanent alternate accommodation. in the permanent alternate accommodation. 5. Strictly in the alternative and without prejudice to the above, out of Strictly in the alternative and without prejudice to the above, out of Strictly in the alternative and without prejudice to the above, out of the stamp duty value sought to be taxed both the stamp duty value sought to be taxed both rent for temporary rent for temporary alternate accommodation, and hardship compensation is not exigible alternate accommodation, and hardship compensation is not exigible alternate accommodation, and hardship compensation is not exigible to tax in terms of a number of judicial pronouncements, and to tax in terms of a number of judicial pronouncements, and to tax in terms of a number of judicial pronouncements, and consequently the learned Commissioner of Income Tax Appeals erred consequently the learned Commissioner of Income Tax Appeals erred consequently the learned Commissioner of Income Tax Appeals erred is confirming the addition to that extent. is confirming the addition to that extent. 6. The appellant previously to add alter or amend any of the grounds The appellant previously to add alter or amend any of the grounds The appellant previously to add alter or amend any of the grounds of appeal prior to or at the time of hearing. of appeal prior to or at the time of hearing.”

Snchalata Heramb Dhayagude, Vs. Snchalata Heramb Dhayagude, 3 urisdictional Ward 16(3)(1), Jurisdictional Ward 16(3)(1), ITA No. 258/MUM/2026 ITA No.

The central controversy involves an addition of ₹1,20,40,750/- 2. The central controversy involves an addition of The central controversy involves an addition of sustained by the Ld. CIT(A) under Section 56(2)(x) Section 56(2)(x) of the Income sustained by the Ld. CIT(A) under Tax Act, 1961 (‘the Act’), representing the Assessee’s 50% share in Tax Act, 1961 (‘the Act’), representing the Assessee’s 50% share in Tax Act, 1961 (‘the Act’), representing the Assessee’s 50% share in the stamp duty value of a Permanent Alternate Accommodation the stamp duty value of a Permanent Alternate Accommodation the stamp duty value of a Permanent Alternate Accommodation (PAA) under a redevelopment agreement. (PAA) under a redevelopment agreement.

3.1 During the course of assessment proceedings, it was observed During the course of assessment proceedings, it was observed During the course of assessment proceedings, it was observed that the assessee, along with her husband, was in occupation of that the assessee, along with her husband, was in occupation of that the assessee, along with her husband, was in occupation of premises being Room Nos. 10 and 11 on the 3rd Floor of Savitri premises being Room Nos. 10 and 11 on the 3rd Floor of Savitri premises being Room Nos. 10 and 11 on the 3rd Floor of Savitri Niwas, situated at Dadar Matunga Estate, Hindu Colony, Mumbai, Niwas, situated at Dadar Matunga Estate, Hindu Colony, Mumbai, Niwas, situated at Dadar Matunga Estate, Hindu Colony, Mumbai, admeasuring 1059.40 sq. ft. (carpet area), as co-tenants. The admeasuring 1059.40 sq. ft. (carpet area), as co admeasuring 1059.40 sq. ft. (carpet area), as co assessee claimed to have tenancy rights in said property along with assessee claimed to have tenancy rights in said property along with assessee claimed to have tenancy rights in said property along with her husband. The said property was subjected to redevelopment The said property was subjected to redevelopment The said property was subjected to redevelopment by M/s. Sugee Six Developers, pursuant to which the assessee and her M/s. Sugee Six Developers, pursuant to which the assessee and her M/s. Sugee Six Developers, pursuant to which the assessee and her husband, in lieu of their tenancy rights, became entitled to receive husband, in lieu of their tenancy rights, became entitled to receive husband, in lieu of their tenancy rights, became entitled to receive permanent alternate accommodation (PAA) on ownership basis permanent alternate accommodation (PAA) on ownership basis permanent alternate accommodation (PAA) on ownership basis

Snchalata Heramb Dhayagude, Vs. Snchalata Heramb Dhayagude, 4 urisdictional Ward 16(3)(1), Jurisdictional Ward 16(3)(1), ITA No. 258/MUM/2026 ITA No.

3.2 The terms governing the aforesaid arrangement were The terms governing the aforesaid arrangement were The terms governing the aforesaid arrangement were embodied in an agreement dated 18.09.2017 entered into with the developer. in an agreement dated 18.09.2017 entered into with the developer. in an agreement dated 18.09.2017 entered into with the developer. In terms thereof, the assessee and her husband were to receive a In terms thereof, the assessee and her husband were to receive a In terms thereof, the assessee and her husband were to receive a residential unit admeasuring 1525.47 sq. ft. (carpet area) on residential unit admeasuring 1525.47 sq. ft. (carpet area) on residential unit admeasuring 1525.47 sq. ft. (carpet area) on ownership basis in substitution of their existing tenanted premises. ownership basis in substitution of their existing tena ownership basis in substitution of their existing tena

3.3 Pending completion of construction, the assessee, jointly with Pending completion of construction, the assessee, jointly with Pending completion of construction, the assessee, jointly with her husband, was entitled to temporary alternate accommodation, her husband, was entitled to temporary alternate accommodation, her husband, was entitled to temporary alternate accommodation, along with monthly rental compensation of ₹1,39,424/ along with monthly rental compensation of 1,39,424/-. It was further stipulated that, upon handing over poss further stipulated that, upon handing over possession of the PAA, a ession of the PAA, a corpus amount would also be paid, which, however, was not corpus amount would also be paid, which, however, was not corpus amount would also be paid, which, however, was not received during the year under consideration. The differential received during the year under consideration. The differential received during the year under consideration. The differential amount between rent received and rent paid for temporary amount between rent received and rent paid for temporary amount between rent received and rent paid for temporary accommodation, aggregating to ₹5,50,725/-, was duly offer accommodation, aggregating to , was duly offered to tax in equal proportion by the assessee and her husband. It is an in equal proportion by the assessee and her husband. It is an in equal proportion by the assessee and her husband. It is an admitted position that possession of the PAA was not handed over admitted position that possession of the PAA was not handed over admitted position that possession of the PAA was not handed over during the relevant previous year. during the relevant previous year.

3.4 It is further noted that the assessee’s husband was also a It is further noted that the assessee’s husband was also a It is further noted that the assessee’s husband was also a tenant in another pr tenant in another premises situated in the building, namely Bakul emises situated in the building, namely Bakul Niwas, in respect of which a separate redevelopment agreement was Niwas, in respect of which a separate redevelopment agreement was Niwas, in respect of which a separate redevelopment agreement was executed on 17.03.2016. Under the said agreement, the husband executed on 17.03.2016. Under the said agreement, the husband executed on 17.03.2016. Under the said agreement, the husband was entitled to receive PAA; however, the assessee was neither a was entitled to receive PAA; however, the assessee was neither a was entitled to receive PAA; however, the assessee was neither a party to the said agreement nor connected therewith. Further, even agreement nor connected therewith. Further, even agreement nor connected therewith. Further, even

Snchalata Heramb Dhayagude, Vs. Snchalata Heramb Dhayagude, 5 urisdictional Ward 16(3)(1), Jurisdictional Ward 16(3)(1), ITA No. 258/MUM/2026 ITA No.

in respect of the said premises, possession of the alternate in respect of the said premises, possession of the alternate in respect of the said premises, possession of the alternate accommodation was not received either in the earlier year or during accommodation was not received either in the earlier year or during accommodation was not received either in the earlier year or during the year under consideration. the year under consideration. In these circumstances, the assessee In these circumstances, the assessee contended that no taxable event had arisen in the relevant previous that no taxable event had arisen in the relevant previous that no taxable event had arisen in the relevant previous year, either in her hands or in the hands of her husband. year, either in her hands or in the hands of her husband. year, either in her hands or in the hands of her husband.

3.5 The learned Assessing Officer invoked section 56(2)(x) he learned Assessing Officer invoked section 56(2)(x) he learned Assessing Officer invoked section 56(2)(x) of the Act and asked the assessee as why the and asked the assessee as why the difference difference in the market value of the property adopted by the Stamp Duty Value Authorities e property adopted by the Stamp Duty Value Authorities e property adopted by the Stamp Duty Value Authorities and the consideration consideration recorded in the agreement should be treated recorded in the agreement should be treated as income of the assessee under “Income from Other Sources”. as income of the assessee under “Income from Other Sources”. as income of the assessee under “Income from Other Sources”.

3.6 The submissions of the assessee were considered but the The submissions of the assessee were considered but the The submissions of the assessee were considered but the Assessing Officer was not convinced cer was not convinced. The Assessing Officer (AO) The Assessing Officer (AO) noted that the stamp duty value of the PAA significantly exceeded noted that the stamp duty value of the PAA significantly exceeded noted that the stamp duty value of the PAA significantly exceeded the declared consideration (which the AO perceived as nil). Invoking the declared consideration (which the AO perceived as nil). Invoking the declared consideration (which the AO perceived as nil). Invoking the deeming provisions of the deeming provisions of Section 56(2)(x), the AO treated the , the AO treated the differential stamp duty value of property namely Savitri Niwas’ at differential stamp duty value of property namely Savitri Niwas’ at differential stamp duty value of property namely Savitri Niwas’ at Rs.2,40,81,500/- and another property namely ‘Bakul Niwas’ at and another property namely ‘Bakul Niwas’ at and another property namely ‘Bakul Niwas’ at Rs.47,07,000/- as "Income from Other Sources and added as "Income from Other Sources and added as "Income from Other Sources and added aggregating to Rs.2,8 aggregating to Rs.2,87,88,500/- to the total incom income for the year under consideration. under consideration.

Snchalata Heramb Dhayagude, Vs. Snchalata Heramb Dhayagude, 6 urisdictional Ward 16(3)(1), Jurisdictional Ward 16(3)(1), ITA No. 258/MUM/2026 ITA No.

Niwas’ property and deleting 50% of the addition amounting to property and deleting 50% of the addition amounting to property and deleting 50% of the addition amounting to Rs.1,20,40,750/- with res with respect to the ‘Savitri Niwas Savitri Niwas’ property and sustained addition to the extent of Rs.1,20,40,750/ sustained addition to the extent of Rs.1,20,40,750/- - to the extent of 50% share of the assessee’s property namely 50% share of the assessee’s property namely ‘Savitri Niwas Savitri Niwas’.

7.1 Firstly, it was contended that the value adopted for stamp it was contended that the value adopted for stamp it was contended that the value adopted for stamp duty purposes does not partake the character of a revenue receipt duty purposes does not partake the character of a revenue receipt duty purposes does not partake the character of a revenue receipt chargeable to tax under the h chargeable to tax under the head “Income from Other Sources”. It ead “Income from Other Sources”. It was submitted that the consideration received is intrinsically linked was submitted that the consideration received is intrinsically linked was submitted that the consideration received is intrinsically linked to a capital asset, namely, tenancy rights, and therefore assumes to a capital asset, namely, tenancy rights, and therefore assumes to a capital asset, namely, tenancy rights, and therefore assumes the character of a capital receipt. The learned counsel submitted the character of a capital receipt. The learned counsel submitted the character of a capital receipt. The learned counsel submitted that for a receipt to be brought to tax under the head “Capital to be brought to tax under the head “Capital to be brought to tax under the head “Capital Gains”, the essential conditions must be satisfied, viz., (i) existence Gains”, the essential conditions must be satisfied, viz., (i) existence Gains”, the essential conditions must be satisfied, viz., (i) existence of a capital asset, (ii) transfer of such asset, (iii) consideration for of a capital asset, (ii) transfer of such asset, (iii) consideration for of a capital asset, (ii) transfer of such asset, (iii) consideration for

Snchalata Heramb Dhayagude, Vs. Snchalata Heramb Dhayagude, 7 urisdictional Ward 16(3)(1), Jurisdictional Ward 16(3)(1), ITA No. 258/MUM/2026 ITA No.

such transfer, and (iv) such transfer, and (iv) such transfer taking place during the such transfer taking place during the relevant previous year. relevant previous year.

7.1.1 It was further submitted that while the first three conditions It was further submitted that while the first three conditions It was further submitted that while the first three conditions stand satisfied, inasmuch as tenancy rights constitute a valuable stand satisfied, inasmuch as tenancy rights constitute a valuable stand satisfied, inasmuch as tenancy rights constitute a valuable property and hence a capital asset, and the same were agreed to be property and hence a capital asset, and the same were agre property and hence a capital asset, and the same were agre surrendered surrendered surrendered in in in consideration consideration consideration of of of permanent permanent permanent alternate alternate alternate accommodation (PAA) and corpus compensation, the fourth accommodation (PAA) and corpus compensation, the fourth accommodation (PAA) and corpus compensation, the fourth condition remains unfulfilled. condition remains unfulfilled. But as far as the fourth condition But as far as the fourth condition is concerned, the learned counsel for the assessee learned counsel for the assessee referred to clause referred to clause 13 of the agreement and submitted that the surrender of tenancy of the agreement and submitted that the surrender of tenancy of the agreement and submitted that the surrender of tenancy rights was contractually stipulated to take effect only upon the rights was contractually stipulated to take effect only upon the rights was contractually stipulated to take effect only upon the assessee being put in possession of the new premises. It was assessee being put in possession of the new premises. It was assessee being put in possession of the new premises. It was emphasized that, admittedly, no such possession was handed over emphasized that, admittedly, no such possession was handed over emphasized that, admittedly, no such possession was handed over during the year under consideration. Consequently, the assessee g the year under consideration. Consequently, the assessee g the year under consideration. Consequently, the assessee continued to hold tenancy rights in the original premises. It was continued to hold tenancy rights in the original premises. It was continued to hold tenancy rights in the original premises. It was argued that, at best, the rights of the assessee stood in abeyance argued that, at best, the rights of the assessee stood in abeyance argued that, at best, the rights of the assessee stood in abeyance during the interregnum period and were not extinguished. In the during the interregnum period and were not extinguished. In the during the interregnum period and were not extinguished. In the event of failure of the redevelopment project, such rights would event of failure of the redevelopment project, such rights would event of failure of the redevelopment project, such rights would stand revived. On this basis, it was contended that no “transfer” stand revived. On this basis, it was contended that no “transfer” stand revived. On this basis, it was contended that no “transfer” within the meaning of section 2(47) of the Act had taken place within the meaning of section 2(47) of the Act had taken place within the meaning of section 2(47) of the Act had taken place during the relevant year, and therefore no capital gains could be during the relevant year, and therefore no capital gains could during the relevant year, and therefore no capital gains could said to have accrued. said to have accrued.

Snchalata Heramb Dhayagude, Vs. Snchalata Heramb Dhayagude, 8 urisdictional Ward 16(3)(1), Jurisdictional Ward 16(3)(1), ITA No. 258/MUM/2026 ITA No.

7.2 Secondly, it was submitted that the transaction in question it was submitted that the transaction in question it was submitted that the transaction in question was not one of receipt without consideration. The PAA and the was not one of receipt without consideration. The PAA and the was not one of receipt without consideration. The PAA and the corpus amount were received in lieu of surrender of valuable corpus amount were received in lieu of surrender of valuable corpus amount were received in lieu of surrender of valuable tenancy rights, and thus constituted consideration flowing from the tenancy rights, and thus constituted consideration flowing from the tenancy rights, and thus constituted consideration flowing from the assessee to the developer. The arrangement, being contractual in developer. The arrangement, being contractual in developer. The arrangement, being contractual in nature, imposed reciprocal obligations on both parties. It was nature, imposed reciprocal obligations on both parties. It was nature, imposed reciprocal obligations on both parties. It was argued that there was no element of gratuitous receipt, and argued that there was no element of gratuitous receipt, and argued that there was no element of gratuitous receipt, and therefore, the provisions of section 56(2)(x) of the Act were therefore, the provisions of section 56(2)(x) of the Act were therefore, the provisions of section 56(2)(x) of the Act were inapplicable at the threshold. hreshold.

7.3 Thirdly , and in the alternative, it was contended that even , and in the alternative, it was contended that even , and in the alternative, it was contended that even assuming section 56(2)(x) to be applicable, the fundamental assuming section 56(2)(x) to be applicable, the fundamental assuming section 56(2)(x) to be applicable, the fundamental condition of “receipt” of immovable property during the year was not condition of “receipt” of immovable property during the year was not condition of “receipt” of immovable property during the year was not satisfied, as possession of the PAA had not been handed over satisfied, as possession of the PAA had not been ha satisfied, as possession of the PAA had not been ha during the relevant previous year. during the relevant previous year.

7.4 Lastly, without prejudice, it was further submitted that if the prejudice, it was further submitted that if the transaction were to be regarded as a “transfer” exigible to tax, the transaction were to be regarded as a “transfer” exigible to tax, the transaction were to be regarded as a “transfer” exigible to tax, the same would fall for consideration under the head “Capital Gains”, same would fall for consideration under the head “Capital Gains”, same would fall for consideration under the head “Capital Gains”, in which event the assessee would be entitled to exemption under event the assessee would be entitled to exemption under event the assessee would be entitled to exemption under section 54F of the Act, thereby resulting in no taxable liability. section 54F of the Act, thereby resulting in no taxable liability. section 54F of the Act, thereby resulting in no taxable liability.

7.5 It was also contended that the rent received towards It was also contended that the rent received towards It was also contended that the rent received towards temporary alternate accommodation and hardship compensation is temporary alternate accommodation and hardship compensation is temporary alternate accommodation and hardship compensation is not exigible to tax in view of settled judicial precedents. to tax in view of settled judicial precedents. to tax in view of settled judicial precedents.

Snchalata Heramb Dhayagude, Vs. Snchalata Heramb Dhayagude, 9 urisdictional Ward 16(3)(1), Jurisdictional Ward 16(3)(1), ITA No. 258/MUM/2026 ITA No.

“X) where any person receives, in any previous year, from any X) where any person receives, in any previous year, from any X) where any person receives, in any previous year, from any person or persons on or after the 1st day of April, 2017,— person or persons on or after the 1st day of April, 2017, person or persons on or after the 1st day of April, 2017, (a)any sum of money, without (a)any sum of money, without consideration, the aggregate value of consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate which exceeds fifty thousand rupees, the whole of the aggregate which exceeds fifty thousand rupees, the whole of the aggregate value of such sum; value of such sum; (b)any immovable property, (b)any immovable property,— ” A) without consideration, the stamp duty value of which A) without consideration, the stamp duty value of which A) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty val exceeds fifty thousand rupees, the stamp duty val exceeds fifty thousand rupees, the stamp duty value of such property;”

9.1 A plain reading of section 56(2)(x) makes it abundantly clear A plain reading of section 56(2)(x) makes it abundantly clear A plain reading of section 56(2)(x) makes it abundantly clear that the sine qua non for its applicability is the “receipt” of that the sine qua non for its applicability is the “receipt” of that the sine qua non for its applicability is the “receipt” of immovable property during the relevant previous year. The charge immovable property during the relevant previous year. The charge immovable property during the relevant previous year. The charge under the said provision is triggered under the said provision is triggered only when such receipt takes only when such receipt takes

Snchalata Heramb Dhayagude, Vs. Snchalata Heramb Dhayagude, 10 urisdictional Ward 16(3)(1), Jurisdictional Ward 16(3)(1), ITA No. 258/MUM/2026 ITA No.

place without consideration or for inadequate consideration. place without consideration or for inadequate consideration. place without consideration or for inadequate consideration. Therefore, the resolution of he resolution of dispute in the case of assessee rests on dispute in the case of assessee rests on the interpretation of the word the interpretation of the word "receives" as appearing in Section as appearing in Section 56(2)(x). The Section Section 56(2)(x) is a deeming provision that taxes the 56(2)(x) is a deeming provision that taxes the "receipt" of any sum of money or immovable property without "receipt" of any sum of money or immovable property without "receipt" of any sum of money or immovable property without adequate consideration. For an immovable property to be "received," adequate consideration. For an immovable property to be "received," adequate consideration. For an immovable property to be "received," there must be a transfer of the right to use, occupy, and enjoy the there must be a transfer of the right to use, occupy, and enjoy the there must be a transfer of the right to use, occupy, and enjoy the property, typically evidenced by possession or a title deed. ically evidenced by possession or a title deed. ically evidenced by possession or a title deed.

9.2 In the present case, it is an admitted and undisputed fact that In the present case, it is an admitted and undisputed fact that In the present case, it is an admitted and undisputed fact that the assessee has not received possession of the permanent alternate the assessee has not received possession of the permanent alternate the assessee has not received possession of the permanent alternate accommodation accommodation accommodation during during during the the the year year year under under under consideration. consideration. consideration. The The The agreement itself clearly stipulates that the surrender of tenancy clearly stipulates that the surrender of tenancy clearly stipulates that the surrender of tenancy rights would take effect only upon the assessee being placed in rights would take effect only upon the assessee being placed in rights would take effect only upon the assessee being placed in possession of the new premises. possession of the new premises. Thus, till such possession is Thus, till such possession is handed over, the tenancy rights cannot be said to have been handed over, the tenancy rights cannot be said to have been handed over, the tenancy rights cannot be said to have been extinguished or trans extinguished or transferred in terms of section 2(47) of the Act. At ferred in terms of section 2(47) of the Act. At best, the rights of the assessee remain in a state of suspension and best, the rights of the assessee remain in a state of suspension and best, the rights of the assessee remain in a state of suspension and We have perused Clause 13 of the PAA Agreement, not cessation. We have perused of the PAA Agreement, which states as under: as under:-

“13. The Tenant shall in consideration of being provided with the The Tenant shall in consideration of being provided with the The Tenant shall in consideration of being provided with the Permanent Alternate Accommodation on ownership basis and Permanent Alternate Accommodation on ownership basis and Permanent Alternate Accommodation on ownership basis and simultaneously of being put in possession/deemed possession of the simultaneously of being put in possession/deemed possession of the simultaneously of being put in possession/deemed possession of the said Permanent/alternate Accommodation, shall be deemed to have said Permanent/alternate Accommodation, shall be deemed to have said Permanent/alternate Accommodation, shall be deemed to have

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surrendered the tenancy rights of the said Existing Premises to the ered the tenancy rights of the said Existing Premises to the ered the tenancy rights of the said Existing Premises to the Developer and after that the Tenant shall have no claim against the Developer and after that the Tenant shall have no claim against the Developer and after that the Tenant shall have no claim against the Developer in respect of the said tenancy right of the said Existing Developer in respect of the said tenancy right of the said Existing Developer in respect of the said tenancy right of the said Existing Premises except the entitlement to the new ownership Flat as Premises except the entitlement to the new ownership Flat a Premises except the entitlement to the new ownership Flat a specified above.”

9.3 This clause establishes a "condition precedent." The surrender This clause establishes a "condition precedent." The surrender This clause establishes a "condition precedent." The surrender of the old right and the acquisition of the new right are of the old right and the acquisition of the new right are of the old right and the acquisition of the new right are synchronized with the handing over of possession. So the synchronized with the handing over of possession. synchronized with the handing over of possession. immovable property i.e. a Flat in the Savitri Niwas was to be immovable property i.e. a Flat in the Savitri Niwas wa immovable property i.e. a Flat in the Savitri Niwas wa received on completion of the said building. received on completion of the said building. It is an undisputed fact It is an undisputed fact that during AY 2018 that during AY 2018-19, the building was still under construction. 19, the building was still under construction. The The The Assessee Assessee Assessee continued continued continued to to to reside reside reside in in in temporary temporary temporary alternate alternate alternate accommodation. Deeming provisions must be construed st Deeming provisions must be construed strictly. Deeming provisions must be construed st One cannot "receive" a flat that does not exist in a habitable state. A One cannot "receive" a flat that does not exist in a habitable state. A One cannot "receive" a flat that does not exist in a habitable state. A mere right to receive a property in the future mere right to receive a property in the future—contingent upon the contingent upon the completion of construction completion of construction—does not equate to the "receipt of does not equate to the "receipt of immovable property" as contemplated u/s 56(2)(x immovable property" as contemplated u/s 56(2)(x). The approach of The approach of the lower authorities in invoking section 56(2)(x) on a notional or the lower authorities in invoking section 56(2)(x) on a notional or the lower authorities in invoking section 56(2)(x) on a notional or anticipatory basis, without actual receipt of property, is contrary to anticipatory basis, without actual receipt of property, is contrary to anticipatory basis, without actual receipt of property, is contrary to the plain language of the statute. the plain language of the statute.

9.4 In light of the above, we hold that the provisions of Sect In light of the above, we hold that the provisions of Section In light of the above, we hold that the provisions of Sect 56(2)(x) were prematurely and erroneously invoked. There was no 56(2)(x) were prematurely and erroneously invoked. There was no 56(2)(x) were prematurely and erroneously invoked. There was no receipt of immovable property during the previous year relevant to receipt of immovable property during the previous year relevant to receipt of immovable property during the previous year relevant to

Snchalata Heramb Dhayagude, Vs. Snchalata Heramb Dhayagude, 12 urisdictional Ward 16(3)(1), Jurisdictional Ward 16(3)(1), ITA No. 258/MUM/2026 ITA No.

AY 2018-19. Thus, the addition sustained by the learned CIT(A) Thus, the addition sustained by the learned CIT(A) Thus, the addition sustained by the learned CIT(A) Consequently, the addition of ₹1,20,40,750/- stands deleted. Consequently, the addition of Consequently, the addition of sustained by the Ld. CIT(A) is hereby deleted. As the primary issue sustained by the Ld. CIT(A) is hereby . As the primary issue is decided in favor of the Assessee, the alternative grounds is decided in favor of the Assessee, the alternative grounds is decided in favor of the Assessee, the alternative grounds (including claims u/s 54F and treatment of hardship compensation) (including claims u/s 54F and treatment of hardship compensation) (including claims u/s 54F and treatment of hardship compensation) are rendered academic and do not require adjudi are rendered academic and do not require adjudication. cation.

Order pronounced in the open Court on ced in the open Court on 21/04 /04/2026.

Sd/- Sd/- (ANIKESH BANERJEE ANIKESH BANERJEE) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 21/04/2026 M. Ranganath Vittal , Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai