DCIT 19 1 MUMBAI, MUMBAI vs. NISHA JHAVERI, MUMBAI

ITA 2389/MUM/2026Status: DisposedITAT Mumbai28 September 2026AY 2013-149 pages
AI SummaryAllowed

What were the facts?

The assessee, Nisha Javeri, filed her return for AY 2013-14 declaring income of Rs. 18,50,690/-. The Assessing Officer (AO) noted that the assessee received Rs. 2,96,25,000/- as 'compensation' from the sale proceeds of a flat. The assessee offered this to tax as Capital Gains and claimed deductions under Sections 54/54EC. The AO found that the flat was purchased by the assessee's father-in-law and mother-in-law. The Will of the father-in-law stipulated that only his wife had a life interest, and the property would devolve upon his grandson. The assessee had no right, title, or interest. She was merely a 'Confirming Party' in the sale agreement, and the compensation was paid at the request of the first transferor (mother-in-law) out of her share. The AO treated the receipt as 'Income from Other Sources'. The CIT(A) reversed this, holding the possessory interest as a capital asset. The Revenue appealed to the ITAT.

What did the Tribunal hold?

The Tribunal held that for a receipt to be taxed under Section 45(1), there must be a capital asset as defined under Section 2(14), held by the assessee, transferred under Section 2(47), and profits arising from such transfer. In this case, the Will of the deceased owner clearly delineated the ownership and life interest, excluding the assessee. The share certificates were in the name of the mother-in-law, and she and the grandson were the sole transferors. The assessee was merely a confirming party. The Tribunal found that the CIT(A) erred in assuming the assessee possessed 'possession' or 'possessory interest' constituting a capital asset, as no material was produced to establish any lawful tenancy or legally recognized possessory title. The payment of Rs. 2,96,25,000/- was explicitly stated in the sale deed to be at the request of the First Transferor out of her share, as compensation for alternate accommodation. Merely signing as a confirming party does not confer ownership or create a capital asset. The case laws relied upon by the CIT(A) were distinguishable as they involved documented possessory or contractual rights, which were absent here. Therefore, in the absence of a capital asset held and transferred by the assessee, Sections 45 and 48 are not applicable, and consequently, deductions under Sections 54/54EC cannot arise. The AO was justified in treating the sum as 'Income from Other Sources'. The CIT(A)'s order was set aside, and the AO's order was restored.

What were the issues?

1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in considering that the capital asset is defined in section 2(14) of the Act as property of any kind held by an assessee, when the assessee did not own/hold the property nor had any right or title over it, thus the flat was not a capital asset of the assessee, and consequently, no income under the head capital gain arises and no deduction under section 54 of the Act can be allowed. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in considering that the amount of Rs. 2,96,25,000/- was given to the assessee on request of the first transferor, Mrs. Ranjan Javeri, when the sale agreement stated it was given as compensation, indicating the assessee had no right or title over the property, hence it was rightly assessed under income from other sources. Assessee's contentions: The term 'property' under Section 2(14) is wide and includes possessory rights. By becoming a Confirming Party, the assessee relinquished all claims, amounting to extinguishment of rights under Section 2(47)(ii). The CIT(A) correctly relied on precedents. Revenue's contentions: The CIT(A) overlooked primary documents. The assessee never held the flat or possessed any enforceable legal right. The payment was made at the request of the First Transferor out of her share as compensation for alternate accommodation, not for transfer of any legal right. Signing as a Confirming Party does not create an interest. Thus, charging under Section 45 and consequential deductions are unsustainable.

Which sections of the Income-tax Act were involved?

Section 2(14),Section 2(47),Section 45,Section 54,Section 54EC,Section 143(1),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: SHRI SANDEEP GOSAIN & SHRI JAGADISH

Pronounced: 28.09.2026

PER SHRI SANDEEP GOSAIN, JUDICIAL MEMBER:

This appeal is filed by the Department against the order of Ld. NFAC DELHI vide DIN: ITBA/NFAC/S/250/2025-26/1083737592(1) dated 27-Feb- 2026 for the Assessment Year 2013-14. 2. The Department has raised the following grounds of appeal:

1) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in considering that, the capital asset is defined in secti

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 2(14)

All 1,116 judgments and leading authorities on Section 2(14) →

Recent GST High Court judgments

Search GST case law →