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आदेश/Order
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 16.07.2018 of the Commissioner of Income Tax (Appeals)-
43, New Delhi [hereinafter referred to as CIT(A)].
The assessee in this appeal has taken following grounds of appeal:-
That the order passed by the worthy CIT (Appeals)-43, New Delhi dated 16.07.2018 is contrary to the facts of the case and law.
ITA No. 1307-c-18 Smt.Jaswinderjit kaur, Ludhiana 2 2. That the Id. CIT(A) has erred in law as well as facts by upholding the addition made by the Id. DCIT by treating the compensation of Rs 10,47,582 as interest income. 3. That the Id. CIT(A) has erred by confirming the action of the Id. DCIT by treating the compensation received as Interest Income since the Appellant had made part payment to the builder for allotment of flat and not for the purpose of earning interest. 4. That the Id. CIT(A) has failed to appreciate that the amount of Rs. 10,47,582 had been paid as compensation for delay in construction and handing over physical possession by the builder pursuant to the case filed by the Appellant before the Consumer Forum. 5. That the Id. CIT(A) has erred in confirming the addition merely on the basis of nomenclature of payment mentioned by the payer in the letter addressed to the appellant dt. 04.03.2015. 6. That the Id CIT(A) has erred in confirming the addition without appreciating the decisions in case of CIT vs HP Housing Board (2012) 18 taxmann.com 129 (High Court of H.P) , Delhi Development Authority vs ITO (1995) (53 ITD 19) and GDA vs Dr NK Gupta (Revision Petition no. 2244/199 National Commission decided on 18/09/2002.) 7. That the Id. CIT(A) has erred in confirming the addition made by the Id. DCIT by solely applying the decision of IT AT Mumbai in case of Kumarpal Mohanlal Jain vs ITO (ITA no. 7231 MUM 2010) and treated the compensation received by appellant as interest. 8. That the Id. CIT(A) has failed to pass a speaking order without considering all the case laws relied upon by the appellant.
Relief Prayed for : That the addition of Rs. 10,47,582/- made by the Id. DCIT and upheld by the Id. CIT(A) may kindly be deleted or any other relief as deemed fit may be allowed. 10.That the Appellant craves leave to append, amend or withdraw any ground of appeal till it is finally decided.
ITA No. 1307-c-18 Smt.Jaswinderjit kaur, Ludhiana 3 3. The sole issue involved in this appeal is as to whether the
compensation received by an assessee on account of the failure of
builder / developer to handover possession of the house would fall
within the definition of ‘interest’ as defined u/s 2(28A) of the Income
Tax Act, 1961 (in short 'the Act') and would be exigible to Income tax
as per the provisions of the Income Tax Act.
The brief facts relevant to the issue are that the assessee had
booked for a residential flat in a project to be launched by the Builder
namely ‘Parsvnath Prideasia’ at Chandigarh. However, the builder /
developer failed to deliver the possession of the built up flat on the
stipulated date. The assessee, therefore, approached the State Consumer
Disputes Redressal Commission, Chandigarh seeking refund of the
amount as well as compensation. The complaint of the assessee was
allowed by the State Consumer Disputes Redressal Commission,
Chandigarh, whereby, a compensation was awarded to the assessee as
per the clause 9 (c) of the agreement of the assessee with the builder i.e.
@ Rs. 107.60 per square meter of the super area of the unit per month
after stipulated period of 36 months from the date of booking /
allotment. The Assessing Officer treated the aforesaid compensation
received by the assessee as ‘interest income’ of the assessee exigible to
the income tax. However, the plea of the assessee is that the same is a
capital receipt in the hands of the assessee.
ITA No. 1307-c-18 Smt.Jaswinderjit kaur, Ludhiana 4 5. Both the Ld. Representatives of the parties have fairly agreed that
the issue is now squarely covered by the decision dated 28.11.2011 of
the Hon'ble Himachal Pradesh High Court in the case of ‘CIT vs H.P.
Housing Board’ [2012] 18 taxmann.com 129 (HP), wherein, the Hon'ble
Court has held that interest paid by the Housing Board to its allottees on
amount deposited by them on account of delayed allotment of flats is
not interest within the meaning of section 2(28A) of the Income Tax
Act. The Hon'ble High Court while holding so observed that in the said
case, the allottees had not given the money to the Board by way of
deposit, nor had the Board borrowed the amount from the allottees. The
interest was paid on account of damages suffered by the claimants for
delay in completion of the flats and the same would not fall within the
definition of interest as provided u/s 2(28A) of the Income Tax Act.
Identical view has been taken by the Hon'ble Calcutta High Court in
‘Principal CIT, Koltaka vs West Bengal Housing Infrastructure
Development Corpn Ltd.’ [2018] 96 taxman.com 610 (Calculla) order
dated 9.8.2018.
The facts of the present case also reveals that what has been paid
by the builder is a compensation for its failure to construct and
handover the possession of the flats which the assessee had booked with
them. The facts and issue involved are squarely covered by the aforesaid
decision of the Hon'ble Himachal Pradesh High Court in ‘CIT vs H.P.
Housing Board’ (supra) and of Hon'ble Calcutta High Court in
ITA No. 1307-c-18 Smt.Jaswinderjit kaur, Ludhiana 5 ‘Principal CIT, Koltaka vs West Bengal Housing Infrastructure
Development Corpn Ltd.’ (supra). In view of this, the addition made by
the lower authorities on this issue is hereby ordered to be deleted.
In the result, the appeal of the assessee is hereby allowed.
Order pronounced in the Open Court on 11.07.2019.
Sd/- Sd/- (संजय गग� / SANJAY GARG) (एन. के. सैनी / N.K. SAINI) उपा�य� /Vice President �या�यकसद�य/ Judicial Member Dated : 11.07.2019 “आर.के.”
आदेशक���त�ल�पअ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकरआयु�त/ CIT 4. आयकरआयु�त (अपील)/ The CIT(A) 5. �वभागीय��त�न�ध, आयकरअपील�यआ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड�फाईल/ Guard File
आदेशानुसार/ By order, सहायकपंजीकार/ Assistant Registrar