ISHWAR VITHAL NAVADIA,SURAT vs. ITO, WARD 3(2)(1), SURAT
Facts
The assessee received Rs.10,91,090/- as compensation/redevelopment receipt from M/s Kalpataru Ltd. for reconstructing their flat. The Assessing Officer added this amount to the assessee's income, and the CIT(A) upheld this addition.
Held
The Tribunal found that similar issues were decided in favour of the assessee in their own case, where such compensation was treated as a capital receipt and not includible in income.
Key Issues
Whether the compensation received by the assessee for reconstruction of their flat is a capital receipt or income.
Sections Cited
250, 143(3), 147, 148, 2(24)(vi)
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Before: SHRI DINESH MOHAN SINHA & SHRI BIJAYANANDA PRUSETH
आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, 'the Act’) dated 31.01.2025 by the Commissioner of Income-tax Appeal, Addl/JCIT(A)-4, Delhi [in short, ‘CIT(A)’] for the assessment year (AY) 2013-14, which in turn arises out of assessment order passed by the Assessing Officer (in short, ‘AO’) u/s. 143(3) r.w.s. 147 of the Act on 27.12.2018. 2. The grounds of appeal raised by the assessee are as under:
ITA No.297/SRT/2025/ AY 13-14 Ishwar V Navadia “1) The ld. CIT(A) has erred in law and on facts in confirming the action of the ld. AO of making addition of Rs.10,91,090/- being the amount of hardship compensation received by the appellant.
2) The appellant craves leave to add, amend, alter, modify, substitute, delete, change or vary all or any of the ground or grounds of appeal."
Brief facts of the case are that in the instant case, the assessee filed return of income for the AY 2013-14 on 19.03.2014 declaring total income of Rs.31,97,630/-. Thereafter AO issued notice u/s 148 of the Act on 31.03.2018 to tax the amount of Rs.10,91,090/- received by the assessee as compensation/redevelopment receipt from M/s Kalpataru Ltd. for reconstructing the old flat at Garib Co-Op. Housing Society, Juhu, Mumbai. The assessee request to tread the original return as the return in response to the notice u/s 148 of the Act. After hearing the assessee, the AO added Rs.10,91,090/- to his gross income. Aggrieved by the addition made by AO, assessee filed appeal before CIT(A), who upheld the finding of AO that the impugned amount was received in return of the extinguishment of right on the property. The CIT(A) also did not accept the plea of the assessee that his case is covered by the decision of ITAT Mumbai in case of Rajnikant D Shroff vs. ACIT, ITA No.4424/Mum/2014. Accordingly, he dismissed appeal of the assessee.
Further aggrieved by the order of CIT(A) assessee has filed present appeal before the Tribunal. The Ld. AR filed a paper book enclosing the submissions
ITA No.297/SRT/2025/ AY 13-14 Ishwar V Navadia made before CIT(A) and copy of agreement between the members of the said society with M/s Kalpataru Ltd., the developer company. The Ld. AR also submitted copy of the decision of this co-ordinate Bench of this Tribunal in appellant’s own case for AY 2011-12 in ITA No.153/SRT/2021 dated 18.10.2022. He submitted that identical issue was decided in favour of the appellant by this Tribunal. He, therefore, requested to quash the order of lower authorities.
On the other hand, Ld. Sr. DR for the Revenue supported the order of lower authorities.
We have heard both the parties and have gone through order of lower authorities carefully. We find that similar issue was decided by this Tribunal in appellant’s own case (supra). The relevant part of the decision is reproduced below for ready reference: “6. Considering, the aforesaid factual and legal view taken by various bench of Tribunal that where assessee was a flat owner in a housing society and he received certain sum from developer as corpus fund towards hardship cause d to flat owners on redevelopment, impugned amount would be in nature of capital receipt simplicitor not includible in income as per section 2(24)(vi). Hence, we direct the assessing officer to treat such receipt as capital receipt. In the result, ground No.3 of the appeal is allowed.”
ITA No.297/SRT/2025/ AY 13-14 Ishwar V Navadia 6.1 Since the facts are similar, following the above decision, the order of CIT(A) is set aside and the AO is directed to delete the addition. The ground raised by appellant is allowed. 7. In the result, the appeal of the assessee is allowed.
Order pronounced in accordance with Rule 34 of ITAT Rules, 1963 on 30/10/2025 in the open court.
Sd/- Sd/- (DINESH MOHAN SINHA) (BIJAYANANDA PRUSETH) �याियक सद�य/JUDICIAL MEMBER लेखा सद�य/ ACCOUNTANT MEMBER सूरत /Surat �दनांक/ Date: 30/10/2025 Dkp Outsourcing Sr.P.S* आदेश क� �ितिलिप अ�ेिषत/ Copy of the order forwarded to : अपीलाथ�/ The Appellant ��यथ�/ The Respondent आयकर आयु�/ CIT आयकर आयु� (अपील)/ The CIT(A) िवभागीय �ितिनिध, आयकर अपीलीय आिधकरण, सूरत/ DR, ITAT, SURAT गाड� फाईल/ Guard File
By order/आदेश से, // True Copy // सहायक पंजीकार आयकर अपील�य अ�धकरण, सूरत
