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Income Tax Appellate Tribunal, “C”, BENCH KOLKATA
Before: SHRI J. SUDHAKAR REDDY, AM & S. S. GODARA, JM Shri Kamal Kumar Ghosh
Appellant by : Shri Ranu Biswas, Addl. CIT(DR) Respondent by : Shri Mihir Bandyopadhyay, AR सुनवाई क� तार�ख/ Date of Hearing : 09/08/2019 घोषणा क� तार�ख/Date of Pronouncement : 04/10/2019 आदेश / O R D E R Per Shri S. S. Godara: This Revenue’s Miscellaneous Application filed u/s 254(2) of the Act seeks to recall/rectify our order dated 20.06.2018 upholding the CIT(A)’s findings treating the undisclosed income addition of Rs.90,00,000/- as mesne profits and a capital receipt not chargeable to tax.
Heard both the parties. Case file perused.
We now advert to the Revenue’s sole grievance raised in the instant miscellaneous application. It transpires during the course of hearing that the assessee and his brother had received an amount of Rs.1,80,00000/- to the extent half share each coming to Rs.90,0000/-. He claimed the same as Mesne Profit in the nature of a capital receipt not liable to be taxed. The Assessing Officer declined its explanation to add the said sum of Rs.90,00,000/- as undisclosed receipts. The CIT(A) reversed the Assessing Officer’s action and treated the said amount as Mesne Profits not assessable to tax. In this backdrop the Revenue filed its instant miscellaneous application.
M.A No.225/Kol/2018 Shri Kamal Kumar Ghosh (Deceased), represented by L/H Sri Amal Kr. Ghosh 3. We have given our thoughtful consideration to rival contentions. Case file suggests that the assessee and his brother had enjoyed lease rights on the two properties i.e. 36B, Garcha 1st Lane and 44/11, Garcha Road, Kolkata and 36B, Garcha 1st Lane, Garcha Road, Kolkata. The lease period had admittedly expired on 24.08.1986 and 25.08.2006; respectively. These two brothers continued in possession of the property upto the year 2010. The payer concerned Shri Anup Jash made the impugned total payment of Rs.1,80,00,000/- to both of them in equal shares in F.Y 2010-11. We find in this backdrop of facts that the assessee had not enjoyed any right or title on either of the two properties upto the relevant previous year since the lease period had expired way back in the year 1986 and 2006; respectively. The assessee’s case is that the impugned sum is liable to be treated as Mesne Profit goes contrary to the relevant definition clause to this effect u/s 2(12) of the Code of Civil Procedure that “Mesne Profits” of property means those profits which the person in wrongful possession of such property actually received or might with ordinary diligence have received”. The same sufficiently indicates that the person is wrongful person has to pay and not receive the Mesne Profits. Our order in question appears to have followed this tribunal’s coordinate bench decision in Narang Overseas Pvt. Ltd. vs. ACIT 111 ITD 1 (Mum ITAT) (SB) that mesne profits constitute a capital receipt not chargeable to tax and also hon’ble jurisdictional high court’s decision in CIT vs. Smt. Lila Ghosh 205 ITR 9 (Cal) as relied upon by the CIT(A). Ld. Authorized Representative fails to dispute that none of the said two assessees had continued in possession of the respective properties beyond the specified tenure of their respective rights or possession or tenancy; as the case may be. Contrary to this, we reiterate that the instant assessee’s status on the two properties is that of an illegal occupant only after expiry of the lease period (supra). We observe in this backdrop of fact that our findings affirming the CIT(A)’s action deleting the impugned addition of Rs.90,00,000/- to this effect is instance of apparent error on the face of record since a person having continued in wrongful possession of a property is supposed to pay Mesne Profits than to receive the same from the title holder of the property(ies). We accordingly recall our order to this limited extent and accept the Revenue’s grievance raised in the instant Miscellaneous Application M.A No.225/Kol/2018 as well as in the former Page | 2
M.A No.225/Kol/2018 Shri Kamal Kumar Ghosh (Deceased), represented by L/H Sri Amal Kr. Ghosh substantive ground pleaded in the main case. We therefore order that the Revenue’s former substantive grievance in the main appeal seeking to revive the impugned addition of Rs.90,00,000/- would stand accepted henceforth as an necessary corollary. Ordered accordingly.
This Revenue’s Miscellaneous Application in M.A No.225/Kol/2018 is allowed and its main appeal is partly allowed in foregoing terms.
Order is pronounced in the open court on 04.10.2019.