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Income Tax Appellate Tribunal, MUMBAI BENCHES “A”, MUMBAI
Before: Shri Joginder Singh & Shri Rajendra
आदेश / O R D E R The assessee is aggrieved by the impugned order dated 23/10/2012 of the ld. First Appellate Authority, Mumbai, on the ground that the ld. Commissioner of Income Tax (Appeals) erred in holding that the amount of Rs.6,50,000/- received as capital receipt was directed to be taxed as capital gain.
During hearing, it was noted by the Bench that there is delay of two days in filing the appeal by the assessee before this Tribunal, therefore, before adverting further, first we shall decide the issue of late filing the appeal by two days. Considering the totality of facts, no doubt filing of an appeal is a right granted under the statute to the assessee and is not an automatic privilege, therefore, the assessee is expected to be vigilant in adhering to the manner and mode in which the appeals are to be filed in terms of the relevant provisions of the Act. Nevertheless, a liberal approach has to be adopted by the appellate authorities, where delay has occurred for “bona fide reasons” on the part of the assessee or the Revenue in filing the appeals. In matters concerning the filing of appeals, in exercise of the statutory right, a refusal to condoned the delay can result in a meritorious matter being thrown out at the threshold, which may lead to miscarriage of justice. The judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
2.1. The Hon’ble Apex Court in a celebrated decision in Collector, Land Acquisition vs Mst. Katiji & Ors. 167 ITR 471 opined that when technical consideration and substantial justice are pitted against each other, the courts are expected to further the cause of substantial justice. This is for the reason that an opposing party, in a dispute, cannot have a vested right in injustice being done because of a non- deliberate delay. Therefore, it follows that while considering matters relating to the condonation of delay, judicious and liberal approach is to be adopted. If “sufficient cause” is found to exist, which is bona-fide one, and not due to negligence of the assessee, the delay needs to condoned in such cases. The expression ‘sufficient cause’ is adequately elastic to enable the courts to apply law in a meaningful manner, which sub-serves the end of justice- that being the life purpose of the existence of the institution of the courts. When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred. This means that there should be no malafide or dilatory tactics. Sufficient cause should receive liberal construction to advance substantial justice. The Hon’ble Apex Court in Collector, Land Acquisition vs Mst. Katiji & Ors. (167 ITR 471) observed as under:- “3. The legislature has conferred the power to condone delay by enacting section 51 of the Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on de merits. The expression “sufficient cause” employed by the legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice that being the life-purpose of the existence of the institution of courts. It is common knowledge that this court has been making a justifiably liberal approach in matters instituted in this court. But the message does not appear to have percolated down to all the others courts in the hierarchy.”
2.2. Furthermore, the Hon'ble Supreme Court in the case of Vedabai Alia Vaijayanatabai Baburao Patil vs. Shantaram Baburao Patil 253 ITR 798 held that the court has to exercise the discretion on the facts of each case keeping in mind that in construing the expression ‘sufficient cause’, the principle of advancing substantial justice is of prime importance. The court held that the expression “sufficient cause” should receive liberal construction. Having made the aforesaid observation and considering the material facts available on record and more specifically the reason of delay, supported by an affidavit, as mentioned in the application, we are satisfied the delay was with bona-fide reasons and the assessee has satisfactorily explained the reasons of delay, therefore, the delay of two days is condoned.
So far as, considering the amount of Rs.6,50,000/-, received by the assessee, which was decided as “income from other sources” by the ld. Assessing Officer and taxable u/s 45 of the Act by the ld. Commissioner of Income Tax (Appeals), is concerned, the ld. counsel for the assessee explained that, the amount was received in terms of redevelopment of agreement in lieu of surrender of tenancy rights in the old flat, during the period of stay outside, thus, in fact, there was no gain to the assessee as the amount was received on account of hardship and displacement caused to the assessee for alternative accommodation. On the other hand, the ld. DR, Shri M. Murli, defended the conclusion arrived at in the impugned order by contending that the ld. Commissioner of Income Tax (Appeals) rightly treated the same as capital gains u/s 45 of the Act.
3.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee was a tenant in the building namely “Jaydeep”, situated at Road no.1, JVPD Scheme, Vile-parle, Mumbai, which was agreed to be given for redevelopment through an redevelopment agreement with the builders M/s Tassa Netcom Pvt. Ltd. In view of the surrender of tenancy rights in the old flat, the assessee was given compensation of Rs.6,50,000/- on account of hardship and displacement, caused to the assessee, for alternative accommodation. The ld. Assessing Officer was not satisfied with the explanation of the assessee and he treated the income assessable under the head “income from other sources”. On appeal, before the ld. Commissioner of Income Tax (Appeals), it was held that the amount of Rs.6,50,000/- and the value of the new flat is chargeable under the head capital gains u/s 45 of the Act. The assessee is aggrieved and is in appeal before this Tribunal.
3.2. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, there is no dispute to the fact that the assessee received cash of Rs.6,50,000/- from the developer through a redevelopment of agreement for surrender of tenancy right in the old flat and on account of hardship and displacement caused to the assessee for alternative accommodation. In such a situation, neither it is a income from other sources nor to be taxed as capital gain u/s 45 as was held in the impugned order, because, the assessee received this amount for getting alternative accommodation until the period, the new flat is allotted to the assessee. This amount was received on account of hardship and displacement caused to the assessee for alternative accommodation. In such a situation, there is no gain to the assessee. Presumably, the amount was used for paying the rent for the alternative accommodation for a fixed period of time until, the new building came in to existence and new flat was allotted to the assessee in place of old one, pursuant to redevelopment agreement. What the assessee received was only a new flat in place of old flat to be used for residential purposes, therefore, there is no gain to the assessee as has been held in the impugned order, consequently, there is no question of treating the amount as capital gain taxable u/s 45 of the Act. The appeal of the assessee, is, therefore, allowed.
Finally, the appeal of the assessee is allowed.
This order was pronounced in the open in the presence of ld. representatives from both sides at the conclusion of the hearing on 16/03/2016.