Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (4) TMI 794 - ITAT DELHINature of receipt - payment of damages for breach of contract - compensation from Debt Recovery Tribunal (DRT) on sum paid in auction for purchase of property, which after issue of sale certificate was cancelled - revenue or capital receipt - chargeability to tax - Held that:- In the present case, the sum is received by the assessee on cancellation of sale contract as per the auction of Sanmati Rice Mills. Further, the sum received by the assessee had direct nexus to the cancellation of acquisition of the immovable property obtained by him in auction. Further, it is clear that excess of amount then what assessee deposited, received by the assessee for a breach of a contract and hence same is a capital receipt. DR has heavily relied on the provision of section 56(2) (viii) of the act. The above section provides that income shall be chargeable to tax under the head income from other sources if it is income by way of interest received on compensation or on enhanced compensation referred to in clause (b) of section 145A - provision of section 145A speaks about the timing of taxability and section 56 (2) (viii) the head under which it is chargeable - the character of income should be interest on compensation or enhanced compensation. As held that it is not interest but compensation. Section 56 (2) (viii) also does not provide for taxation of compensation but only interest on such compensation. In the present case, the assessee has received compensation. Ld DR also could not show that if the amount received is interest on compensation what the amount of compensation itself is. In view of this, we reject the contention of the revenue that provision of section 56 (2) (viii) applies to the impugned amount. - Decided in favour of assessee Rectification of mistake u/s 154 - Held that:- Section 154 of the Act was not applicable in this case. Right to rectify mistakes under section 154 could not be invoked in a case of mere change of opinion. A rectifiable mistake was a mistake, which was obvious, and not something, which had to be established by a long drawn process of reasoning or where two opinions were possible. A decision on a debatable point of law could not be treated as a “mistake apparent from the record.” In the present case, firstly it was held that the impugned sum is chargeable to tax as interest and subsequently it was held that it is capital receipt, therefore there is a change of opinion on a debatable issue. Hence, we hold that ld CIT (A) has erred in rectifying his order u/s 154 of the act. One cannot say that this is a case of a mistake apparent from record. Hence, we cancel the order of the ld CIT (A) passed u/s 154 of the act.
|