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2019 (8) TMI 768 - ITAT MUMBAITaxability of compensation for giving-up of the litigation for land - right to sue - capital OR revenue receipt - additional compensation was paid in addition to sale consideration as per sale deed - several litigation was going on in respect of land, firstly encroached by some slum lords by slum later slum redevelopment area - amicable resolution of the dispute by 'way of filing Consent Terms by both the parties was reached before the Hon'ble Supreme Court HELD THAT:- The additional compensation of ₹ 9 Crores was payable to the assessee only pursuant to consent terms dated 03/01/2012 filed before Hon’ble Supreme Court. As per Clause-5 of the consent terms, the assessee was to be paid the said compensation for time, money and effort put in by him to challenge the acquisition of the suit property and for pursuing litigation before the Authorities, Hon’ble Bombay High Court and Hon’ble Supreme Court. The additional compensation was towards time, cost and effort of the assessee in pursuing the litigation. This being so, we are unable to concur with the submissions of Ld. DR that the said compensation was part and parcel for the sale transaction and received by the assessee as a consideration of sale of property. On the other hand, the learned CIT(A), in our considered opinion, has clinched the issue in the proper perspective. As rightly held, there could not be any transfer of a "right to sue" under Indian Law and any capital receipt arising from a right to sue cannot thus be considered capital gains u/s 45. Additionally, the cost of the said right being indeterminable, the charging Section would fail as per the cited decision of Hon’ble Supreme Court rendered in CIT V/s B.C.Srinivasa Shetty [1981 (2) TMI 1 - SUPREME COURT]. Therefore, no infirmity could be found on the issue in adjudication done by learned CIT(A). The same is further fortified by the decision of this Tribunal rendered in Sushmita Sen V/s ACIT [2018 (11) TMI 792 - ITAT MUMBAI] wherein it has been held that compensation received for loss of reputation and not to initiate civil or criminal proceedings would be capital in nature. Similar is the decision in ACIT V/s Jackie Shroff [2018 (9) TMI 1006 - ITAT MUMBAI] wherein it has been held that compensation / damages received for withdrawal of criminal complaint would be capital receipt and could not be treated as income u/s 2(24). This decision places reliance on the decision of Hon’ble Bombay High Court rendered in CIT V/s Amar Dye Chem Ltd. [1993 (10) TMI 366 - BOMBAY HIGH COURT] - the appeal as well as cross-objections stands dismissed
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