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2014 (9) TMI 388 - AT - Income TaxTreatment of compensation received – Opportunity to examine evidences not given - Whether the compensation received by assessee can be treated as capital receipt not liable to tax without giving opportunity to AO to examine the new evidence/claim of the assessee – Held that:- Assessee received ₹ 3.5 crores from Amba High Rise P Ltd as compensation and out of this, an amount of ₹ 75 Lakhs was claimed as receipt for releasing rights to premises and balance amount of ₹ 2.75 crores was claimed as loss of its right to develop the said premises as per agreement with the said Amba High Rise P Ltd. - assessee has no right or title or interest in the property as on the date of agreement, by virtue of which, the compensation was received - The assessee could not have acquired the property because there was no order of court for transfer of property in the name of the assessee - Even the MOU/agreement cannot be used for specific performance of contract to purchase the property - the Tribunal was right in arriving at a conclusion that it was a capital receipt - The amount was received because the assessee had given up its right to purchase and/or to operate the property - it is loss of source of income to the assessee and that right is determined for consideration. Following the decision in Kettlewell Bullen And Company Limited Versus Commissioner Of Income-Tax, Calcutta [1964 (5) TMI 4 - SUPREME Court] - The amount was received because the assessee had given up its right to purchase and/or to operate the property and the amount was held to be capital receipt and not revenue receipt by giving up its right to purchase and/or to operate the property, injury was inflicted on the capital asset of the company thereby resulting in loss of source of income - the assessee has released/discharged qualcomm from the project agreement thereby giving up its right to purchase/acquire the equipment from the party and this act has certainly inflicted an injury to the capital structure of the assessee company resulting in loss of source of income - the entire sum was capital receipt not liable to tax – Decided against revenue.
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