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2015 (7) TMI 1368 - AT - Income TaxNature of receipt - Compensation received - difference of compensation received and the compensation and brokerage paid for alternate accommodation - Amount received from the Developers for agreeing to the redevelopment, for alleviating hardship of shifting/reshifting and agreeing to share the common area with more persons after redevelopment - Capital gain or Income from other sources - HELD THAT:- In “Paranugraha Co-op. Housing Society Ltd.” [2014 (2) TMI 688 - ITAT MUMBAI] it has been held that the TDR is embedded in the land for the purposes of addition made by the owner or lessee; that this TDR, in the form of additional FSI, is negotiable by the owner to the buyer/developer, only for prospective development; that there is no element of cost to the owner and no capital gain is exigible. The other decisions relied on by the assessee are to the same effect. They have been rendered by co-ordinate Benches of the Mumbai Tribunal. There is merit in the contention of the assessee, that the hardship compensation received was due to the problem faced by the assessee on account of demolition of the building and this receipt is, therefore, not a taxable capital gain, there being not transfer of any capital asset involved and no cost of acquisition having been incurred. Disallowance u/s 14A r.w.r. 8D - assessee has contended that the authorities below have wrongly applied Rule 8D of the Rules without pointing out any item of expenditure as having been incurred by the assessee to earn exempt income - HELD THAT:- The matter stands covered in favour of the assessee by the decision of the Hon’ble jurisdictional High Court in the case of “CIT vs. K. Reheja Corporation P. Limited”. [2011 (8) TMI 148 - BOMBAY HIGH COURT] as upheld the decision of the Tribunal, whereby the deletion of disallowance of interest made u/s 14A of the Act, in the absence of any material or basis to hold that the interest expenditure directly or indirectly was attributable for earning dividend income, was upheld. In “CIT vs. Hero Cycles Ltd.” [2009 (11) TMI 33 - PUNJAB AND HARYANA HIGH COURT] as held, inter alia, that the contention of the Revenue that direct or indirect sum of expenditure is always incurred which must be disallowed u/s 14A and the impact of expenditure so incurred cannot be allowed to be set off against the business income which may nullify the mandate of section 14A, could not be accepted; and that disallowance u/s 14A requires a finding of incurrence of expenditure and where it is found that for earning exempted income, no expenditure has been incurred, disallowance u/s 14A cannot stand. - Decided in favour of assessee.
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