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2018 (5) TMI 492 - AT - Income TaxRevision u/s 263 - liquidated damages are taxable as capital gain or revenue receipt - Held that:- We find that AO has not examined regarding liquidated damages and AO failed to make enquiry. Secondly, the Ld. DIT(IT) has also not made enquiry whether liquidated damages are taxable as capital gain or revenue receipt. DIT(IT) has come to a conclusion that it is liable for tax under the provisions of section 56(2)(vi). DIT(IT) has also not applied his mind properly. Therefore, we are of the opinion that whether the liquidated damages received by the assessee are as per the document filed by the assessee is liable for taxation or not. AO and the Ld. DIT(IT) has not applied their mind at all. Therefore, in the interest of justice and fairplay, we are of the opinion that it requires verification at the end of the AO. Therefore, relying upon the decision in the case of Malabar Industrial Co. Ltd. vs. CIT (2000 (2) TMI 10 - SUPREME Court), we find that AO failed to apply his mind in perspective order passed by him and hence erroneous. AO has not applied his mind. AO has also not verified any supporting material and without making any enquiry. Therefore, we are of the opinion that Ld. DIT(IT) has rightly exercised the jurisdiction under section 263(1). DIT(IT) has without making enquiry has come to a conclusion that this amount is taxable under section 56(2)(vi) of the Act. Therefore, we modify the order of Ld. DIT(IT) and restore this issue back to the file of AO to verify the claim of the assessee that the sum of ₹ 34,57,318/- is liable to tax being a capital income or revenue receipt or whether not taxable as capital gain - Appeal of the assessee is partly allowed
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