2023 (6) TMI 818 - AT - Income Tax

Income from other sources - Additional compensation of land received by the assessee from HUDA - CIT(A) deleted addition - HELD THAT - CIT(A) concluded that the enhanced compensation received by the assessee company from HUDA was also transferred to OILP in accordance with the collaboration agreement. CIT(A) before granting relief to the assessee also noted that the enhanced compensation received by the appellant has been duly offered to tax as income by OIPL under the head income from operation for F.Y. 2014-15 relevant to A.Y. 2015-16. We concur with the findings arrived by the Ld. CIT(A) that since the entire land rights were transferred by the appellant to OIPL and the enhanced compensation including interest thereon was offered to tax by OIPL after claiming deduction of 50% of interest u/s. 57 of the Act and the same income cannot be taxed in the hands of assessee. Decided against revenue.

Summary

Issues involved: Appeal against order of CIT(A)-3 New Delhi for AY 2015-16 regarding addition of compensation received by assessee from HUDA.

Issue 1: Addition of compensation received from HUDA

The Revenue contended that the assessee was not under legal obligation to transfer the land to Orris Infrastructure P. Ltd. (OIPL) and thus the entire enhanced compensation should be treated as business receipts. The Revenue argued that the CIT(A) erred in granting relief without basis. The Assessee, on the other hand, pointed out that the compensation was transferred to OIPL as per the collaboration agreement, and OIPL had offered it to tax. The CIT(A) noted the collaboration agreement where the appellant transferred all rights to OIPL, including the right to receive additional compensation from HUDA. The CIT(A) found that since the compensation was duly offered to tax by OIPL, the addition in the hands of the appellant should be deleted. The Tribunal upheld the CIT(A)'s findings, stating that the collaboration agreement clearly indicated the transfer of rights to OIPL and the proper tax treatment of the compensation by OIPL. Therefore, the Revenue's appeal was dismissed.

Final Outcome: The appeal of the Revenue against the order of CIT(A)-3 New Delhi for AY 2015-16, regarding the addition of compensation received by the assessee from HUDA, was dismissed by the Tribunal.