Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (9) TMI 746 - AT - Income TaxRevision u/s 263 - Nature of receipt - compensation received by the assessee as per the consent decree of the Hon’ble Bombay High Court - taxability of receipt of damages which was claimed as capital receipt not chargeable to tax, whereas the ld. PCIT has held it to be in the nature of income - HELD THAT:- As noted above, Section 6 of the Transfer of Property Act clearly provides that “a mere right to sue cannot be transferred”, even if it is to be treated as “property” u/s. 5 of the Transfer Property Act. Transfer of property means the act by which a person conveys a property to another and to transfer property is to perform such act. The mere right to sue may or may not be property but certainly it cannot be transferred as per law. In the case of the assessee MOU was not capable of specific performance under the Specific Relief Act and was confirmed by the Hon’ble Bombay High Court vide consent decree dated 10/07/2017 and it was decreed that the only right available to the assessee was the right to sue for damages and the compensation was paid under the decree towards the said right to sue. As considering judgments of various High Courts including the two judgments of the Hon’ble Jurisdictional High Court in favour of the assessee, the impugned order of the ld. PCIT cancelling the assessment order solely relying on the judgment of M/s. Vijay Flexible Containers [1989 (9) TMI 16 - BOMBAY HIGH COURT] which is not applicable on the facts of the assessee’s case cannot be sustained and is hereby set aside and the order of the Assessing Officer accepting the claim is upheld. Also once the ld. AO has examined this issue threadbare relying upon the various judgments of the High Court which was cited before him accepting the claim, then ld. PCIT cannot set aside the assessment order within the scope of u/s. 263 is not adjudicated as we have already held on merits that the judgment of the ld. PCIT is incorrect in law. Accordingly, the appeal of the assessee is allowed.
|