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2022 (12) TMI 885 - HC - Income TaxRevision u/s 263 by CIT - compensation received for cancellation of the plot to be in the nature of a capital receipt and not a revenue receipt - HED THAT:- A reading of the aforesaid Sections of the Act of 2012, evidences that the payment calculated @ 10% per annum over and above the premium by Government of Goa was not by way of interest but was statutorily in the nature of compensation and therefore, the said receipt cannot be treated as Assessee’s ‘Income from other sources’. We also agree that the finding of the ITAT that in the present case, since the plot allotted to the Assessee was to be used by the Assessee for carrying on its business and was an income producing asset for this company, since the Assessee who is a real estate developer, intended to construct a building and further sub-lease or transfer such a building to third parties to earn income, it would constitute a capital asset as held by in the case of C.I.T., Bombay City v. Bombay Burmah Trading Corpn., Bombay,[1986 (7) TMI 8 - SUPREME COURT] The reference to a Power of an Attorney transaction in the grounds of appeal is incorrect since there was no Power of Attorney executed in favour of the Assessee as noted in the order of the PCIT. The leasehold rights held by the Assessee in the plot was a Capital Asset and that the compensation received by the Assessee from the Government of Goa on the cancellation of the plot was a capital receipt and not a revenue receipt. It is trite law that if an agreement for transfer of rights in an immovable property is not performed by the transferor, the transferee is entitled for compensation as he/she is deprived of the price of escalation. Therefore, the character of payment received as compensation by the transferee bears the character of capital receipt. The payment of interest in the facts of the present case is compensatory in nature and therefore, does not bear the character of revenue receipt. We hold that the AO’s order was correct and it did not suffer from any error, justifying the invocation of the PCIT’s powers under Section 263 of the Act.
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