9911796707
TMI Blog2011 (5) TMI 659X X X X Extracts X X X X X X X X Extracts X X X X ..... chased land measuring 2 acres 51 cents situated at Survey No. 143/1A of Pattanturu Agrahara Village, Krishnarajapuram, Hubli Bangalore East Taluk from one Mr. P.C.D Nambiar, Chennai at a cost of Rs. 2,24,54,580/-. It was noticed that on the eastern side of the property, one M/s Paranjape Scheme Constructions Ltd, a public company of developers had trespassed assessee's property by using a private road to reach their land located behind assessee's property. To get the encroached portion retrieved, the assessee filed civil suit which was numbered OS No. 1340/2005 for restraining that company's entry on assessee's land. After two years of pursuing of this civil suit, the defendants M/s Paranjape Scheme Constructions Ltd., came for a out-of-cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition in respect of the transfer of the rights, if any. So, according to the assessee, amount received was only capital receipt and could not be treated a capital gain or any other income for that matter. Sensing that he could not tax this receipt under the head 'capital gains', Assessing Officer tried to tax this receipt as rent for the use of private road and accordingly, he treated the net amount of Rs. 24,82,500/- as rent received for using land under the head 'income from other sources'. Being aggrieved, the assessee filed first appeal and the Commissioner of Income-tax [Appeals] has finally epilogued that this receipt cannot be taxed under the head 'income from other sources' and that this receipt is only capital receipt and under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cannot stop use of this portion of the land by the company. It is a fact that he has received Rs. 25 lakhs and has also shown this amount in the 'note' appended to his return of income, as capital receipt in the 'land account'. Initially, the Assessing Officer proposed to tax this receipt under the head 'capital gains', but when the assessee explained that although this is capital receipt, but this cannot be taxed under any provision of law because the 'right of easement' being an 'intangible asset' having no cost thereof cannot be taxed, as such in view of the decision of the Hon'ble Jurisdictional High Court rendered in the case of B.C. Srinivasa Setty (supra). Being convinced about sensing this legal position, the Assessing Officer has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... afraid that this is a case where this income cannot be taxed and if it cannot be taxed under the Act, no tax can be levied under one pretext or the other. Our above view is supported by the decision of the Hon'ble Supreme Court taken in the case of CIT v. Sandu Bros. Chembur (P.) Ltd. [2005] 273 ITR wherein it has been held that 'it would be illogical and against logic of section 56 of the Act to hold that that which is not chargeable to capital gain could be taxed as income u/s 56 of the Act'. Decision of the Hon'ble Allahabad High Court relied on by the ld. D.R. in Raza Buland Sugar Co. Ltd. v. CIT [1980] 123 ITR 24 is entirely on different issue and different facts, and is, therefore, not at all applicable even remotely to the facts of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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