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TMI Blog2019 (10) TMI 771X X X X Extracts X X X X X X X X Extracts X X X X ..... nal high court s in Smt. Lila Ghosh [ 1993 (1) TMI 11 - CALCUTTA HIGH COURT] has already settled the law that mense profits are in the nature of damages which are not chargeable to tax being in the nature of a capital receipt. We apply the very analogy in the case of damages as well to conclude that both the lower authorities have erred in treating the assessee s damages amount as chargeable to tax. The assessee therefore succeeds in its former substantive ground. - ITA No.2260/Kol/2014 - - - Dated:- 9-8-2019 - Shri J.Sudhakar Reddy, Accountant Member and Shri S.S.Godara, Judicial Member For The Appellant : Shri Anil Kr. Duggar, Advocate For The Respondent : Shri A.K. Bandyopadhyay, JCIT, SR-DR ORDER PER S.S.Godara, Judicial Member:- This assessee s appeal for assessment year 2010-11 arises against the Commissioner of Income Tax (Appeals)-VIII, Kolkata s order dated 30.09.2014 passed in case No.12/CIT(A)-VIII/Kol/2013-14, involving proceedings u/s 143(3) of the Income Tax Act, 1961; in short the Act . Heard both the parties. Case file(s) perused. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent of ₹ 97,4101- per month minus actual rent of ₹ 25000/- tent per month paid by (PSIDC) for the period Nov, to Dec, 98 and ₹ 30,000/-paid from Jan. 99 to May, 99.. The A.O also held that interest receipt of ₹ 35,93,296/- is nothing but revenue receipt and should !e taxed under the head income from other sources. On the other hand the appellant has in grounds of appeal has mentioned that the money was received by way of a judicial order and the property was forcibly and illegally occupied and the relationship of land lord and tenant was not existing at that time and the receipt was manse profit and should be considered as Capital Receipt. He also referred to the following case laws which he claimed that the A.O. ignored: 1. M/s Narang Overseas.Pvt. Ltd. Vs The C.LT. Central Circle 36 (AIT- 2008 67ITAT), 2. CIT vs Smt Lila Ghosh (IT-Reference No. 32 of 1991,18th January, 1993 133 CTR Calcutta. I have-gone-through-the assessment order and written submission of the appellant. Matter to be decided-here is that whether amount so awarded is man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or public sector undertakings for comparable premises. The valuer shall be appointed in the manner described in clause 2(e) hereinbefore, and his costs shall be paid in the first instance by the First Party, who will reimburse in toto by the Second Party. Thus in the clause 2 (g) of the lease agreement the terms for payment have been provided in case the lease continue to occupy the property after the expiry of lease period property. Hence it cannot be said that (PSIDC) was in unlawful possession of property. They continue to occupy property beyond lease period and in terms of lease an arbitrator was appointed and amount of rent payable after lease period was decided b-y him. Since there was element of arrear rent the arbitrator awarded interest payment also on arrear amount of rent decided by him till the date of actual payment of the same. Thus in no case the amount of rent of ₹ 20,89,7101- and interest of ₹ 35,93,296/- totaling ₹ 56,83,006/- cannot be termed as mesne profit in the hand of the assessee. Even Hon ble Delhi High Court in the appeal filed by the appellant company agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the assessee cannot realize rent from a property let to a tenant and subsequently the assessee has realized any amount of such rent, the amount so realized shall deemed to be income chargeable under the head Income from house property , in the previous year in which the income is so realized, whether or not the assessee is the owner of the property in that year. Regarding taxability of interest amount of ₹ 35,93,296/- is concerned it is nothing but an award for delayed payment of rent and is taxable as income from other sources. I therefore find that the act of the assessee to credit the sum of ₹ 56,83,006/- directly to Reserve and Surplus account instead of crediting the same in profit Loss account is not acceptable. The amount received by the appellant is not a mesne profit as he never lost charge of the property, as he was receiving rent, the amount of ₹ 20,89,7101- received by him is nothing but arrear rent and has rightly been charged to tax under the head income from house property . Similarly interest income of ₹ 35,93,296/- has rightly been charged to tax under the head, Income from, other sources. I, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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