TMI Blog2022 (12) TMI 885X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - HON'BLE MR. JUSTICE MANM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2018, under Section 263 of the Act, directing the Assessee to show cause as to why an order may not be passed against it. 5. The PCIT, after considering the Assessee s reply, passed its order dated 27th March, 2018, setting aside the assessment order passed by the AO by holding it to be erroneous and prejudicial to the interest of Revenue and further directed the AO to pass a fresh assessment order, with a direction to bear in mind that the Assessee had wrongly treated the property in question as its Capital Asset and that the claim of indexation cost of the property cannot be allowed. 6. The Assessee being aggrieved by the PCIT s order dated 27th March, 2018, filed an appeal before the ITAT, wherein the ITAT vide its impugned order dated 5th January, 2022, allowed the Assessee s appeal by holding that the compensation received for cancellation of the plot to be in the nature of a capital receipt and not a revenue receipt. 7. Learned senior standing counsel for the Revenue states that the ITAT failed to appreciate that the Assessee was granted a lease only for a period of 30 years and ownership right of land was not transferred by the Government of Goa. He states that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Assessee to the said asset as being in the nature of the Capital Asset is not correct and thus, the AO had committed an error in accepting the ITR filed by the Assessee. 11. We have perused the paper-book and are unable to accept the contentions of the Revenue. In the present case, the Assessee applied for allotment of a plot of land vide application dated 10th May, 2006, and was allotted Plot No. 9 in the Rajiv Gandhi I.T. Habitat by Infotech Corporation of Goa Ltd., a Company of the Government of Goa, which was incorporated for setting up Rajiv Gandhi I.T. Habitat ( the Project ). The possession of the said plot was handed-over to the Assessee on 26th September, 2006 and the lease deed was executed and registered in favour of the Assessee for an initial period of 30 years which may be further extended by 60 years, subject to the conditions laid down therein. 12. The Assessee herein had started the Project in AY 2008-09 and opened an office in Goa to effectively manage the Project. The Assessee had shown the property under the head Fixed Assets in its Books of Accounts and claimed it as a Capital Asset within the meaning of Section 2(14) of the Act. However, due to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: Clause6(o) The Lessee who is in real estate developer for offering space for IT Software ITES shall be permitted to sublease, assign, transfer / assign, alienate or part with possession of constructed building and a proportionate land thereof (in case of proportionate land, only sublease is permissible) for setting IT SOFTWARE/ IT enabled Services Industries only. 16. In the facts of the present case, it is evident that there was a transfer of right in the land in question in favour of the Assessee under the lease deed. In this case, as noted above, the lease deed is for a period of 30 years with an option of renewal for a further period of 60 years and further, a lease premium was charged from the Assessee for the said lease. In this regard it would be relevant to refer to Clause 1 of the lease deed as reproduced in the order of PCIT, which reads as under: Clause (1)In pursuance of the aforesaid agreement and in consideration of the lessee agreeing and undertaking to the payment of premium, the annual lease rent and compliance with the terms, conditions and covenants- mentioned hereinafter, the lessor does hereby demise, grant of lease the land and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the plot created an interest in the land in favour of the Assessee. The Assessee under the terms of the agreement not only had the right to construct on this plot but it had a further right to transfer and alienate the building along with the land to third parties and therefore the lease land comes within the definition of Capital Asset as defined under Section 2(14) of the Act. 20. Further, in this case, as noted above, the allotment of land was cancelled by the Government of Goa in pursuance of the Act of 2012. The payment received by the Assessee towards compensation was in terms of sub-section (3) (5) of Section 3 of the Act of 2012, which reads as under: 3. Cancellation/Abolition of Allotments. XXX XXX XXX (3) Every allottee whose allotment of plot has been cancelled/ abolished as specified in this section shall be given by the Info Tech Corporation of Goa Limited, an amount equal to the amount of premium/lease rent/license fee paid by the allottee along with simple interest at the rate of ten percent per annum. The Info Tech Corporation of Goa Limited shall, however, not be liable or responsible, in any manner, in respect of the loans, dues, etc., if a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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