TMI Blog2024 (1) TMI 599X X X X Extracts X X X X X X X X Extracts X X X X ..... e above payments made by the developer only to compensate the assessee towards the shifting as well as the additional burden on the corpus funds. Therefore, it clearly shows that it is a compensation towards hardship faced by the assessee. As relying on Smt Delilah Raj Mansukhani [ 2021 (3) TMI 252 - ITAT MUMBAI] we are inclined to agree with the submissions of the Ld. AR of the assessee and hold that the above receipt of compensation for hardship is in the nature of capital receipt. Further, we observe that assessee has submitted that the corpus fund received by her was already declared as additional income subsequently on receipt basis in A.Y. 2015-16. Therefore, we direct the AO to verify the same and if it is found proper, the addition on corpus fund may be deleted. Accordingly, the addition made by the AO is deleted. Ground raised by the assessee is allowed. - SHRI KULDIP SINGH, HON BLE JUDICIAL MEMBER SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER For the Appellant : Mr. Dharan Gandhi For the Respondent : Mr. S. Abhi Rama Karthikeyan ORDER PER S. RIFAUR RAHMAN (AM) 1. This appeal is filed by the assessee against order of Learned Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble..... 4. After considering the submissions of the assessee, the Assessing Officer has rejected the same and observed that MIG-III Co-op. Hsg. Society is the lawful owner of property consisting of 9 buildings with 80 members entered into contract with M/s. Suyog Happy Homes vide Agreement Dated 30.04.2008. As per the terms of the said agreement, the developer shall develop the property and each member of the Society shall receive a new flat in exchange of surrender of old flat depending upon the size of the old flat along-with interest in the additional FSI allotted by MHADA. As per the agreement, the Developer, has paid to the society being lawful owner of the property and the members an aggregate monetary consideration of ₹. 39,10,00,000/-. The above said amount of ₹. 39.10 crores has been distributed among the members of the society being shareholders, depending upon the size of their old flat. The assessee being one of the member of the society, the assessee has received an amount of ₹. 52,88,045/- being consideration for surrender of her old flat along with her interest in the additional FSI allotted by MHADA. 5. The Assessing Officer observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d secondly cash compensation in the name of corpus fund, cost of transit accommodation and cost of shifting etc. The appellant offered Long Term Capital Gain of Rs. 4,25,249/- only out of corpus amount (as claimed) received of Rs. 21,77,069/- and it was claimed that the rest amount was capital asset. The Ld. AO in his order treated the whole amount received by appellant as income distributed by the cooperative society and treated the entire sum as revenue receipt. It is noted that the agreement was between the MIG-III Society and M/s Suyog Happy Homes (the developer) but the benefit of such agreement was directly transferred to the appellant and other members of the society. Since there was no agreement between the appellant and the developer, the entire amount which should have been appeared in the books of accounts of the society had been bye-passed and credited in the accounts of the appellant. It is clearly a diversion of fund and treatment of the Ld. AO rightly taxed it as revenue receipt by assessee from the Cooperative society. The appellant further received a flat which was almost double in size of her previous property. Therefore, it is clear that the entire su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able by the developer to the individual members to meet the expenses for shifting / re-shifting and compensation to the individual members to meet the cost for temporary transit accommodation to be arranged by the individual members during the period of construction of the proposed building at ₹. 21,60,976/- for an initial period of 24 months. In this regard, he relied on the decision of the ACIT v. IGE India ltd., [2013] 33 taxmann.com 405 (Mumbai Trib.). 10. On the other hand, Ld. DR objected to the above submissions and submitted that funds were routed through the society, therefore he supported the findings of the Assessing Officer that the assessee has received dividend in cash. Therefore, he relied on the findings of the Ld.CIT(A) at Page No. 17 of the order. 11. In rejoinder, Ld. AR brought to our notice Para No. 3.2 of the Assessment Order and submitted that it is not the dividend income received from the society, assessee has received by entering tripartite agreement and assessee has received as compensation from the developer. In this regard he relied on the decision of the Coordinate Bench in the case of Shri Lawrence Rebello v. ITO in ITA.No. 132/IND/2020 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, society and the assessee being the one of the member of the society. It clearly shows that assessee is one of the party and consigning party for development of the society. In compensation assessee has received new flat with additional FSI and certain compensations which includes corpus funds, compensation towards shifting/re-shifting personal belongings and compensation towards cost for temporary transit accommodation, initially for a period of 24 months. The Ld. AR submitted the development agreement to submit that the additional FSI in new flats are allotted to all the members of the society. 14. The case of the revenue is that the society has entered into a development agreement and received the compensation and distributed the same to the individual members being part of the society. Since the compensation is no doubt paid to the individual members, however, same were routed through the society. Therefore, the compensation received by the assessee will fall as an additional income earned through the society. Therefore, it has a character of the revenue in nature which will fall under the category of dividend, which is chargeable to tax under the head income from other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for re-development as per the agreement between the developers and flat owners dated 28.03.2008. The said compensation was paid towards hardship Rs, 13,45,278/-; rehabilitation Rs, 5,90,625/- and for shifting Rs. 15,000/-. We also note that the assessee paid Rs. 18,63,000/- to Joys Developers for acquiring additional area of 138 Sq Ft. It was also noted that the assessee shifted to his own house when the building went for re-development. Now the question before is whether the compensation upon re-development of property towards hardship, rehabilitation and shifting received by the assessee is taxable if the potential TDR/FSI is available to the land owner or society which owns the (and depending upon the terms of the de-development agreement without transferring the land. In the present case the assessee who was flat owner in the building was member of the society, As per the agreement each member of the society including the assessee was to be given a flat in lieu of the old one and the each member including the assessee was given compensation. We also note that In the decisions in 1TA No 72/Mum/2012 assessment year 2008- 09 Bench E and ITA No 5271/Mum/2012 assessment year 2008- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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