1987 (11) TMI 106 - AT - Income Tax

Summary

Issues:
1. Taxability of compensation received by the assessee for requisitioned property as "Capital Gains" or "Income from Property."

Detailed Analysis:
The assessee received compensation for a requisitioned property, which the ITO assessed under the head "Other Sources." The assessee argued that the compensation should be considered as "Capital Gains" and not taxable due to the nature of the acquisition by the Government. The CIT(A) held that the compensation should be taxed as income from the property based on the Requisitioning And Acquisition of Immovable Property Act, 1952. The CIT(A) directed the correct property income determination, reducing the assessed amount accordingly.

2. Interpretation of transfer of interest due to requisitioning of property.

The assessee claimed that the requisitioning of the property by the Government resulted in a transfer of interest as per the Supreme Court's decision in Sunil Sidharth Bhai vs. CIT. The argument was based on the reduction of exclusive interest to a shared interest, constituting a transfer. The CIT(A) disagreed, holding that the compensation was taxable as income from the property, not as capital receipt.

3. Assessment of compensation received for requisitioned property under the Income Tax Act.

The Departmental Representative argued against the CIT(A)'s decision, stating that the compensation should be taxed as property income in the year received. The ITAT considered the ownership rights, the nature of compensation, and relevant legal provisions. The ITAT concluded that the compensation received by the assessee should be assessed as income from "house property" under Section 22 of the Income Tax Act, dismissing the Revenue's appeal.

In conclusion, the ITAT upheld the CIT(A)'s decision to tax the compensation received for the requisitioned property as income from "house property," dismissing both the assessee's and Revenue's appeals.