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2023 (8) TMI 503 - AT - Income TaxSale of capital asset - transfer of capital asset and compensation received on account of delay in construction by the builder of property - short term capital gain or long term capital loss - appellant had acquired the capital asset in the shape of right in an office space in 2007 - assessee is a non-resident Indian - HELD THAT - In the instant case, admittedly, the allotment letter was issued back in the year 2007 and substantial payment had been made before the year 2018 when final payment was made. Therefore, we find merit into the contention that the AO erred in treating the surplus to be short term capital gain without giving benefit of indexation. We therefore, direct the AO to re-compute gain, if any after giving benefit of indexation as provided under law and decide the issue in the light of judgement of PCIT vs Vembhu Vidyanathan 2019 (1) TMI 1361 - BOMBAY HIGH COURT The ground raised by the assessee is allowed for statistical purpose. Nature of receipt - Compensation received by the assessee from the builder - capital receipt or Revenue receipts - HELD THAT - As relying on Aaran R. Infrastructure Ltd 2018 (5) TMI 261 - DELHI HIGH COURT we are of the considered view that the lower authorities were not justified in treating the amount as revenue receipts, the same deserves to be deleted. The ground raised by the assessee is thus, allowed.
Issues Involved:
1. Determination of total income. 2. Addition of alleged short-term capital gain versus long-term capital loss. 3. Treatment of compensation received as capital receipt or income from other sources. 4. Inclusion of compensation amount in both capital gain calculation and income from other sources. 5. Deduction under Section 80TTA of the Income Tax Act. 6. Levying of interest under Section 234B of the Income Tax Act. Summary: Issue 1: Determination of Total Income The Assessee's appeal challenges the order of the Assistant Commissioner of Income Tax, who determined the total income at Rs. 33,60,600/- against the declared income of Rs. 5,37,371/- for the Assessment Year 2018-19. Issue 2: Addition of Alleged Short-term Capital Gain The AO/DRP made an addition of Rs. 3,37,202/- representing alleged short-term capital gain as opposed to the Assessee's claim of a long-term capital loss of Rs. 81,42,760/- on the sale of a capital asset. The AO considered the effective date of purchase as 23.02.2018, the date of the final payment, thus treating the gain as short-term. The Tribunal found merit in the Assessee's contention that the date of acquisition should be reckoned from the date of allotment (14.08.2008) and directed the AO to re-compute the gain, giving the benefit of indexation. Issue 3: Treatment of Compensation Received The AO treated the compensation of Rs. 24,86,030/- received from Emaar MGF Ltd. as income from other sources. The Tribunal referred to binding precedents and held that the compensation received for delayed possession is a capital receipt, not a revenue receipt, and thus should be included in the computation of capital gain. Issue 4: Inclusion of Compensation Amount The Assessee argued that the compensation amount was erroneously included twice, both in capital gain calculation and as income from other sources. The Tribunal agreed with the Assessee and directed the AO to correct this error. Issue 5: Deduction under Section 80TTA The AO/DRP failed to allow a deduction of Rs. 10,000/- under Section 80TTA of the Act. The Tribunal directed the AO to allow this deduction as per the law. Issue 6: Levying of Interest under Section 234B The Assessee contested the levy of interest of Rs. 9,486/- under Section 234B of the Act. The Tribunal did not specifically address this issue in the judgment summary. Conclusion: The Tribunal partly allowed the Assessee's appeal for statistical purposes, directing the AO to re-compute the gains and correct the errors as per the Tribunal's findings. The compensation received was held to be a capital receipt, and the benefit of indexation was to be given from the date of allotment.
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