2024 (7) TMI 273 - AT - Income Tax

Correct head of income - Income from other sources OR capital gain - amount received as compensation for transferring the rights accrued in favour of the assessee - sale deed executed by the landlords, wherein the assessee was a consenting party - HELD THAT - In view of the above clause of the sale deed and deed of nomination, we are of the view that the amount received by assessee on account of compensation by way of deed of nomination is compensation for transferring the rights accrued in favour of the first party, in favour of the second party and hence, these cannot be assessed under the head long term capital gains and it has rightly been assessed by AO and CIT(A) under the head income from other sources . We confirm the order of the CIT(A) and this issue of assessee appeal is dismissed. Computation/calculation of notional rent - HELD THAT - AO adopted this precedent of reasonable realizable rental value and assessed the rental income in the hands of Shri. M.G. Vasan, husband of the assessee for the assessment year 2009-10 and determined the rental value at Rs. 3 lakhs. AO accordingly assessed the proportionate income from these three units at Rs. 2.01 lakhs as against offered by assessee s husband at Rs. 1,78,125/-. We noted that the estimation made by the Assessing Officer in assessee s husband case can be adopted here also and we direct that the same rate be adopted for assessee, also can be assessed notional rent at Rs. 2.01 lakhs in assessee s case and accordingly, this ground of assessee is partly allowed. Addition being the interest income, brought to tax under the head 'interest from other sources' - HELD THAT - AO assessed the interest income and when confronted to the assessee, he stated that income has been admitted, but this income is on account of assessee s spouse invested some of his funds in assessee name and assessee s husband has already included this income u/s. 64(1)(iv) of the Act being clubbing provision, but when confronted the assessee neither before the AO nor before the CIT(A) could produce any evidences. Even now before us, simply bald statement was made but no evidence whatsoever was produced. Hence, we have no hesitation in confirming the action of the AO and that of the CIT(A) and hence, addition is confirmed. This issue of assessee s appeal is dismissed. Addition to claim of deduction under Chapter VIA - as argued C IT(A) faile d to appreciate that the notes of arguments filed with evidences on all issues comprised of 97 pages was completely overlooked and brushed aside - HELD THAT - We noted that only plea of the assessee is that the assessee could not produce evidence neither before CIT(A) nor before the Assessing Officer and even now before us he could not produce any evidence and hence, the order of the Assessing Officer and that of the CIT(A) are confirmed. Appeal filed by the assessee is partly allowed.

Summary

Issues:
1. Validity of re-assessment
2. Treatment of compensation received as income from other sources
3. Assessment of notional rent for specific units
4. Addition of interest income
5. Claim of deduction under Chapter VIA

Validity of re-assessment:
The appellant raised concerns regarding the validity of the re-assessment in ground nos. 2 & 3. However, the appellant's counsel decided not to pursue this issue, leading to its dismissal as withdrawn.

Treatment of compensation received as income from other sources:
The main dispute revolved around the treatment of compensation received by the appellant as income from other sources. The appellant sold a property and received a total consideration, part of which was claimed as compensation for transferring rights accrued. The Assessing Officer and CIT(A) determined that the compensation amount should be treated as income from other sources. The Tribunal upheld this decision based on the clauses in the sale deed and deed of nomination, confirming that the compensation was indeed for transferring rights and not eligible for long term capital gains.

Assessment of notional rent for specific units:
Another issue raised was the assessment of notional rent for specific units. The appellant contested the calculation of notional rent for certain units, arguing that the assessment was incorrect. The Tribunal reviewed the facts and directed that the same rate adopted for the husband of the appellant be applied to the appellant as well, partially allowing this ground of appeal.

Addition of interest income:
The Assessing Officer added interest income to the appellant's taxable total income, which was contested by the appellant. The appellant claimed that the income was already included by the spouse under clubbing provisions. However, the appellant failed to provide evidence to support this claim, leading to the confirmation of the addition by the Tribunal.

Claim of deduction under Chapter VIA:
Lastly, the appellant disputed the denial of a deduction under Chapter VIA. The appellant argued that there was a lack of opportunity to present evidence, but the Tribunal confirmed the decision of the Assessing Officer and CIT(A) due to the appellant's failure to produce any evidence to support the claim.

In conclusion, the Tribunal partly allowed the appeal filed by the appellant, addressing various issues raised in the case.