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TMI Blog2012 (5) TMI 316X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. Taxability of compensation of Rs. 7,01,460/- received by the assessee for alternate accommodation during the period of construction of property for 18 months. - held that:- displacement compensation is not related to any capital asset. - he compensation had been paid in connection with the alternate accommodation given to the assessee to facilitate construction of the flat. Since the actual rent paid by the assessee for the alternate accommodation was lower than the amount received, there was net income to the assessee which has been rightly taxed as income from other sources. - Addition confirmed - Decided against the assessee. - IT Appeal No. 6921 (Mum.) of 2010 - - - Dated:- 25-4-2012 - RAJENDRA SINGH, VIVEK VARMA, JJ. OR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee had neither purchased nor constructed the house property. The AO, therefore, held that the assessee was not entitled for exemption under section 54 of the Act. He, therefore, did not allow the claim of deduction under section 54. The sale consideration in respect of transfer of the old flat was computed by the AO at Rs.86,96,760/- consisting of sum of Rs. 75,64,960/- being market value of the new flat and Rs. 11,25,800/-being cash compensation and long term capital gain was computed at Rs. 55,91,866/- after deducting the indexed cost of acquisition from the sale consideration. 2.2 In appeal, CIT(A) agreed with the AO that exchange of old flat with new flat constituted transfer and the capital gain was therefore taxable. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime period of 3 years from the date of transfer as mentioned in section 54 would apply for the acquisition of new flat. The ld. DR on the other hand supported the order of authorities below and argued that provisions of section 54 were not applicable as the assessee had neither purchased a new residential house nor constructed a new residential house. 4. We have perused the records and considered the rival contentions carefully. The dispute is regarding allowability of exemption under section 54 of the Act and computation of long term capital gain in respect of exchange of old flat with a new flat and cash compensation under development agreement with the builder. The authorities below have held that since assessee had neither purchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds under section 54EC. Since cash compensation was part of consideration for transfer of the old flat and the assessee had invested the money in REC bonds, the exemption under section 54 EC will be available. In any case, the long term capital gain computed by the AO including cash compensation as part of sale consideration is much below the cost of new flat and therefore, the cash component is also exempt under section 54. As regards the completion of new flat within a period of 3 years, assessee has filed a copy of letter dated 30.5.2007 of the builder in which it has been mentioned that the builder had applied for occupation certificate and possession was to be given on 14.6.2007. This letter was not available before lower authorities. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2349/Mum./2011 for assessment year 2007-08 order dated 31.1.2012 in which, it was pointed out, that the Tribunal had held that cash compensation received in connection with construction of new flat in exchange of the old flat under development agreement was a capital receipt and was not taxable. The ld. Departmental Representative on the other hand submitted that compensation had been received for alternate accommodation and was not referable to any capital asset and therefore, the same had been rightly taxed as income from other sources. 7. We have perused the records and considered the rival contentions carefully. The dispute is regarding taxability of compensation received by the assessee from the builder for providing alternate acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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