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TMI Blog2008 (7) TMI 1007X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tribunal that the amount in issue was paid to the appellant only to safeguard Mr. Dalvi from any claim(s) likely to be made against him by the person who had booked the flats through the appellant, since Mr. Dalvi did not construct the flats as agreed by him earlier. Thus, considering over all facts and circumstances of the case and the factual findings recorded by all the three lower authorities, we are unable to accept the contentions of the appellant, firstly that the amount in issue received by the appellant is not an income at all, as defined u/s 2(24) of the said Act and that alternatively this income of the appellant is required to be treated as income from long-term capital gain and not as income from other sources as contemplated by section 14 r/w section 56 of the said Act. We hold that all the three lower authorities were fully justified in treating the receipt of amount in issue by the appellant, not only as an income but also as income received by the appellant from other source as contemplated by section 14 r/w section 56 of the said Act and subject the same to taxation accordingly. The appellant has thus, failed to raise any question of law by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted by the aforesaid three documents and that it was a capital gain . However, all the lower authorities have treated the amount in issue as income earned by the appellant as and by way of income from other sources , by rejecting the claim of the appellant. Hence, this appeal. 5. The nature of transaction which resulted into the appellant receiving the amount in issue needs to be set out with few particulars and we do the same hereunder:- On 10-4-1985 the appellant entered into an agreement termed as Memorandum of Understanding with one Mr. Dalvi, who was to acquire certain piece of land bearing Survey No. 6 of village Barave, taluka Kalyan, for the purpose of construction of buildings, to be used mainly for the residential purpose. Mr. Dalvi wanted to sell the flats, which he proposed to construct, to third parties on ownership basis. Said Mr. Dalvi, the developer, was short of funds to undertake this project. The appellant therefore, offered to promote a Co-operative Housing Society and thereby collect funds from the proposed members of the Society. Consequently, the aforesaid MOU dated 10-4-1985 was entered into by and between the appellant Mr. Dalvi whereby it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me from long-term capital gain . Whereas, the department has treated this amount, received by the appellant, as an income from other sources . 7. It is the first contention of the appellant that the amount in issue is not an income within the definition of the term income set out in section 2(24 ) of the said Act. We are unable to accept this contention of the appellant and we agree with the findings rendered in this regard by all the lower authorities, including the Income-tax Appellate Tribunal by its impugned order dated 26-7-2006, for the reasons set out hereunder. 8. Section 2(24) defines the term income as and by way of an inclusive and not exhaustive definition. Section 14 of the said Act lays down the categories in which income can be classified for the purpose of charging the income-tax. The same reads thus:- 14. Heads of income.- Save as otherwise provided by this Act, all income shall, for the purposes of charge of income-tax and computation of total income, be classified under the following heads of Income :- A. Salaries; B.****** C. Income from house property; D. Profits and gains of business or profession; E. Capital gains; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant has received refund of the entire money paid by the appellant to Mr. Dalvi, along with interest towards the cancellation of the transaction that the appellant had with Mr. Dalvi in respect of purchase of flats which were to be constructed by Mr. Dalvi. In addition thereto Mr. Dalvi has paid to the appellant separately the amount in issue. This amount in issue has been paid to the appellant by Mr. Dalvi, inter alia in pursuance of clause No. (5) of the MOU dated 1-12-1989, the relevant portion of which has been reproduced by the Commissioner in its appellate order dated 8-10-2002 and reads thus:- The amount as agreed to be paid as compensation hereinabove shall be due on execution of this Memorandum but shall be paid only when the promoter obtains proof of refund of flat booking from persons as listed in Annexure A and also the no claim certificate from them against the Developer. 11. It is thus, clear that the appellant has not received the amount in issue from Mr. Dalvi towards either acquiring or releasing or relinquishing any right or title or interest whatsoever, in the immovable property. The appellant was paid separately for relinquishing his interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n future is initiated against the Developer, Mr. Dalvi, by the members of the proposed housing society for having failed to construct flats for them as was initially agreed by Mr. Dalvi. In other words the appellant has received this amount in issue to indemnify Mr. Dalvi against any action (that too if any) that may be taken against Mr. Dalvi in future. This amount in issue was not paid to the appellant towards any right/title/interest that the appellant had in praesenti in any immovable property. We are therefore, of the view that these judgments relied on behalf of the appellant cannot further the case of the appellant and are of no assistance to the learned counsel appearing on behalf of the appellant in advancing his points. 15. We agree with the observation of the Income-tax Appellate Tribunal that the amount in issue was paid to the appellant only to safeguard Mr. Dalvi from any claim(s) likely to be made against him by the person who had booked the flats through the appellant, since Mr. Dalvi did not construct the flats as agreed by him earlier. 16. Thus, considering over all facts and circumstances of the case and the factual findings recorded by all the three low ..... X X X X Extracts X X X X X X X X Extracts X X X X
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