The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT), held that the claim for the compensation in the case of the co-owner was admitted by the revenue and therefore the revenue has taken contrary stand by disallowing the addition in the hand of the assessee who is also a co-owner.
The assessee in the present case Raghuvirsinh Amarsinh Vaghela is an individual and drawing his income under the head house property, short term capital gain (STCG )and other sources. The assessee in the return of income while calculating STCG has claimed the deduction of Rs. 92 lakhs representing the compensation paid to Popular Estate Management Ltd.
The assessee, has acquired piece of land along with his brother bearing measuring 57466 Square meters, to develop the land along with his brother has entered into a development agreement with a company namely Popular Estate Management Limited which was subsequently cancelled vide termination agreement.
As a result of termination agreement, the assessee had to pay compensation along with his brother to Popular Estate Management Limited amounting to Rs. 1,15,00,000/- only. The share of the assessee was Rs. 82 lakhs and share of the brother of the assessee was Rs. 23 lakhs in the amount of gross compensation.
The Assessing Officer (AO) in the proceeding under Section 147 of the Income Tax Act,1961 disallowed the claim of the assessee for Rs. 92 lakhs and added to the total income of the assessee. Aggrived by the order the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT (A)], which upheld the decision of AO.
Further aggrieved the assessee filed an appeal before the Tribunal. The Authorised Representative of the assessee Nupur Shah, contended that the compensation paid by the brother of the assessee for Rs. 23 lakhs to the Popular Estate Management Limited was allowed as deduction by the revenue, but denied to the assessee.
The Departmental Representative Chitra Soneji, supported the order of the authorities.
The Bench comprising of Waseem Ahmed, Accountant Member and Ms. Madhumita Roy, Judicial Member held the claim of the assessee cannot be denied for the fact that the claim in the case of co-owner was admitted by the revenue. Accordingly the Tribunal set aside the findings of the CIT(A) and direct the AO to delete the addition made by him.
Hence, the ground of appeal of the assessee is allowed.
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