The assessee, a lawyer by profession, was assessed for the compensation of Rs.900 Lakhs received by the assessee during impugned AY pursuant to certain consent terms as approved by Hon’ble Supreme Court.
The property under consideration was the subject matter of extensive litigation which ultimate got culminated into the sale of the property by the assessee in terms of consent terms dated 03/01/2012 between the assessee and certain other parties. The assessee, along with others, has executed the deed of conveyance on 31/12/2011 in favour of Hubtown Limited for an aggregate sale consideration of Rs.4 Crores. The additional compensation of Rs.9 Crores was payable to the assessee only pursuant to consent terms dated 03/01/2012 filed before Hon’ble Supreme Court.
The Tribunal noted that as per Clause-5 of the consent terms, the assessee was to be paid the said compensation for time, money and effort put in by him to challenge the acquisition of the suit property and for pursuing litigation before the Authorities, Hon’ble Bombay High Court and Hon’ble Supreme Court.
“The additional compensation was towards time, cost and effort of the assessee in pursuing the litigation. This being so, we are unable to concur with the submissions of Ld. DR that the said compensation was part and parcel for the sale transaction and received by the assessee as a consideration of the sale of the property. On the other hand, the learned CIT(A), in our considered opinion, has clinched the issue in the proper perspective. As rightly held, there could not be any transfer of a “right to sue” under Indian Law and any capital receipt arising from a right to sue cannot thus be considered capital gains under Section 45. Additionally, the cost of the said right being indeterminable, the charging Section would fail as per the cited decision of Hon’ble Supreme Court rendered in CIT V/s B.C.Srinivasa Shetty [supra]. Therefore, no infirmity could be found on the issue in adjudication done by learned CIT(A),” the Tribunal said.Subscribe Taxscan AdFree to view the Judgment