Smt. Jaswinderjit Kaur, Canada V. DCIT (Indl. Taxation), Circle, Chandigarh

ITA 1307/CHANDI/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8340 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 16-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital receipt

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A, CHANDIGARH . . , , BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRISANJAY GARG, JUDICIAL MEMBER ./ ITA NO. 1307/CHD/2018 / ASSESSMENT YEAR : 2015-16 SMT. JASWINDERJIT KAUR, 17293, 64,AVENUE,SURREY BC, CANADA VS. THE DCIT (INTERNATIONAL TAXATION), CIRCLE CHANDIGARH ! ' ./ PAN NO: ADBPK4073D !#/ APPELLANT %& !# / RESPONDENT '()* /ASSESSEE BY : SH. MOHIT DHIMAN, CA )* / REVENUE BY : SH. MADIT SRIVASTAVA, SR. DR + ,)( -' /DATE OF HEARING : 13.06.2019 ./ )( -' / DATE OF PRONOUNCEMENT : 11.07.2019 / ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 16.07.2018 OF THE COMMISSIONER OF INCOM E TAX (APPEALS )- 43, NEW DELHI [HEREINAFTER REFERRED TO AS CIT(A)] . 2. THE ASSESSEE IN THIS APPEAL HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE ORDER PASSED BY THE WORTHY CIT (APPEALS)-4 3, NEW DELHI DATED 16.07.2018 IS CONTRARY TO THE FACTS OF THE CASE AND LAW. ITA NO. 1307-C-18 SMT.JASWINDERJIT KAUR, LUDHIANA 2 2. THAT THE ID. CIT(A) HAS ERRED IN LAW AS WELL AS FAC TS BY UPHOLDING THE ADDITION MADE BY THE ID. DCIT BY TREA TING THE COMPENSATION OF RS 10,47,582 AS INTEREST INCOME . 3. THAT THE ID. CIT(A) HAS ERRED BY CONFIRMING THE ACT ION OF THE ID. DCIT BY TREATING THE COMPENSATION RECEIV ED AS INTEREST INCOME SINCE THE APPELLANT HAD MADE PAR T PAYMENT TO THE BUILDER FOR ALLOTMENT OF FLAT AND NO T FOR THE PURPOSE OF EARNING INTEREST. 4. THAT THE ID. CIT(A) HAS FAILED TO APPRECIATE THAT T HE AMOUNT OF RS. 10,47,582 HAD BEEN PAID AS COMPENSAT ION FOR DELAY IN CONSTRUCTION AND HANDING OVER PHYSICAL POSSESSION BY THE BUILDER PURSUANT TO THE CASE FILE D BY THE APPELLANT BEFORE THE CONSUMER FORUM. 5. THAT THE ID. CIT(A) HAS ERRED IN CONFIRMING THE ADD ITION MERELY ON THE BASIS OF NOMENCLATURE OF PAYMENT MENTIONED BY THE PAYER IN THE LETTER ADDRESSED TO T HE APPELLANT DT. 04.03.2015. 6. THAT THE ID CIT(A) HAS ERRED IN CONFIRMING THE ADDI TION WITHOUT APPRECIATING THE DECISIONS IN CASE OF CIT V S HP HOUSING BOARD (2012) 18 TAXMANN.COM 129 (HIGH COURT OF H.P) , DELHI DEVELOPMENT AUTHORITY VS ITO (1995) (53 ITD 19) AND GDA VS DR NK GUPTA (REVISION PETITION NO. 2244/199 NATIONAL COMMISSION DECIDED O N 18/09/2002.) 7. THAT THE ID. CIT(A) HAS ERRED IN CONFIRMING THE ADD ITION MADE BY THE ID. DCIT BY SOLELY APPLYING THE DECISIO N OF IT AT MUMBAI IN CASE OF KUMARPAL MOHANLAL JAIN VS ITO (ITA NO. 7231 MUM 2010) AND TREATED THE COMPENSATION RECEIVED BY APPELLANT AS INTEREST. 8. THAT THE ID. CIT(A) HAS FAILED TO PASS A SPEAKING O RDER WITHOUT CONSIDERING ALL THE CASE LAWS RELIED UPON B Y THE APPELLANT. 9. RELIEF PRAYED FOR : THAT THE ADDITION OF RS. 10,47,582/- MADE BY THE ID. DCIT AND UPHELD BY THE ID. CIT(A) M AY KINDLY BE DELETED OR ANY OTHER RELIEF AS DEEMED FIT MAY BE ALLOWED. 10.THAT THE APPELLANT CRAVES LEAVE TO APPEND, AMEND OR WITHDRAW ANY GROUND OF APPEAL TILL IT IS FINALLY DE CIDED. ITA NO. 1307-C-18 SMT.JASWINDERJIT KAUR, LUDHIANA 3 3. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS AS TO WHETHER THE COMPENSATION RECEIVED BY AN ASSESSEE ON ACCOUNT OF THE FAILURE OF BUILDER / DEVELOPER TO HANDOVER POSSESSION OF THE H OUSE WOULD FALL WITHIN THE DEFINITION OF INTEREST AS DEFINED U/S 2(28A) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') AND WOULD BE EX IGIBLE TO INCOME TAX AS PER THE PROVISIONS OF THE INCOME TAX ACT. 4. THE BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT T HE ASSESSEE HAD BOOKED FOR A RESIDENTIAL FLAT IN A PROJECT TO BE LA UNCHED BY THE BUILDER NAMELY PARSVNATH PRIDEASIA AT CHANDIGARH. HOWE VER, THE BUILDER / DEVELOPER FAILED TO DELIVER THE POSSESSION OF THE B UILT UP FLAT ON THE STIPULATED DATE. THE ASSESSEE, THEREFORE, APPROACHE D THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION, CHANDIGARH SEEKING R EFUND OF THE AMOUNT AS WELL AS COMPENSATION. THE COMPLAINT OF TH E ASSESSEE WAS ALLOWED BY THE STATE CONSUMER DISPUTES REDRESSAL CO MMISSION, CHANDIGARH, WHEREBY, A COMPENSATION WAS AWARDED TO THE ASSESSEE AS PER THE CLAUSE 9 (C) OF THE AGREEMENT OF THE ASSESS EE WITH THE BUILDER I.E. @ RS. 107.60 PER SQUARE METER OF THE SUPER AREA OF THE UNIT PER MONTH AFTER STIPULATED PERIOD OF 36 MONTHS FROM THE DATE OF BOOKING / ALLOTMENT. THE ASSESSING OFFICER TREATED THE AFORES AID COMPENSATION RECEIVED BY THE ASSESSEE AS INTEREST INCOME OF TH E ASSESSEE EXIGIBLE TO THE INCOME TAX. HOWEVER, THE PLEA OF THE ASSESSEE I S THAT THE SAME IS A CAPITAL RECEIPT IN THE HANDS OF THE ASSESSEE. ITA NO. 1307-C-18 SMT.JASWINDERJIT KAUR, LUDHIANA 4 5. BOTH THE LD. REPRESENTATIVES OF THE PARTIES HAVE FAIRLY AGREED THAT THE ISSUE IS NOW SQUARELY COVERED BY THE DECISION D ATED 28.11.2011 OF THE HON'BLE HIMACHAL PRADESH HIGH COURT IN THE CASE OF CIT VS H.P. HOUSING BOARD [2012] 18 TAXMANN.COM 129 (HP), WHE REIN, THE HON'BLE COURT HAS HELD THAT INTEREST PAID BY THE HOUSING BO ARD TO ITS ALLOTTEES ON AMOUNT DEPOSITED BY THEM ON ACCOUNT OF DELAYED ALL OTMENT OF FLATS IS NOT INTEREST WITHIN THE MEANING OF SECTION 2(28A) O F THE INCOME TAX ACT. THE HON'BLE HIGH COURT WHILE HOLDING SO OBSERV ED THAT IN THE SAID CASE, THE ALLOTTEES HAD NOT GIVEN THE MONEY TO THE BOARD BY WAY OF DEPOSIT, NOR HAD THE BOARD BORROWED THE AMOUNT FRO M THE ALLOTTEES. THE INTEREST WAS PAID ON ACCOUNT OF DAMAGES SUFFERED BY THE CLAIMANTS FOR DELAY IN COMPLETION OF THE FLATS AND THE SAME WOULD NOT FALL WITHIN THE DEFINITION OF INTEREST AS PROVIDED U/S 2(28A) OF T HE INCOME TAX ACT. IDENTICAL VIEW HAS BEEN TAKEN BY THE HON'BLE CALCU TTA HIGH COURT IN PRINCIPAL CIT, KOLTAKA VS WEST BENGAL HOUSING INFR ASTRUCTURE DEVELOPMENT CORPN LTD. [2018] 96 TAXMAN.COM 610 (C ALCULLA) ORDER DATED 9.8.2018. 6. THE FACTS OF THE PRESENT CASE ALSO REVEALS THAT WHAT HAS BEEN PAID BY THE BUILDER IS A COMPENSATION FOR ITS FAILURE TO CONSTRUCT AND HANDOVER THE POSSESSION OF THE FLATS WHICH THE ASSE SSEE HAD BOOKED WITH THEM. THE FACTS AND ISSUE INVOLVED ARE SQUARELY COV ERED BY THE AFORESAID DECISION OF THE HON'BLE HIMACHAL PRADESH HIGH COURT IN CIT VS H.P. HOUSING BOARD (SUPRA) AND OF HON'BLE CALCUTTA HIG H COURT IN ITA NO. 1307-C-18 SMT.JASWINDERJIT KAUR, LUDHIANA 5 PRINCIPAL CIT, KOLTAKA VS WEST BENGAL HOUSING INFR ASTRUCTURE DEVELOPMENT CORPN LTD. (SUPRA). IN VIEW OF THIS, THE ADDITION MADE BY THE LOWER AUTHORITIES ON THIS ISSUE IS HEREBY ORDER ED TO BE DELETED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HEREB Y ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.07.2019. SD/- SD/- ( . . / N.K. SAINI) ( / SANJAY GARG) !'# / VICE PRESIDENT $% / JUDICIAL MEMBER DATED : 11.07.2019 .. 1)%(2343( / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. %& !# / THE RESPONDENT 3. + 5( / CIT 4. + 5( ( )/ THE CIT(A) 5. 36 %(7 , - 7 , 89:; / DR, ITAT, CHANDIGARH 6. :< , / GUARD FILE 1 + / BY ORDER, = / ASSISTANT REGISTRAR