MAYANK KISHOR TEJURA, MUMBAI V. ITO WARD-19(2)(2), MUMBAI

ITA 3777/MUM/2023

• Counselvise Citation: [2024] 130 COUNSELVISE.COM (IT) 3425 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 06-03-2024
• Assessment Year: 2013-2014
• Appeal Filed On: 19-10-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHITA NAIR
• Assessee Lawyers: VIMAL PUNAMIYA
• Keywords: Capital receipt; Capital Gains
• Section: 143(3); 271(1)(c); 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘D‘ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI GAGAN GOYAL, ACCOUNTANT MEMBER ITA No.3777/Mum/2023 (Assessment Year :2013-14) Mayank Kishor Tejura 365-367, Tejura Chambers CP Road Grant Road Mumbai – 400 004 Vs. ITO Ward- 19(2)(2) Mumbai PAN/GIR No.AAAPT6282B (Appellant) .. (Respondent) Assessee by Shri Vimal Punamiya Revenue by Smt. Mahita Nair Date of Hearing 07/03/2024 Date of Pronouncement 11/03/2024 आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against order dated 25/08/2023 passed by NFAC, Delhi for the quantum of assessment passed u/s. 143(3) for the A.Y.2013-14. 2. In various grounds of appeal assessee has challenged taxing of compensation received by the assessee of Rs.75,00,000/- for vacating the flat under the head ‘income from ITA No. 3777/Mum/2023 Mayank Kishor Tejura 2 other sources’ instead of capital gain and thereby, denying the assessee’s claim for deduction u/s.54F. Alternatively, it has been submitted that compensation received for vacating and handing over the peaceful possession of the suit flat to be capital receipt. 3. The brief facts are that assessee received Rs.75,00,000/- from Overseas Impex Private Limited (hereinafter referred to as OIPL) for vacating the flat which he has occupied with his family members for over 40 years. The facts and the background of the entire issue have been explained before us in the following manner:- 1.Overseas Impex Pvt. Ltd (OIPL) was a tenant of a residential flat being Flat No. 15, 4th Floor, Park View Building, Little Gibbs Road, Malabar Hill, Mumbai - 400 006 since 1965. The Company had been the tenant by way of Leave and License agreement dated 1-5-1965 between Mr. Amrit Sagar Puri (Landlord) and the company (Tenant). 2. The original agreement between OIPL and Landlord was for a period of 5 years. However, at the end of agreement, OIPL refused to vacate the flat. Mr. Puri, the Landlord, filed a suit against OIPL. The Court ruled against the Landlord and held OIPL to be a deemed tenant of the residential flat The Landlord, thereafter, filed several suits against the earlier ruling i.e. suit Nos. 596/1632 of 1998 and Suit No. 827/1306 of 2003 to evict OIPL from the said premises. 3. As such, while the tenancy right of the flat was with OIPL, the flat was occupied by Late Shri Kishor Tejura (who was then a director of OIPL in 1965) along with his family & brother's & uncles as a joint family. Many of the occupants of the Tejura family moved on or passed away over the years including the late Shri Kishor Tejura. The present directors of OIPL ITA No. 3777/Mum/2023 Mayank Kishor Tejura 3 respectively Mr. Mayank Tejura and Mr. Rakesh Tejura were born & lived in the flat from childhood along with their parents, uncles & cousins whe were all occupying the said flat as joint family for a very long period of time since 1965. 4 During the pending status of the suits filed by Mr. Puri against the company, the company received offer from Mr. Puri for making out of court settlement and vacating the flat. Mr. Puri offered to pay monetary compensation to the company for having the flat vacated from its directors & family members residing in the flat & handing over peaceful & vacant possession of the same 5. However, Mr. Rakesh Tejura did not agree to vacate the premises. He, vide his letter dated 26-9-2011, addressed to the Chairman of the Company, Shri Mayank Tejura, expressed it clearly that he would not vacate the said premises unless he would be suitably compensated for giving up his occupancy rights thereof. The Chairman assured Shri Rakesh Tejura vide reply dated 12-10-2011 to resolve the issue in the best interests of the Company and its directors and family members. Copies of both these letters are enclosed herewith 6. In light of the above facts and situation, a Memorandum of Understanding (MOU) dated 16-1-2012 was entered into between Overseas Impex Pvt. Ltd. (OIPL), Mr. Mayank K. Tejura and Mr. Rakesh K. Tejura. A copy of the Memorandum of Understanding is enclosed herewith. Some of the relevant facts emerging from the MOU are as under.  The MOU recorded the fact that Mr. Mayank Tejura and Mr. Rakesh Tejura have been residing in the said flat since birth and continue to do so along with their family members. ITA No. 3777/Mum/2023 Mayank Kishor Tejura 4  The MOU further recorded the fact that the company had received an offer from Mr. Puri, the landlord. As per the offer the landlord is willing to pay a sum of Rs. 2,01,00,000/- with a view to get the vacant and peaceful possession of the said flat from OIPL, its directors and family members.  There was a difference in opinion between Company, Mr. Mayank Tejura and Mr. Rakesh Tejura which has been resolved by mediation efforts of well-wishers & family members. 7. As per the terms of the Memorandum of Understanding it was agreed as under:  Clause-1: Out of the amount of Rs. 2,01,00,000/- received from the landlord, the company OIPL will pay Rs. 75,00,000/- each to Mr. Mayank Tejura and Mr. Rakesh Tejura for vacating the said flat and seeking suitable alternative accommodation at their cost for themselves and members of their family presently residing at the said flat.  Clause-3: The payment of Rs. 1.50 crores as aforesaid shall be made to both the directors only after they alongwith all their family members have vacated the said Flat and taken away all their belongings, furniture/fixtures etc.  Clause-4: Mr. Mayank & Mr. Rakesh agree that in the above manner, they will be suitably compensated for their occupancy rights of the said flat and they will make no future claims/damages/compensation from OIPL and/or from any director/ shareholder thereof towards any right of occupancy or adverse possession & also that OIPL shall henceforth not be liable to provide any rental/lease/ alternative accommodation in lieu of the above compensation agreed upon and executed ITA No. 3777/Mum/2023 Mayank Kishor Tejura 5  Clause-6: Mr. Mayank & Mr. Rakesh agree to co-operate to all the terms as stated in the MOU on their behalf and also in their capacity as heads of family and as shareholders & directors of OIPL. They shall also co-operate with OIPL in its settlement taking place with Mr. Puri with regard to the said Flat and they alongwith their family members shall not evoke any possessory or occupancy rights in respect of the said flat. 8. On the basis of the Memorandum of Understanding dated 16-1-2012, the company proceeded with the offer received from the landlord Mr. Puri for giving effect to the proposal, the company OIPL passed a resolution at the meeting of the Board of Directors held on 4th April, 2012. Copy of the resolutions passed on 4th April 2012 is enclosed herewith. Vide the resolutions, the company recognized that it would be in the best interest of the company to enter into consent terms with Mr. Puri in the Eviction Suit. Further it was resolved to authorize the directors to file consent terms in the Eviction Suit pending before the Court of Small Causes at Bombay against the company and to carry out various necessary steps in this direction. One of the authorities given to the directors included the authority to handover quiet, vacant and peaceful possession of the Suit Premises to Mr. Puri in terms of the draft consent terms and give up all claims in relation thereto on or before the execution of the consent terms. 9. The company passed one more resolution at the meeting of equity shareholders held on 13th April, 2012 which is mentioned in para 19 of Court Decree. A copy of the said resolution is enclosed herewith. While passing the resolution, it was once again recorded that Mr. Mayank and Mr. Rakesh Tejura and their family members are presently occupying the suit flat and that they both will be paid Rs. 75 Lakhs each for ITA No. 3777/Mum/2023 Mayank Kishor Tejura 6 vacating the said flat and seeking suitable alternative accommodation of their own. Accordingly, the shareholders also recognized the fact of occupancy of the flat by Mr. Mayank Tejura and Mr. Rakesh Tejura alongwith their family members. The resolution was passed in the meeting authorizing the directors to carry out various steps in relation to filing of the consent terms in the Eviction Suit pending before the Court. Here also one of the authorities given included the authority to hand over quiet, vacant and peaceful possession of the Suit Premises to Mr. Puri in terms of draft consent terms and give up all claims in relation thereto on or before the execution of the consent terms. 10. On the basis of the resolutions passed by the Board of Directors and also the share- holders of the company, the Company finally entered into the Consent Terms with the landlord Mr. Puri. The Consent Terms were filed before the Court of Small Causes at Bombay on 10th May, 2012) A copy of the consent terms is enclosed herewith. Some of the relevant clauses of the consent terms are discussed hereunder: (a) As per Clause 3, the landlord had agreed to contribute a sum of Rs. 2,01,00,000/- towards purchase price in respect of the alternative premises that the company may acquire in lieu of the suit premises (b) As per Clause 6, it is expressly clarified that the landlord did not have any further obligation or responsibility to assist the company in acquiring alternative accommodation and the company had agreed that on receipt of Rs. 2,01,00,000/- from the landlord, the company had no further claims or demand of whatsoever nature against the landlord in respect of delivery of quiet, vacant and peaceful possession of the suit premises by the company to the landlord (c) As per Clause - 8, the company is required to vacate and hand over quiet, vacant and peaceful possession of the suit ITA No. 3777/Mum/2023 Mayank Kishor Tejura 7 premises to the landlord in the manner stipulated in the consent terms As such it is clear that the amount of Rs 2,01,00,000/-could not have been received by the company but for the vacant and peaceful possession of the flat which was hitherto occupied by Mr. Mayank and Mr. Rakesh Tejura (d) As per Clause - 10, the company had declared that the tenancy of the company in respect of the suit premises ite the flat together with the garage on the ground floor shall stand finally and irrevocably determined and extinguished and all the right (including the right of occupancy of the directors), title, interest claim or demand of whatsoever nature of the company in respect of the suit premises, whether contractual and/or otherwise under the provisions of law shall expire, stand determined and come to an end with the passing of a decree by the Court in terms of the consent terms On reading of this clause, it clearly emerges that all the rights of the company, whether contractual or otherwise, over the suit property had extinguished on entering the consent terms. It is natural that the tenancy rights of the company were subject to the occupancy rights of Mr. Mayank Tejura and Mr. Rakesh Tejura. Unless the occupancy rights of Mr. Mayank and Mr. Rakesh Tejura got extinguished, it was not possible for the company to surrender its tenancy rights to the landlord since both of them were having a clear occupancy rights over the said property as recorded time and again in various documents including the resolutions passed by the Board of Directors and the Shareholders of the company (e) As per Clause - 11, the Court Receiver appointed by the court shall permit Mr. Mayank Tejura and Mr. Rakesh Tejura and their family members to occupy the suit premises for a period of four months only for the sole purpose of enable ITA No. 3777/Mum/2023 Mayank Kishor Tejura 8 the defendant to acquire and shift to alternate accommodation alongwith removal of articles, furniture, fittings, fixtures, property of the said directors and their family members lying in the suit premises. Accordingly, the directors of the company had given undertaking to the court to deliver quiet, vacant and peaceful possession of the suit premises to the court receiver. On reading of this clause, it becomes absolute clear that the permission to occupy the premises for a further period of four months was given to acquire and shift to alternate accommodation with all the Aimiture and fixtures property etc belonging to the directors Le. Mr Mayank Tejura and Mr. Rakesh Tejurs. Further, it also emerges that both Mr. Mayank Tejura and Mr. Rakesh Tejura has given an undertaking in the court to deliver quiet, vacant and peaceful possession of the suit premises. As such, it is clear that the amount received by both Mr. Mayank and Mr. Rakesh Is for surrender of the right of occupancy of the flat which they have been occupying since birth. As per clause 16, it has been clarified that in the event of the company failing to hand over the possession of the suit premises to the landlord on the stipulated date under the consent terms, then the landlord shall be entitled to claim mesne profits from the company from the date of filing of the suit till the date of the consent terms and also the company shall forthwith return Rs. 2,01,00,000/- to the landlord On reading of this clause, it becomes clear that the possession of the property was essence of the contract. Not giving of the possession would have resulted in returning the entire amount of Rs. 2,01,00,000/- by the company and also mesne profits from the date of filing the suit to the date of consent terms. This establishes the significance of the handing over the possession by the company to the landlord. The right of occupancy was with Mr. Mayank and Mr. Rakesh Tejura and ITA No. 3777/Mum/2023 Mayank Kishor Tejura 9 accordingly the amount of Rs. 1.50 Crores paid to both the directors collectively is for surrender of their right of occupancy without any doubt. 11. In pursuance of the Consent terms before the court, the company OIPL received an amount Rs. 2,01,00,000/- from Mr. Puri, the landlord. As agreed in the MOU and also the resolution dated 13-4-2012 passed at the meeting of the shareholders of the company, the company paid Rs. 75 Lakhs each to both Mr. Mayank Tejura and Mr. Rakesh Tejura. The payment of these amounts was made on surrendering of the vacant and peaceful possession so as to enable the company to meet its commitment given in the consent terms and hand over the possession to the landlord The payment of Rs. 75 Lakhs each was made to Mr. Mayank Tejura and Mr. Rakesh Tejura on 8th December, 2012 after handing over of vacant and peaceful possession of the flat. Copies of the bank passbook of Mr. Mayank Tejura and Mr. Rakesh Tejura reflecting the entries for receipt of Rs. 75 Lakhs from OIPL are attached herewith. 12. Both Mr. Mayank and Mr. Rakesh deposited the amount of Rs. 75 Lakhs each in the Capital Gains Accounts Scheme Account with Union Bank of India Opera House Branch on 20- 9-2013 since they could not finalise the alternate residential house for them by that date. As such, the amount was deposited in the Capital Gain Account Scheme as required under the provisions of section 54F(4) of the Act. The copies of the receipts for the deposit made by the assessee are attached herewith. 13. Eventually on 30th July, 2014, Mr. Mayank Tejura and Mr. Rakesh Tejura purchased a residential flat, being Flat No. 9D, Lands End, 29D Doongersi Road, Mumbai 400 006 for the purpose of their residence. The total consideration for the flat is Rs. 9,25,65,000/-, which had been equally contributed by both Mr. Mayank Tejura and Mr. Rakesh Tejura. ITA No. 3777/Mum/2023 Mayank Kishor Tejura 10 14. While filing the Return of Income for A.Y. 2013-14, both the assessees have shown the amount of Rs. 75 Lakhs as Long Term Capital Osins arising on transfer of right of occupancy of the Flat No. 15, 4th Floor, Park Vi View Building, Little Gibbs Read, Malabar Hill, Mumbai-400 006. The transfer of right of occupancy arises on account of extinguishment of such right on account of the MOU signed collectively by the appellant and joint family members occupying the flat & subsequent consent terms agreed by the company OIPL with Mr. Puri, the landlord. Copies of Computation of Income of the appellants are enclosed herewith. 15. Since the cost of acquisition in the case of the appellant was NIL, the entire amount of Rs. 75 Lakhs had been reflected as Long Term Capital Gains. Further, the appellants claimed exemption under section 54F of the Act in respect of the Long Term Capital Gains on transfer of the right of occupancy by way of extinguishment of the said rights. 4. However, the ld. AO held that the amount of Rs.75,00,000/- is taxable in the hands of the assessee as ‘income from other sources’. The reason being that assessee has received this amount not on account of surrender of transfer of tenancy rights as assessee was never the sub-tenant of the said flat by virtue of any legal agreement or by payment of any rent to the tenant. The landlord had paid sum of Rs.2,01,00,000/- towards purchase price in respect of alternative terms that the company may acquire in lieu of suit premises. He has also reproduced relevant portion of the consent terms. (a) As per Clause 3, the landlord had agreed to contribute a sum of Rs. 2,01,00,000/- towards purchase price in respect of the ITA No. 3777/Mum/2023 Mayank Kishor Tejura 11 alternative premises that the company may acquire in lieu of the suit premises (b) As per Clause 6, it is expressly clarified that the landlord did not have any further obligation or responsibility to assist the company in acquiring alternative accommodation and the company had agreed that on receipt of Rs. 2,01,00,000/- from the landlord, the company had no further claims or demand of whatsoever nature against the landlord in respect of delivery of quiet, vacant and peaceful possession of the suit premises by the company to the landlord (c) As per Clause - 8, the company is required to vacate and hand over quiet, vacant and peaceful possession of the suit premises to the landlord in the manner stipulated in the consent terms. As such it is clear that the amount of Rs 2,01,00,000/- could not have been received by the company but for the vacant and peaceful possession of the flat which was hitherto occupied by Mr. Mayank and Mr. Rakesh Tejura (d) As per Clause - 10, the company had declared that the tenancy of the company in respect of the suit premises ite the flat together with the garage on the ground floor shall stand finally and irrevocably determined and extinguished and all the right (including the right of occupancy of the directors), title, interest claim or demand of whatsoever nature of the company in respect of the suit premises, whether contractual and/or otherwise under the provisions of law shall expire, stand ITA No. 3777/Mum/2023 Mayank Kishor Tejura 12 determined and come to an end with the passing of a decree by the Court in terms of the consent terms On reading of this clause, it clearly emerges that all the rights of the company, whether contractual or otherwise, over the suit property had extinguished on entering the consent terms. It is natural that the tenancy rights of the company were subject to the occupancy rights of Mr. Mayank Tejura and Mr. Rakesh Tejura. Unless the occupancy rights of Mr. Mayank and Mr. Rakesh Tejura got extinguished, it was not possible for the company to surrender its tenancy rights to the landlord since both of them were having a clear occupancy rights over the said property as recorded time and again in various documents including the resolutions passed by the Board of Directors and the Shareholders of the company (e) As per Clause - 11, the Court Receiver appointed by the court shall permit Mr. Mayank Tejura and Mr. Rakesh Tejura and their family members to occupy the suit premises for a period of four months only for the sole purpose of enable the defendant to acquire and shift to alternate accommodation alongwith removal of articles, furniture, fittings, fixtures, property of the said directors and their family members lying in the suit premises. Accordingly, the directors of the company had given undertaking to the court to deliver quiet, vacant and peaceful possession of the suit premises to the court receiver. ITA No. 3777/Mum/2023 Mayank Kishor Tejura 13 5. He further distinguished various judgments relied upon by the assessee and distinguished it on the facts of the present case. Finally, he taxed the amount after observing and holding as under:- “In short, in this case, OIPL is a tenant in the property for which it was paying rent to the landlord. OIPL, being the closely held company, decided to use the flat for the residence of its directors. There was no resolution before handing over this flat to the directors. The directors (ie, assessce and his brother) occupied the said premise only in the capacity of being the director of the company. The directors did not pay any rent to the company nor did the company show any such perquisite given to its directors. It was all on mutual basis. Thus throughout the tenancy period, only the company had a sole right of tenancy on the property, which resulted in an inflow of Rs. 2,01,00,000/- to the company from the landlord for surrendering its tenancy rights in the said property. However, as the assessee and his brother did not have any rights in the said property, they were not compensated separately. The assessee had received amount from his closely held company as compensation for alternate accommodation. Hence, this amount received by the assessee from his closely held company is not for transfer of any capital asset and cannot be classified as Capital Gain. The said amount cannot also be qualified as salary, House Property Income or Business Income. As such, the compensation received by the assessee has to be characterized as Income from Other Sources and taxed accordingly. As a result of this, the claim for exemption of the said income u/s. 54F does not arise at all. Penalty proceedings/u/s. 271(1)(c) is initiated for filing inaccurate particulars of income.” 6. The ld. CIT(A) too has confirmed the said addition made by the ld. AO. 7. Before us ld. Counsel submitted that here in this case, the right of occupancy of the flat is a valuable right and hence, a capital asset and without the right of the assessee company, ITA No. 3777/Mum/2023 Mayank Kishor Tejura 14 OIPL could not have proceeded with the consent terms unless and until the right of occupancy was released by the assessee and joint family members did occupied the flat with the assessee. Thus, without assessee vacating the flat, company would not have received the amount of Rs.2,01,00,000/-. After receiving the compensation the company had to pay to the Directors who were occupied the flat for more than 40 years. Thus, the amount which has been received by the assessee from OIPL is nothing but to surrender of valuable rights by way of possession of the flat from last 40 years and therefore, it is a transfer of a capital asset liable to be taxed under the head ‘capital gains’ because its extinguishment of rights result in capital gains. 7. On the other hand, ld. DR after relying to the various observations of the ld. AO and ld. CIT(A) submitted that once the OIPL was the tenant, the amount has been received by OIPL towards compensation and assessee was not a tenant and was living in the rented property of the company, then assessee does not have any right in form of capital asset and therefore, the amount has rightly been held not taxable in the head ‘capital gain’ and in fact it has to be taxed under the head ‘income from other sources’ being residual. 8. We have heard the rival submissions and perused the relevant materials placed on record and relevant findings given in the impugned order. It is not in dispute that the company OIPL was a tenant in the residential flat pursuance of leave and license agreement dated 01/05/1965 and thereafter, the ITA No. 3777/Mum/2023 Mayank Kishor Tejura 15 company continued to have the possession of the flat. For vacating the flat, a suit filed by the landlord against OIPL. The Court ruled against the Landlord and it was held that OIPL is a deemed tenant of the residential flat. Thereafter, various suits were filed by the landlord for eviction. Finally, consent terms were agreed into and out of Court settlement was made between landlord and OIPL for vacating the flat an in lieu thereof, a sum of Rs.2,01,00,000/- was paid to OIPL by the Landlord for vacating the flat. Now, the assessee is contending that, since assessee and his family members (directors in the OIPL) and were staying in the said flat rented by OIPL for more than 40 years and they had to vacate flat to find an alternative accommodation, therefore, the company had paid an amount of Rs.75,00,000/- to each of the Director. Thus, the compensation received from the company for vacating the flat is for the occupancy rights, that is, they will not evoke any possessory or occupancy rights in respect of the said flat and therefore, surrender of said rights amounts to capital asset. However, we are unable to agree with the contention raised by the assessee, because, as rightly held by the ld. AO, assessee was neither a sub-tenant nor there was any kind of sub-licensing of the property by the company to the assessee from his family members. Though assessee might have resided in the property taken on rent by the company but it does not translate into any right in the property in the name of the assessee. Assessee was occupying the property on behalf of the company which company had allowed them to stay. There is also nothing on record that a ITA No. 3777/Mum/2023 Mayank Kishor Tejura 16 separate consent between assessee and the landlord had also been agreed upon or assessee was part of the legal suit filed by the landlord. Further, it is also not on record the directors had paid any rent to the company nor did the company had shown any such perquisite given to its director. Thus, we agree, with the observation of the ld. AO to the extent that it is not chargeable to tax under the head ‘capital gain’ in the hands of the assessee, because only company had a sole right in the tenancy in the property and company alone can show the entire compensation amount as its income from Capital Gain from surrender of tenancy right. There is nothing on record to suggest that assessee had any kind of right in the said property for which they were to be compensated separately by the Landlord. 9. However, the amount of Rs.75,00,000/- received by the assessee cannot be taxed in the hands of the assessee for the reason that:  firstly, the amount has been received from the company out of its own income which was received in the form of compensation chargeable to tax under the head ‘capital gains’ entirely in the hand of the company and any amount given to the assessee out of such taxable income amounts to application of income by the company.  Secondly, the capital gains for the entire compensation received is taxable in the hands of the company OIPL and if any such amount paid to the assessee by the company is out of its income, which cannot be taxed as ‘income from other sources’ in the hands of the assessee. The reason being, the ITA No. 3777/Mum/2023 Mayank Kishor Tejura 17 amount has been received by the assessee from the company so that company can honour the consent term with the landlord for peaceful vacation of the flat and assessee had no role in the consent term.  Thirdly, the amount to be taxed in the hands of the assessee has to be in the nature of income which assessee had earned from company carrying out any activity or surrendering any right or asset in favour of the company which can be assessable under any head. Here the money has been received by the assessee from the company so that company can discharge its obligations; it has nothing to with the assessee. In the hands of the assessee it is purely a capital receipt which he has received from the company so that company can give undertaking to vacate the premises in the favour of the landlord for which company was paid compensation.  Lastly, If at all, the amount of entire compensation was taxable in the hands of the company which we find that it has offered as a capital gain in the return of income. However, it has claimed deduction for such payment made to the assessee. Such a claim is allowable or not the issue before us, because it is not a cost incurred on tenancy right albeit its application of income. Since, it is not the subject matter of issue before us therefore, we are refraining to go on this issue. ITA No. 3777/Mum/2023 Mayank Kishor Tejura 18 10. In so far as issue before is concerned, whether it is taxable in the hands of the assessee, we hold that, the amount received from the company is neither chargeable under the head ‘capital gains’ nor as income from other sources, albeit, it is a capital receipt in the hands of the assessee because the amount received from the company out of its own income, is an application of income by the company. The entire amount of compensation is capital gains in the hands of the company, which has been declared, albeit its computation and deduction is subject matter of examination there and since this not the issue before us so we refrain from any such adjudication. Thus on this ground, the addition made by the ld. AO is deleted. 11. In the result, appeal of the assessee is allowed in the manner indicated above. Order pronounced on 11 th March, 2024. Sd/- (GAGAN GOYAL) Sd/- (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 11/03/2024 KARUNA, sr.ps ITA No. 3777/Mum/2023 Mayank Kishor Tejura 19 Copy of the Order forwarded to : BY ORDER, (Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy//