No capital gains tax on income from waiver of rights: ITAT

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Waiver - capital gains tax - ITAT - Taxscan

The Income Tax Appeals Tribunal (ITAT), Mumbai, ruled that income from surrender of the right to a property cannot be treated as a “capital gain” for tax purposes. collection of income tax.

Smt. SaraswatiVithaldasSahita occupied an apartment on the 2nd floor of the building known as Gangasagar on the basis of a license. She has two sons, namely Shri Vidyut Sahita and Shri Mohit Sahita. The appellant is the daughter-in-law of Ms. SaraswatiVithaldasSahita. After the death of Ms SaraswatiVithaldasSahita, her son Shri Vidyut Sahita occupied said apartment with his family. Said Gangasagar building was purchased by M / s HM Enterprises. For leaving the scene, M / s HM Enterprises filed a complaint against the occupant of the Gangasagar building. A friendly settlement was reached so that the occupier could not interfere with the possession of M / s HM Enterprises. The appellant being the daughter-in-law of Smt. SaraswatiVithaldasSahita received 25,000,000 rupees for not interfering in the possessions of M / s HM Enterprises.

The appraiser treated the amount received as a capital gain and claimed tax as such. On appeal, the first appeal authority confirmed the order.

The court found that in the lawsuit, the defendants declared and confirmed to the Mumbai Small Cases Court that they had created no right, title or interest or had separated from possession of the trial premises in favor of ‘someone else.

The Court struck down orders from lower authorities on the basis of precedents in which compensation received for waiver of occupancy / possession rights was considered to fall outside the scope of appreciation.

Granting relief to the person assessed, the Tribunal observed that “the distillation of precedent must now be applied to the facts of this case. We are of the opinion that the ratio established in the decisions referred to in paragraphs 7 and 7.3 above is applicable in the present case. Following the same, we set aside the order of Ld. CIT (A). ”

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