INCOME TAX ACT, 1961

Section 14

Heads of income - Capital gains vis-a-vis Income from other sources - Assessee received amount because of handling over old flat for purpose of re-development -

Assessee was an individual. He offered long-term capital gain of Rs. 31,12,638, towards sale of residential flats and simultaneously claimed deduction under section 54. AO found that assessee owned a flat in housing society which was given for development under a scheme of re-development. As per terms of development agreement between housing society and members of the society, in addition to receiving a new residential flat after re-development each member was also entitled to receive an amount of Rs. 53,80,500. AO alleged that aforesaid amounts was not paid to assessee for acquisition of old flat, but was paid towards compensation and therefore, amount received was taxable as income from other sources. Held: It was clear that amount of Rs. 53,50,500 was received by assessee only because of handing over old flat for purpose of re-development. Therefore, amount received by assessee was integrally connected with the transfer of his old flat to developer for re-development in lieu of which he received the amount and a new residential flat. Therefore, the amount of Rs. 53,50,500, has to be treated as income under the head “Capital Gain”.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2011-12

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