The Tribunal held that the character of the compensation would not change merely on the ground that the development agreement, termination of agreement and the sale of the property happened in different financial years. It was because there were different parties involved in the transactions and the assessee had no control whatsoever on these parties. When the societies terminated the agreement with the assessee, it acquired the right to sue and for relinquishment of such right it received the compensation. \u00a0The compensation amount was not liable to be treated as income under section\u00a02(24)\u00a0nor was the amount taxable as capital gains or business income being in the nature of a capital receipt.\u00a0 Accordingly the amount of the compensation received by the assessee from the societies for relinquishment of its right to sue to avoid the litigation could not be treated as a colourable device. Hence, the amount received as compensation in view of the right was not chargeable to tax. Followed\u00a0 Popular Estate Management Ltd. v. ITO (I. T. A. No. 212\/Ahd\/2014 \u00a0dt .29 -8 -2017 \u00a0( AY.2012-13)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 4 : Charge of income-tax -Capital or revenue – Real estate development – Compensation for relinquishment of right to sue societies for breach of contract capital receipt not taxable as capital gains or business income [ S. 2(24) 28(i) , 45 ] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-14140","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-3G4","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/14140","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=14140"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/14140\/revisions"}],"predecessor-version":[{"id":14141,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/14140\/revisions\/14141"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=14140"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=14140"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=14140"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}