Compensation Received for Transferring Rights Along With Sale of Property to Be Taxed as Income from OS | ITAT
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- Last Updated on 17 January, 2024
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Case Details: Smt. Geetha Vasan v. ITO - [2024] 158 taxmann.com 345 (Chennai-Trib.)
Judiciary and Counsel Details
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- Mahavir Singh, Vice-President & Manjunatha. G, Accountant Member
- N. Arjunraj, CA for the Appellant.
- AR V Sreenivasan, Addl. CIT for the Respondent.
Facts of the Case
The assessee sold a property for Rs. 2.50 crores. During assessment, the Assessing Officer (AO) observed that the registered sale deed indicated a sale consideration of Rs. 1.04 crores involving the assessee and her husband. Additionally, the assessee paid Rs. 1.46 crores through a deed of nomination. The assessee asserted that the entire Rs. 2.50 crores constituted the sale consideration for the property transfer, qualifying for long-term capital gains.
AO held that the compensation received through the deed of nomination should be treated as income from other sources. Consequently, the income of the assessee was computed with the compensation amount of Rs. 1.46 crores assessed as income from other sources.
On appeal, the CIT(A) upheld the order of AO. The matter reached before the Tribunal.
ITAT Held
The Chennai Tribunal held that the sale deed, as evidenced by its registration and the pertinent clause, explicitly indicates a sale consideration of Rs. 1.04 crores between the sellers and the buyer. The deed involves a developer who is a consenting party to the transaction. Additionally, the assessee was a party involved in transferring accrued rights to both the first and second parties of the sale transaction.
Considering the sale deed and deed of nomination, the amount received by the assessee on account of compensation by way of deed of nomination amounting to Rs. 1.46 crores was compensation for transferring the rights accrued in favour of the first party, in favour of the second party. Hence, these cannot be assessed under head long-term capital gains.
Accordingly, it had rightly been assessed by AO and CIT(A) under the head ‘income from other sources’.
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