Income Tax Appellate Tribunal - Delhi
Late Sh. Sandeep Goyal, New Delhi vs Department Of Income Tax on 26 April, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH 'G' : NEW DELHI)
SHRI U.B.S. BEDI, JUDICIAL MEMBER
and
BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER
ITA No.2603/Del./2012
(ASSESSMENT YEAR : 2001-02)
ITO, Ward 31 (2), vs. Late Shri Sandeep Goyal,
New Delhi. (R/o 4, Babar Lane, New Delhi)
Through Legal Heir Smt. Sunita Gupta,
D - 119, Sector 40,
NOIDA - 201 303.
(PAN : AAFAG3353J)
(APPELLANT) (RESPONDENT)
ASSESSEE BY : None
REVENUE BY : Smt. Renuka Jain Gupta, Senior DR
ORDER
PER B.C. MEENA, ACCOUNTANT MEMBER :
This appeal filed by the revenue emanates from the order of the CIT (Appeals)-XXVI, New Delhi dated 26.04.2012 for the Assessment Year 2001-02.
2. The grounds of appeal read as under :-
"1. Whether in the facts and circumstances of the case, CIT (A) has erred in deleting the addition of Rs.18,48,790/- by treating the same as capital receipt as against income from house property treated by Assessing Officer?
2. Whether in the facts and circumstances of the case, CIT (A) has erred in treating assessee's share of receipts from ANZ 2 ITA No.2603/Del./2012 Grindlays bank who was tenant of assessee as mesne profit/damages not liable to tax when the same should be treated as income from house property?
3. The appellant craves leave to add, alter or amend any/all the grounds of appeal before or during the course of hearing of the appeal."
3. The brief facts of the case are as under :-
A sum of Rs.79.20 lacs was received by the co-owners, namely, Shri Jagdish Goyal, Shri Vinod Kumar Goyal, Shri Ashok Goyal and assessee Shri Sandeep Goyal from ANZ Grindlays Bank, Karol Bagh Branch, New Delhi in pursuant to a court order. It is claimed that the payments were in the nature of mesne profit/damages received from Bank tenant and such receipts were not liable to tax under the Income-tax Act, 1961.
4. We have heard the revenue. None present on behalf of the assessee.
The CIT (A) has granted the relief to the assessee by holding as under :-
"6. I have considered the submissions made on behalf of the appellant and facts on record. The issue under consideration was before the Hon'ble ITAT, Delhi Bench-I, new Delhi in the case of one of the other co owners namely Sh. Vinod Kumar Goyal (deceased). The Hon'ble ITAT in ITA no. 2696/De1/2004 relating to the A. Y. 2001-02 vide order dated 20.3.2009 has held as under:
"15. We have considered rival contentions of both the parties and have gone through the orders of the authorities below. We have also carefully pursued the various decisions cited at the Bar.
After considering the totality of the facts and circumstances of the case and the decisions cited at the bar, we are considered view that the issue involved in the present case is squarely 3 ITA No.2603/Del./2012 covered by the decision of Special Bench consisting of five members of ITAT, Mumbai Bench in the case of Narag Overseas Pvt. Ltd. Vs. ACIT (supra) where the Special Bench summarized the legal position as under:
"6.5. In view of the above discussion, the legal position is summarized below:
(1) That the Hon'ble Supreme Court in the case of P. Mariappa Gounder (supra) was not concerned with the issue whether the mesne profit received against the wrongful possession of the property is in the nature of revenue receipt or capital receipt. The only issue before the Court related to the year of taxability. Hence, it cannot be said that the Hon'ble Supreme Court adjudicated upon the issue relating to the nature and character of the receipt by way of mesne profits.
(2) That the amount received against wrongful possession of the property amounts to mesne profits whether determined by the court or under a consent decree within the ambit of section 2(12) of the Code of Civil Procedure, 1908.
(3) There is a difference of opinion amongst various High Courts on the issue relating to nature and 'character of the mesne profits. Therefore, following various judgments of the Hon'ble Supreme Court mentioned in Paragraph No. 48, it is held that the mesne profits constitute capital receipt not chargeable to tax.))
17. In the above referred case of Narang Overseas Pvt. Ltd.
vs. ACIT (supra) decided by die larger special bench of ITA T, Mumbai Bench, the bench has also taken a view that the decision of the Special Bench of the Tribunal in the case of Sushil Kumar and Company (supra) holding to die extent that mesne profit is taxable a revenue receipt is overruled.
18. About the difference of opinion amongst various High Courts on die issue relating to nature and character of die mesne profit, die larger special bench in the case of Narang Overseas Pvt. Ltd. vs. ACIT (supra) has observed as under-
48. The above analysis clearly reveals that there is cleavage of opinion between the High Court. The Hon'ble Madras High 4 ITA No.2603/Del./2012 Court has held that mesne profits is recompense for depreviation of income which the owner would have enjoyed but for the interference of the persons in wrongful possession of the property. Consequently, the same is revenue receipt chargeable to tax. On the other hand the Hon'ble High Courts of Andhra Pradesh, Calcutta, Kerala and Patna have held that mesne profit is in the nature of damages for deprivation for use and occupation of the property and therefore capital receipt not chargeable to tax. There is no judgment of the jurisdictional High Court on this issue. In our view, such conflict can be resolved only by the Hon'ble Supreme Court in some appropriate case. In the absence of the judgment of the highest of land or of the jurisdictional High Court, the legal position is that where there are two views then the view favourable to the subject should be preferred. Reference can be made to various judgments of the Apex Court: CIT v. Vegetable Product Ltd. [1973J 88 ITR 192. CIT v. Naga Hills Tea Co. Ltd. [1973J 89 ITR 236, CIT v. Madho Prasad fatia [1976J 105 ITR 179, CIT v. J.K Hosiery Factory [1986J 159 ITR 85, Smt. Shashi Gupta v. LIC of India [1995J 84 Compo Cas. 436, therefore, following the same, it has to be held that mesne profit received fro deprivation of use and occupation of property would be capital receipt not chargeable to tax. We hold accordingly. Consequently, the decision of the Special Bench of the Tribunal in the case of Sushil kumar & Co. (supra), holding to the extent that mesne profit is taxable as revenue receipt is over-ruled. "
19. No decision of jurisdictional High Court directly on die issue involved in the present appeal has been brought to our notice. The decision of jurisdictional; Delhi High Court in die case of Pal Properties (India) Pvt. Ltd. vs. CIT (supra) was not concerned with die issue whether the mesne profit received against the wrongful possession of die property is in the nature of revenue receipt or capital receipt. The Hon'ble Delhi High Court has not expressed their view on merits whether the amount received by die assessee by an order of the court would not be taxable as claimed by the assessee.
20. Maintaining judicial discipline, we, therefore, respectfully follow the decision of larger Special Bench of the Tribunal in the case of Narang Overseas Pvt. Ltd. Vs. ACIT (supra) and, thus, we uphold the order of ld. CIT(AJ who has taken a view 5 ITA No.2603/Del./2012 that the assessee's share of mesne profit is a capital receipt and, therefore, not taxable. Thus, this issue is decided in favour of the assessee and against the revenue.
7. Since the appellant in this case is one of the co owners, respectfully following the above decision of the Hon'ble ITAT in the case of Sh. Vinod Kumar Goyal, another co owner (Supra) I hold that the appellant's share of mesne profit/damages aggregating to RS.18,48,792/- is a capital receipt and therefore is not subjected to tax, Accordingly the action of the Assessing Officer in assessing the appellant's share of mesne profit/ damages as income from house property is unjustified as the nature of the receipt does not change in the hands of the appellant. Therefore, the addition made by the AO is hereby deleted and the issue is decided in favour of the appellant.
Since the relief has been granted by the Coordinate Bench of the ITAT in the case of co-owner Shri Vinod Kumar Goyal and the CIT(A) has granted the relief on that basis and the facts being the same in the present case also, we have no alternate but to follow the order of the coordinate Bench of the ITAT in the case of the co-owners. The facts are same. In view of this matter, respectfully following the decision of coordinate Bench of the ITAT in the case of Shri Vinod Kumar Goyal, one of the co-owners, we do not find any merit in the appeal of the revenue and the same is dismissed.
5. In the result, the appeal of the revenue stands dismissed.
Order pronounced in open court on this 5th day of April, 2013.
Sd/- sd/-
(U.B.S. BEDI) (B.C. MEENA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated the 5th day of April, 2013/TS
6 ITA No.2603/Del./2012
Copy forwarded to:
1.Appellant
2.Respondent
3.CIT
4.CIT(A)-XXVI, New Delhi.
5.CIT(ITAT), New Delhi. AR, ITAT
NEW DELHI.