Assessee had made an advance payment towards allotment of flats around 4 years ago. Due to some

legal issues, the builder could not construct the flats and so a compensation amount was paid by

the builder to assessee for surrendering his rights in the proposed flats. Assessee’s claim under section

54 against investing this compensation amount in a new residential property was allowed by ITAT.

Revenue’s stand that such receipt of compensation was an income from other sources was rejected by the ITAT.