[2019] 109 taxmann.com 398 (Kolkata – Trib.)

INCOME TAX: Where in terms of arbitral award assessee received certain amount as damages from tenant for unauthorized occupation of let out property, amount so received being in nature of ‘mesne profit’ was a capital receipt, not liable to tax

Section 4, read with section 22, of the Income-tax Act, 1961 – Income – Chargeable as (Mesne profits) – Assessment year 2010-11 – Assessee owned a property which was given on sub-lease to PSIDC – PSIDC did not vacate premises after determination of sublease – Matter was thus referred to arbitrator who passed an award in terms of which assessee received damages for unauthorised occupation of property by PSIDC – Assessing Officer held that amount so received was nothing but unrealized rent and should be taxed as ‘income from house property’ – Whether on facts, damages received by assessee were in nature of mesne profits which were not chargeable to tax being in nature of a capital receipt – Held, yes – Whether, therefore, impugned order passed by Assessing Officer was to be set aside – Held, yes

Talwar Bro. (P.) Ltd.