Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2024 Supreme(Online)(ITAT) 3735

INCOME TAX APPELLATE TRIBUNAL (HYDERABAD BENCH)
Shri Laliat Kumar, J, Shri Manjunatha G, ACJ
SARAT GOPAL BOPPANA HYDERABAD – Appellant
Versus
ACIT. CENTRAL CIRCLE-2(3) HYDERABAD – Respondent
Cross Appeals | ITA No.636/Hyd/2022 | ITA No.689/Hyd/2022 | ITA No.639/Hyd/2022 | ITA No.695/Hyd/2022 | ITA No.643/Hyd/2022 | ITA No.691/Hyd/2022 | ITA No.647/Hyd/2022 | ITA No.693/Hyd/2022

Advocates:
For the Appellants/Petitioners: P. Murali Mohan Rao
For the Respondents: Jeevan Lal Lavidia

The tax assessments must be based on concrete evidence rather than speculative figures or hypothetical compensation amounts, emphasizing the need for clarity in income recognition.

Headnote:(A) Income Tax Act, 1961 - Sections 139(1), 153A - Compensation for delayed delivery of commercial space - Appeals against orders by the CIT(A) on compensation of Rs.28 crores for delayed project delivery and subsequent assessments - CIT(A) incorrectly asserted additional income based on hypothetical compensation figures without substantiated evidence - Assessee entitled to compensation of land received, not assessed at inflated figures. (Paras 4, 11, 16)

(B) Jurisdiction of authorities - Assessments must be supported by substantive evidence, not hypothetical claims or past agreements without basis. (Paras 3, 10, 15)

Facts of the case:
This judgment arises from a consolidated set of appeals relating to compensation claimed by individuals for delayed project delivery based on development agreements, focusing on distinctions between amounts agreed in memorandums versus those assessed. Appellants contested additions made by the Assessing Officer regarding compensatory figures which lacked proper documentation.

Findings of Court:
The court concluded that the appellants had not received what was claimed in terms of monetary compensations and emphasized the need for clear evidential bases for income assessments.

Issues: The court addressed whether the appellants had received correct compensation and the sufficiency of evidence in evaluating claims for income tax purposes.

Ratio Decidendi: The rationale stressed the necessity of tangible support for compensatory claims and clarified that speculative figures cannot be substantively applied to taxation processes.

Result: Appeals allowed; additions for compensation deleted.

Table of Content
1. introduction to facts of the case and context of appeals. (Para 1 , 4 , 10)
2. common grounds of appeal raised by assessee and revenue. (Para 2 , 3)
3. court's assessment of the income tax provisions and agreement details. (Para 5 , 6 , 11)
4. counsel's arguments regarding the principles of compensation. (Para 12 , 14)
5. court's observations on the agreement terms and compensation arguments. (Para 13 , 15)
6. final order on the appeals and dismissals. (Para 16)
7. summary of dismissal of revenue's appeals. (Para 17 , 20 , 21)

ORDER

PER BENCH :

This bunch of eight appeals, four by different assessee’s and four by the Revenue, are directed against separate, but identical orders of the Commissioner of Income Tax (Appeals) – 12, Hyderabad all dated 20.09.2022 and pertains to A.Y. 2016-17. Since facts are identical and issues are common, for the sake of convenience, these appeals filed by the assessee’s and, as well as the Revenue are being heard together and are being disposed off, by this consolidated order.

2. The assessee’s have more or less filed common grounds of appeal in their respective grounds of appeals and therefore, for the sake of brevity, the grounds of appeal filed by the assessee in the case of Shri Sarat Gopal Boppana are reproduced as under :

“1. On the facts and in the circumstances of the case the order passed by the CIT(A) is erroneous both on facts and in law to the extent the order is prejudicial to the interest of the appellant.

2. The Ld.CIT(A) erred in allowing the appeal in part.

3. a) The Ld. CIT(A) ought to have appreciated that the compensation of Rs. 8 crores offered as Income from Other Sources in the Assessment year 2019-20 was in respect of Land received admeasuring 3156 sq. yds as per the Additional Supplemental Development Agreement dated 19-10-2015.

b) The Ld. CIT(A) erred in considering that there were two different compensations to be received by the appellant and his family members.

c) The Ld. CIT(A) ought to have appreciated that the assessee has transferred only the developmental rights at the time of entering Development agreement and not the ownership of the land and that the land admeasuring 3156 sq. yds which has been received subsequently as compensation from Block-E to the appellant does not amount to income of the appellant as the ownership of the land lies with the appellant.

d) The Ld. CIT(A) erred in directing the AO to obtain the SRO value of 3156 sq. yds of land in Block E of the project as on 19-10-2015 and the same on account of compensation.

e) The Ld. CIT(A) erred in directing the AO to obtain 1/4th of SRO value of land of 3156 sq. yds towards appellant's share of compensation and to bring the same to tax.

f) The Ld. CIT(A) ought to have deleted the addition of Rs.7,00,00,000/-.”

3. The Revenue also more or less has raised common grounds of appeal in all four appeals and therefore, for the sake of brevity, the grounds of appeal filed by the Revenue in the case of Shri Sarat Gopal Boppana are reproduced as under :

“1. The ld.CIT(A) erred both in law and on facts of the case in granting relief to the assessee.

2. The ld.CIT(A) erred in deleting the addition of Rs.7 Cr made towards compensation received by the assessee when it is clearly mentioned in para 30 of the Additional Supplementary Agreement dt.19.10.2015 entered into between the assessee and the developer that the assessee and his family members were entitled to receive compensation to the tune of Rs.28 crores.

3. The ld.CIT(A) ought to have appreciated that the FMV of the land of 3156 sq. yards was Rs.28 crore as the assessee and his family members received the said land in lieu of the compensation amount of Rs.28 crore for which they were entitled to as per the terms of the the Additional Supplementary Agreement dt.19.10.2015.”

ITA No.636/Hyd/2022 and ITA No.689/Hyd/2022 (SRI. SARAT GOPAL BOPPANA)

4. The brief facts of the extracted from the case of Shri Sarat Gopal Boppana in ITA No.636/Hyd/2022 are that, the ass

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