IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, DELHI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER &

SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No. 2841/Del/2023 (Assessment Year:2016-17)

(Assessment Year:2016-17)

(Assessment Year:2016-17)

(Assessment Year:2016-17)

(Assessment Year:2016-17)

(Assessment Year:2016-17)

(Assessment Year:2016-17)

Appellant by : Sh. Guarav Singhal, Adv.

Respondent by : Sh. Ajay Kumar Arora, Sr. DR Date of Hearing 03.11.2025 Date of Pronouncement 16.01.2026 O R D E R PER ANUBHAV SHARMA, JM:

This appeal is preferred by the assessee against the order dated

10.08.2023 of the Ld. National Faceless Appeal Centre (NFAC) (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in DIN &Order No : ITBA/NFAC/S/250/2023-24/1055036940(1) arising out of the order dated 28.12.2018 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the AO, Circle 52(1) for AY: 2016-

17.

2. Heard and perused the record and as admitted fact it comes up that during the financial year the appellant owned several immovable properties one of which A-5, Friends Colony, New Delhi was leased out by the assessee to State Bank of India since 2001 till 15.11.2005 and thereafter tenancy was extended till July 2010. Lessee, SBI however, continued to occupy the property for which assessee filed a suit for possession and also sought relief of mesne profits for wrongful possession. The case of the assessee is that Hon’ble Delhi High Court hearing the suit of assessee granted interim relief to the assessee vide order dated 27.09.2013 & 19.09.2014. Thereafter on 08.04.2015 Hon’ble High Court provided final relief to the assessee and directed lessee SBI to vacate the property and pay a mesne profit of INR.2,92,00,000/- to the assessee for the period 01.08.2010 to 30.09.2015. During the Assessment Year 2016-17 the assessee received Rs.1,62,40,000/- as part of the mesne profits and remaining amount was received in earlier years. In the revised return filed by the assessee the aforesaid amount of mesne profits was claimed as non-taxable income, however, Assessing Officer made an addition of same observing that the mesne profit is received in lieu of deprivation of potential income and thus chargeable to tax and revenue receipts and this has been sustained by the CIT(A).

3. The ld. Counsel has relied the decision of Mumbai Tribunal in the case of ACIT Vs. Amrut Enterprises in ITA No. 1215/Mum/2020 and reliance in this regard was also placed on the decision in the case of Col. Jaspal Singh Vs. ITO in ITA No. 6321/Del/2016 and of Hon’ble High Court of Andhra Pradesh in the case of CIT Vs. J.D. Italia [1983] 12 Taxman 60 (AP) and Hon’ble High Court of Kerala in the case of CIT Vs. Mrs. Annamma Alexander (1991) 58 Taxman 47 (Kerala) and Hon’ble High Court of Calcutta in the case of CIT Vs. Smt. Lila Ghosh (1993) 71 Taxman 72 (Calcutta)to contended that in similar facts and circumstances Coordinate Bench at Mumbai and other Hon’ble non-jurisdictional high courts have held that mesne profit is a capital receipts not chargeable to tax. It was submitted that mesne profit is compensation for deprivation of use of occupation of property and not for deprivation of potential income as for this reliance was placed on the Hon’ble Supreme Court decisions i.eNazir Mohamed V. J. Kamala AndOrs. (Civil Appeal Nos. 2843-2844 of 2010 & Lucy Kochuvareed V. P. Mariappa Gounder (1979) 3 Supreme Court Cases 150 and Nawab Sir Mir Osman Ali Khan V. CIT (1986) 28 Taxman 641 (SC). It was submitted that tax authorities have fallen error in considering the mesne profit as an income as the mesne profit was computed on the basis of rental value. It was submitted that manner of determination of amounts of mesne profit cannot determine the nature of its taxability. Further ld. Counsel has submitted that tax authorities had relied case law which are distinguishable and in the written submissions filed by ld. AR following distinguishing facts w