ITA No.1514/AHD/2025

Parties Involved

Facts Summary

The Assessee filed a return of income for the Assessment Year 2015-16 on 25/09/2015 declaring total income of INR.36,56,600/-. The case of the Assessee was selected for regular scrutiny and assessment under Section 143(3) of the Act was framed vide Assessment Order, dated 29/12/2017. The Assessing Officer made the following additions/disallowances: (a) Addition of INR.1,44,68,144/- treating consideration of INR.1,50,00,000/- received on assignment of Court decree/Hukamnama as ‘Income from Other Sources’ instead of Long Term Capital Gain, after allowing expenses of INR.5,31,856/-; (b) Disallowance of INR.22,66,531/- claimed towards indexed cost of improvement; (c) Disallowance of deduction of INR.99,96,687/- claimed under Section 54F of the Act; (d) Addition of INR.44,80,805/- under Section 68 of the Act treating long term capital gains from sale of shares of M/s. Kappac Pharma Ltd. as unexplained income and denying exemption under Section 10(38) of the Act. Thus, the Assessing Officer determined the total assessed income of the Assessee at INR.2,26,05,550/-. The appeal preferred by the Assessee against the Assessment Order, dated 29/12/2017, was dismissed by the CIT(A) vide order dated 30/06/2025.…

Legal Issues

• 1. Ld. CIT(A)/(NFAC) erred in law and on facts in confirming addition of Rs. 1,44,68,144/- made by AO treating Rs. 1,50,00,000/- consideration received on assignment of decree as income from other sources and not giving rise to capital gain earned on transfer of a capital asset as claimed by the Assessee.
• 2. Ld. CIT(A)/(NFAC) erred in law and on facts to hold that 'Right to litigate is inherently a contingent right and not a right to ownership of immovable property to be construed as a capital asset which gives rise to capital gain on its assignment by a court decree.
• 3. Ld. CIT(A)/(NFAC) erred in law and on facts in not adjudicating alternate contention that cost of 'Right to litigate' not ascertainable and receipt being for damages cannot be taxable as held by Hon'ble Apex Court in CIT v B C Srinivas Shetty that there can be no capital gain when there is no cost.

Judgment Outcome

Decided in favour of Assessee.

Similar Judgements

• Kuppusamy Tharmaraj Pakkirisamy vs. The Income Tax Officer, Ward 1, Thiruvarur

  Chennai bench

• DCIT, Circle 4 (2), vs. Cyberwalk Tech Park Pvt. Ltd.

  Delhi Bench ‘B’ benchAY 2012-13Dismissed

• Anshu Dhawan vs. Income Tax Officer

  Delhi Bench 'A', New Delhi benchAY 2022-23Allowed

• Gaurav Dye House Vs. ITO

  Delhi 'E' Bench benchAY 2022-23Allowed

• Income Tax Officer, Ward-1, Panipat. Vs. Santosh Ahlawat

  Delhi Bench benchAY 2016-17Partly Allowed

• Pradipta Kumar Guha Vs. National Faceless Assessment Centre, New Delhi

  Delhi Bench benchAY 2017-18Allowed