Dhiraj Bhai,

First of all, u r rite that Capital gain cannot be applied, we all agree to it.........

Yes u r rite wen u say that a receipt of capital nature cannot be taxed as "income from other souces"

Sale receipts prior to commencement of business - Where the assessee’s business has not commenced, amounts realised by assessee by sale of tender forms and empty bags would be capital receipts and cannot be brought to tax in the assessee’s hands as ‘income from other sources’ - CIT v. Rassi Cement Ltd. [1998] 232 ITR 554 (AP).

Mr.Dhiraj

According to me, Mr.Amir and Mr.G.K. is right........

I don't think that it should be treated as casual income...it is a receipt of capital in nature.....so cannot be brought to tax in the hands of assessee......

Here is something more dhriaj bhai....

"There is no dispute that a tenancy right is a capital asset the surrender of which would attract section 45 or that the value received would be a capital receipt and assessable if at all only under item E of section 14. That being so, it cannot be treated as a casual or non-recurring receipt under section 10(3) and be subjected to tax under section 56. The argument of the appellant that even if the income cannot be chargeable under Section 45, because of the inapplicability of the computation provided under Section 48 it could still impose tax under the residuary head is thus unacceptable. If the income cannot be taxed under Section 45 it cannot be taxed at all [S. G. Mercantile Corporation (P) Ltd vs CIT (1972 83 ITR 700 SC)].

Just to add, this why  the section 55 was amended to say that the cost of tenancy right is NIL.

"Furthermore, it would be illogical and against the language of Section 56 to hold that everything that is exempted from capital gains by the statute could be taxed as a casual or non-recurring receipt under Section 10(3) read with Section 56. We are fortified in our view by a similar argument being rejected inNalinikant Amabalal Mody vs SAL Narayan Row — 1966 61 ITR 428 SC 432, 435."

Source  - https://www.thehindubusinessline.com/2005/07/23/stories/2005072300771100.htm

Hi All,

- According to under section 56(2) it is given that “ANY INCOME FROM LAND will be taxable under the head INCOME FROM OTHER SOURCES”.

- Therefore, this income should be taxable under the head of Income From Other Sources.

- However, one another point is given in the question that this income is once only, but because income is not related with [transfer or contract of transfer of(Sec 45(1))] capital asset, therefore should not be taxable under capital gain.

- And about the CASUAL INCOME (Sec 56(2)(iii)): This casual income is related to Income from lotteries, Horse Races, Gambling, Any TV shows etc., and Rs. 5,000 is the limit for TDS deduction only, it means until casual income is not exceeding Rs. 5,000(except horse races, where limit is Rs. 2,500) there will not be any TDS deduction.

Regards!!!

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It Is to be treated as income from other sources as no transfer takes places.

It should be Income from Other Sources.

Originally posted by : G.K..
	Here is something more dhriaj bhai....   "There is no dispute that a tenancy right is a capital asset the surrender of which would attract section 45 or that the value received would be a capital receipt and assessable if at all only under item E of section 14. That being so, it cannot be treated as a casual or non-recurring receipt under section 10(3) and be subjected to tax under section 56. The argument of the appellant that even if the income cannot be chargeable under Section 45, because of the inapplicability of the computation provided under Section 48 it could still impose tax under the residuary head is thus unacceptable. If the income cannot be taxed under Section 45 it cannot be taxed at all [S. G. Mercantile Corporation (P) Ltd vs CIT (1972 83 ITR 700 SC)].   Just to add, this why  the section 55 was amended to say that the cost of tenancy right is NIL.   "Furthermore, it would be illogical and against the language of Section 56 to hold that everything that is exempted from capital gains by the statute could be taxed as a casual or non-recurring receipt under Section 10(3) read with Section 56. We are fortified in our view by a similar argument being rejected inNalinikant Amabalal Mody vs SAL Narayan Row — 1966 61 ITR 428 SC 432, 435."   Source  - https://www.thehindubusinessline.com/2005/07/23/stories/2005072300771100.htm

Corrrect judgement has been posted by G.K. and  dhiraj u can't say that every income which cannot be taxed under other heads will be taxed under income from other sources by treating it as casual income.

Like for e.g

If i sell my T.V  for 10,000 . COA - 7500. now this 2500 will not be taxed anywhere.

As per me this income is a an capital receipt and will not be taxed anywhere.

It should be treated as income from Other sources because neither Capital asset land is  sold so its should be treated as from other sources.

It should be treated as income from Other sources because neither Capital asset land is  sold so its should be treated as from other sources.

I dont know y all this discussion is led so far...

I've already given all justifications in first page that its INCOME FROM OTHER SOURCES only.....

No need of further discussion...

Hi mayank,

correctly said by you regarding personal effects......

Dear Dhiraj, you have said something on first page, but its not proven bhai.....

I am telling you a story.. you are free to yawn off at any point, or listen to the end...

There are many cases where we cannot charge capital gains cos we simply cannot determine COST OF ACQUISITION... Amendments have come swooping one after the other to say that "the cost f this shall be determined thus", or "the cost of such and such is nil"........ most of these amendments came cos, where the mechanism of sec 45 and 48 fails, it cannot be charged as IFOS..... That is the gist of these judgements

For eg: Cost of goodwill.. how to determine.... did my employee's smile add value to customers and enhance my goodwill? Was it the nice set up that i have which created my goodwill? I dont know, the assessee said, and AO was told that unless cost can be determined there cannot be assessment cos the mechanism fails.. so legislature changed sec 55 and said it is nil... so we tax it as capital gains now that there is a mechanism....

To determine income, we need to consider the benefit lost as well, not just the benefit gained.... it is the net of these, which constitutes income.... That is the principle in sec 57 as well.

Here can we find what is the benefit lost by the person? What has he foregone, what has he gained?Over how many assessment years is he gaining or losing his benefits? Hence, what constitutes his income, when?

How can IFOS be computed in such a case?

Hence dhiraj bhai, capital receipt not chargeable to tax......

Mr.Dhiraj.....

The point of arguement of Mr.G.K. is excellent.....i think you will be clear know....

not other source income only capital receipt not chargeable to tax....

Hi,

From my point of view it is a capital receipt that is Misc. in nature.

it should not be taxable,as some of the other persons pointed it out correctly.

by no means that is a casual income

or may be it can be taken as agricultural income since the amount is paid in compensation to his agricultural activities in that land.