New Delhi, Sept. 24 -- For tenants living in old housing societies, redevelopment can sometimes mean surrendering existing tenancy rights in exchange for new accommodation. In one such case, a resident of Matunga, Mumbai, got two flats in lieu of surrendering his tenancy rights in a housing society, but subsequently received a tax notice.

This case concerns Manoj Devshi Chhadva, who was renting four shops in a Mumbai housing society. When the society decided to redevelop the property, the builder entered into a permanent alternate accommodation agreement with Chhadva. Under the agreement, he received two flats in the redeveloped building, valued at Rs.1.38 crore, in exchange for surrendering his tenancy rights.

However, the income tax a...