Tax needs to be paid even on property encroached upon illegally as it would be considered as 'income from other sources', though it would not be considered as 'capital asset', as per a tribunal ruling.

A Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that property illegally encroached by an assessee cannot be considered 'capital asset' under section 2 (14) of Income Tax Act, and consequently gains arising from transfer of such property cannot be assessed as capital gains, but as income from other sources.