CIT, FARIDABAD V. DHANI RAM (HUF)

ITA/809/2008

AI Insights

The case involves appeals by the Commissioner of Income Tax, Faridabad against the orders of the Income Tax Appellate Tribunal, which had favored the respondents, Sh. Dhani Ram and Sh. Kartar Singh, HUFs, in matters concerning the assessment of interest on enhanced compensation received from HUDA. The core legal issue was whether the interest on enhanced compensation should be assessed on an accrual basis from year to year, and if such interest could be considered for assessment only after it was finally determined. The High Court of Punjab and Haryana decided to remand the matter back to the Tribunal for a fresh adjudication, referencing several subsequent decisions that may have influenced the interpretation of the relevant tax provisions.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 720541 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 05-08-2014
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax v. Shri Prem Singh, Commissioner of Income Tax, Faridabad v. Karambir Singh L/H of Late Shri Khushi Ram, Commissioner of Income Tax, Faridabad v. Bir Singh (HUF) Ballabgarh, Commissioner of Income Tax, Panchkula v. Prem Singh, Manjeet Singh (HUF) Karta Manjeet Singh v. Union of India and others
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: RAVI SHANKER; RAJIV SHARMA
• Assessee Lawyers: YOGESH PUTNEY
• Keywords: Accrual basis; Enhanced compensation; Haryana Urban Development Authority; Income tax appellate tribunal; Interest assessment
• Section: 148; 143(3); 260A

Judgement Text

"ITA No. 809 of 2008 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 809 of 2008 Date of Decision: 5.8.2014 Commissioner of Income Tax, Faridabad ....Appellant. Versus Sh. Dhani Ram, HUF through LRs ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. HON'BLE MR. JUSTICE FATEH DEEP SINGH. PRESENT: Mr. Yogesh Putney, Advocate for the appellant. Mr. Ravi Shanker, Advocate for the respondent, (in ITA No. 809 of 2008). Mr. Rajiv Sharma, Advocate for Mr. S.K. Mukhi, Advocate for the respondent, (in ITA No. 2 of 2009). AJAY KUMAR MITTAL, J. 1. This order shall dispose of ITA Nos. 809 of 2008 and 2 of 2009 as according to the learned counsel for the parties, the legal issue involved therein is identical. For brevity, the facts are being extracted from ITA No. 809 of 2008. 2. This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 14.3.2008 (Annexure A-III) passed by the Income Tax Appellate Tribunal, Delhi Bench “E”, New Delhi (hereinafter referred to as “the Tribunal”) in ITA No. 4667/DEL/03 for the assessment year 1997- 98, claiming the following substantial question of law:- GURBACHAN SINGH 2014.10.01 14:22 I attest to the accuracy and authenticity of this document High Court Chandigarh ITA No. 809 of 2008 -2- “Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was right in law in holding that interest is to be assessed on an accrual basis from year to year and a question of assessment of such interest on accrual basis would not arise unless it is finally determined?” 3. The agricultural land of the assessee located in village Sukhrali was acquired by the Haryana Urban Development Authority (HUDA) and interest on the enhanced compensation amounting to ` 37,53,774/- was received by the assessee on 26.10.1996. However, the assessee had not filed return for the assessment year 1997-98 voluntarily. A notice under Section 148 of the Act was issued on 24.3.1999 for the assessment year in question. The return of income was filed on 1.3.2001 declaring income of ` 5908/- as interest from the Bank and ` 76,000/- as agricultural income. The assessee had not declared the interest on the enhanced compensation on the ground that the interest amount on enhanced compensation received from HUDA had not accrued to him during the year. Accordingly, the Assessing Officer vide order dated 31.1.2003 (Annexure A-I) framed assessment under Section 143(3) of the Act at a total income of ` 38,30,170/-. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [for brevity “the CIT(A)”] who vide order dated 11.8.2003 (Annexure A-II) confirmed the addition made by the Assessing Officer and dismissed the appeal. Still not satisfied, the assessee filed an appeal before the Tribunal. The Tribunal vide order dated 14.3.2008 (Annexure A-III) allowed the appeal and deleted the addition made by the Assessing Officer and confirmed by the CIT(A). GURBACHAN SINGH 2014.10.01 14:22 I attest to the accuracy and authenticity of this document High Court Chandigarh ITA No. 809 of 2008 -3- Hence, the present appeal. 4. We have heard learned counsel for the parties. 5. It is agreed between the learned counsel for the parties that in view of the subsequent decisions of this Court in Commissioner of Income Tax v. Shri Prem Singh, ITA No. 85 of 2010, decided on 5.7.2010, Commissioner of Income Tax, Faridabad v. Karambir Singh L/H of Late Shri Khushi Ram, ITA No. 283 of 2006, decided on 24.8.2010, Commissioner of Income Tax, Faridabad v. Bir Singh (HUF) Ballabgarh, ITA No. 209 of 2004, decided on 27.10.2010, CM Nos. 27928-29-CII of 2010 in ITA No. 85 of 2010 (Commissioner of Income Tax, Panchkula v. Prem Singh, decided on 16.12.2010 and Manjeet Singh (HUF) Karta Manjeet Singh v. Union of India and others, CWP No. 15506 of 2013, decided on 14.1.2014, the matter is required to be remanded to the Tribunal to adjudicate the issue afresh in accordance with law. 6. Accordingly, the appeals are allowed and the orders passed by the Tribunal in both the appeals are set aside and the matters are remitted to the Tribunal to decide afresh in accordance with law after affording an opportunity of hearing to the respective parties. (AJAY KUMAR MITTAL) JUDGE August 5, 2014 (FATEH DEEP SINGH) gbs JUDGE GURBACHAN SINGH 2014.10.01 14:22 I attest to the accuracy and authenticity of this document High Court Chandigarh ITA No. 809 of 2008 -4- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 2 of 2009 Date of Decision: 5.8.2014 Commissioner of Income Tax, Faridabad ....Appellant. Versus Sh. Kartar Singh, HUF through LRs ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. HON'BLE MR. JUSTICE FATEH DEEP SINGH. PRESENT: Mr. Yogesh Putney, Advocate for the appellant. Mr. Rajiv Sharma, Advocate for Mr. S.K. Mukhi, Advocate for the respondent. AJAY KUMAR MITTAL, J. For orders, see ITA No. 809 of 2008 (Commissioner of Income Tax, Faridabad v. Sh. Dhani Ram, HUF through LRs). (AJAY KUMAR MITTAL) JUDGE August 5, 2014 (FATEH DEEP SINGH) gbs JUDGE GURBACHAN SINGH 2014.10.01 14:22 I attest to the accuracy and authenticity of this document High Court Chandigarh "