COMMISSIONER OF INCOME TAX V. PANDIT SHANTI SARUP

ITA/275/2008

AI Insights

The case involves the Commissioner of Income Tax, Hisar, as the appellant, and Pandit Shanti Sarup as the respondent, concerning the taxation of interest on enhanced compensation for various assessment years from 1987-88 to 1994-95. The core issue was whether the interest on enhanced compensation should be taxed on an accrual basis before the final resolution of disputes related to the enhanced compensation itself. The Income Tax Appellate Tribunal had previously ruled that such interest should only be taxed after the litigation concerning the enhanced compensation reaches a final decision. The High Court's decision referenced and followed the precedents set by the Supreme Court and its own earlier judgments, affirming the Tribunal's decision.

• Counselvise Citation: [2008] 140 COUNSELVISE.COM (IT) 684363 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 03-07-2008
• Assessment Year: misc
• Other Referred Cases: CIT Vs. Rama Bai (181 ITR 400), CIT, Faridabad Vs. Naresh Kumar, CIT, Faridabad Vs. Dilbagh Singh, The Commissioner of Income tax, Faridabad versus Shri Hardwari Lal
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: SANJEEV KAUSHIK
• Keywords: Enhanced compensation; Finality of Litigation; Interest Accrual; Tax liability
• Section: 260-A

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A.s No. 275 to 281 of 2008 DATE OF DECISION : 03.07.2008 Commissioner of Income Tax, Hisar .... APPELLANT Versus Pandit Shanti Sarup ..... RESPONDENT CORAM :- HON'BLE MR. JUSTICE SATISH KUMAR MITTAL HON'BLE MR. JUSTICE RAKESH KUMAR GARG Present: Mr. Sanjeev Kaushik, Advocate, for the appellant-revenue. * * * SATISH KUMAR MITTAL , J. ( Oral ) The revenue has filed these 7 appeals under Section 260-A of the Income Tax Act, 1961, pertaining to 7 different assessment years i.e. from 1987-88 to 1993-94, challenging the order dated 30.4.2007, passed by the Income Tax Appellate Tribunal, Chandigarh Bench `B' Chandigarh, whereby vide a consolidated order, 8 appeals pertaining to 8 different assessment years i.e. from 1987-88 to 1994-95 have been disposed of. In all these appeals, the following substantial questions of law have been raised for consideration of this Court : “(i) Whether on the facts and in the circumstances of the case, the ITAT is right in holding that interest on enhanced ITA No. 275 of 2008 -2- compensation will not accrue and not be liable to tax till the time the dispute relating to interest payable on enhanced compensation is pending before a Court of law and not attained finality ? (ii) Whether on the facts and circumstances of the case, the ITAT is right in holding the interest on enhanced compensation to be taxed on accrual basis only after the finality of litigation regarding enhanced compensation or interest, in contradiction with the judgment of this Court following the judgment of Apex Court in the case of CIT Vs. Rama Bai (181 ITR 400) (ITA No. 176 of 05 and ITA No. 177 of 05 in the case of CIT, Faridabad Vs. Naresh Kumar and CIT, Faridabad Vs. Dilbagh Singh, respectively) ? On the basis of similar facts, these very questions have already been considered by this Court in ITA No. 490 of 2007, title as `The Commissioner of Income tax, Faridabad versus Shri Hardwari Lal', decided on 26.3.2008, and it has been concluded as under :- “11. Thus, in view of the above discussed judgements of the Hon'ble Apex Court and this Court, the interest on enhanced compensation would not accrue till the issue of enhanced compensation is finally decided and thereafter on attaining the finality of determination of enhanced compensation by the Court, the interest accrued to the assessee has to be spread over ITA No. 275 of 2008 -3- on an annual basis right from the date of delivery of possession till the date of the order of the court on the time basis.” The issues raised in these appeals are squarely covered by the aforesaid decision and this fact has not been disputed by the learned counsel for the appellant. In view of the above, we do not find any illegality in the impugned order of the Tribunal and no substantial question of law survives for our consideration. Accordingly, all these appeals are dismissed. ( SATISH KUMAR MITTAL ) JUDGE July 03, 2008 ( RAKESH KUMAR GARG ) ndj JUDGE "