DCIT (TDS), Ludhiana V. M/s Dedicated Freight Corridor Corporation Ltd., Ludhiana

ITA 131/CHANDI/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9853 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 25-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Competent authority
• Section: 206AA; 6; 56

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 131/CHD/2016 ASSESSMENT YEAR: 2013-14 THE DCIT (TDS), VS. M/S DEDICATED FREIGHT CORRIDO R CIRCLE, LUDHIANA CORPORATION LTD., LUDHIANA PAN NO. AACCD4768M (APPELLANT) (RESPONDENT) APPELLANT BY : SH. S.K. MITTAL RESPONDENT BY : SH. TEJ MOHAN SINGH DATE OF HEARING : 28.06.2016 DATE OF PRONOUNCEMENT : 30.06.2016 ORDER PER SHAMIM YAHYA, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), PANCHKULA DATED 31.11.2015 AND PERTAINS TO ASSES SMENT YEAR 2013-14 2. THE GROUND OF APPEAL READS AS UNDER:- WHETHER ON THE FACT AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-3, LUDHIANA IS RIGHT IN HOLDING THAT TH E PAYMENT @ 12% PER ANNUM OF THE AMOUNT OF COMPENSATION PAID AND RECORDED AS INTEREST IN THE AWARD OF COMPENSATION OF THE PUNJAB GOVERNMENT IS ENHANCED / ADDITIONAL COMPENSATION IGNORING THE DECISIONS OF HON'BLE PUNJAB & HARYANA HIGH COURT I N THE CASE OF MANJIT SINGH (HUF) VS. UOI & OTHERS (CWP NO. 15506 OF 2013 DATED 143.1.2014) AND SUNDER 2 LAL AND ANR VS. UOI (CWAP NO. 3014 OF 2015 DATED 21.9.2015). 2. IN THIS CASE, THE ASSESSING OFFICER NOTED THAT ASSESSEE HAD PAID THE COMPENSATION IN RESPECT OF AGRICULTURAL LAND DURING THE PERIOD 1.4.2012 TO 31.12.2012 AT RS. 2,42,89,61,686/- WHICH INCLUDES I NTEREST (EXCEEDING RS. 5000/- IN EACH CASE) AMOUNTING TO RS. 31,75,13,979/ -, ON WHICH THE P/R HAS FAILED TO DEDUCT TDS AS PER THE PROVISIONS OF SECTI ON 194A R.W.S. 206AA OF I.T. ACT, 1961. THE ASSESSEES RESPONSE IN THIS REGARD W AS AS UNDER:- INTEREST @ 12% PER ANNUM IS TO BE PAID FROM THE DA TE OF INITIAL NOTIFICATION TO DATE OF PAYMENT AS PER PROV ISIONS IN LAND ACQUISITION ACT AND THIS INTEREST IS PART OF L AND COMPENSATION AMOUNT / RATE. NO SPECIFIC INTEREST DU E TO DELAYED PAYMENT OR ANY OTHER REASON OVER AND ABOVE THE LAND COMPENSATION HAS BEEN PAID TO THE LAND OWNERS. THEREFORE, TDS WAS NOT DEDUCTED ON THIS COMPENSATI ON. THUS WE HAVE PAID INTEREST OVER AND ABOVE THE LAND COST ON THE BASIS OF LAND ACQUISITION ACT AND HAVE BOOKED A S LAND COST ONLY. SO IT IS NOT INTEREST IN REAL SENSE AND TDS ON THAT WILL FURTHER CAUSE LITIGATION. HOWEVER, AS A PREVEN TIVE MEASURE, TDS ON INTEREST AS MENTIONED ABOVE HAS BEE N DEDUCTED FOR THE PAYMENTS MADE FROM JAN. 2013 ONWAR DS. IN VIEW OF THE ABOVE, IT IS REQUESTED TO WAIVE OFF TDS NOT DEDUCTED ON THE SAID COMPONENT, AND PENAL PROCEEDIN GS AS PER I. TAX ACT, 1961 THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE ASSESSEES EXPLANATION. HE HELD THE ASSESSEE AS ASSESSEE IN DEFAULT IN RESPECT TO THE PAYMENT OF INTEREST @ 31,75,13,940/- ON COMPENSATION OF AGRICULTURAL LAND U/S 194A. 3. AGAINST THE ABOVE ORDER, THE ASSESSEE APPEALED B EFORE THE LD. CIT(A). BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED THAT A MOUNT ON WHICH TDS HAS BEEN PROPOSED TO BE DEDUCTED IS NOT INTEREST BUT EN HANCED COMPENSATION AS PER 3 STANDING ORDER NO. 28 OF PUNJAB GOVERNMENT UNDER WH ICH LAND HAS BEEN ACQUIRED, WHICH HAS BEEN PAID TO LAND OWNER @ 12% F ROM THE DATE OF INITIAL NOTIFICATION. IT WAS FURTHER SUBMITTED THAT AS PER RECORD, NO INTEREST HAS BEEN PAID ON ACCOUNT OF DELAYED PAYMENT I.E. FROM DATE O F AWARD TILL DATE OF PAYMENT. LD. CIT(A) ASKED FOR A REMAND REPORT REGARDING THE SUBMISSIONS OF THE ASSESSEE. THE ASSESSING OFFICER VIDE HIS REPORT DATED 15.12. 2014 STATED AS UNDER: THE PERUSAL OF MEMO NO. 1490 DATED 21.07.2014 ISSU ED BY THE SPECIAL SECRETARY REVENUE (K) TO THE DISTRIC T REVENUE OFFICER, LUDHIANA THAT INTEREST IN DISTRICT PRICE FIXATION COMMITTEE'S PROCEEDINGS AND ITS INCORPORAT ION IN THE AWARD IS MISNOMER AND IT IS TO BE READ AND T REATED AS 12% ENHANCED AMOUNT. INTEREST COMPONENT STARTS O N MARKET VALUE OF LAND U/S 34 ON ACCOUNT OF LATE PAYM ENT ON OR AFTER TAKING THE POSSESSION OF ACQUIRED LAND THE INCOME TAX AUTHORITY MAY BE APPRISED ABOUT THE LEGA L AND FACTUAL POSITION. IN ACCORDANCE VIDE ENDST. NO. 1719 DATED 01.08.2014, THE COMPETENT AUTHORITY, DISTRICT REVENUE OFFICER, LUDHIANA INTIMATED THE INCOME TAX CONCERNED AUTHORITIES THAT THE WORD INTEREST @ 12% PER ANNUM MAY BE READ AS ENHANCED COMPENSATION @ 12% PER ANNUM FOR ALL THE LAND AWARDS. FURTHER, DISTRIC T REVENUE OFFICER, LUDHIANA HAS CLARIFIED IN THE SAI D ORDER THAT 'I AM OF THE CONSIDERED VIEW THAT THE INTERES T' HAS BEEN INADVERTENTLY MENTIONED IN THE ABOVE LAND AWAR D U/S OF RAILWAY ACT. IN FACT, THIS IS ENHANCED COMPENSATION/ ADDITIONAL PRICE @ 12% PER ANNUM IN T ERM OF PARA 31-A(I) OF STANDING ORDER NO. 28 AND PARA 2 3(1- A) OF LAND ACQUISITION ACT, 1894. 4. CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND REPORT OF THE ASSESSING OFFICER, THE LD. CIT(A) HELD AS UNDER:- 5. I HAVE CAREFULLY CONSIDERED THE APPELLANT'S S UBMISSIONS AND FACTS OF THE CASE ON RECORD. AS PER PROVISIONS OF C LAUSE (B) OF SECTION 145A OF THE INCOME TAX ACT, 1961 INTEREST RECEIVED BY AN ASSESSEE ON COMPENSATION OR ON ENHANCED COMPENSATION AS THE CAS E MAY BE, SHALL BE DEEMED TO BE THE INCOME OF THE YEAR IN WHICH IT IS RECEIVED. FURTHER AS PER PROVISIONS OF SECTION 56 (VIII) OF I NCOME TAX ACT, 1961, INCOME BY WAY OF INTEREST RECEIVED ON COMPENS ATION OR ENHANCED COMPENSATION REFERRED TO IN CLAUSE (B) OF SECTION 145A SHALL BE CHARGEABLE TO INCOME-TAX UNDER THE HEAD 'I NCOME FROM OTHER SOURCES.' TDS IS DEDUCTED U/S 194A ON THE PAYMENT O F INTEREST OTHER 4 THAN 'INTEREST ON SECURITIES'. AS PER PROVISIONS OF SECTION 194LA, TDS IS DEDUCTED ON PAYMENT OF COMPENSATION ON ACQUI SITION OF CERTAIN IMMOVABLE PROPERTY OTHER THAN AGRICULTURAL LAND. 5.1 AS PER THE AWARD OF THE COMPETENT AUTHORITY, WORD INTEREST HAS BEEN USED. IN THIS REGARD, LETTER OF SPECIAL SECRET ARY REVENUE (K), MEMO NO. 24/51/2014-LR-1/1 1490, CHANDIGARH, DATED 21.07.2014 IS AS UNDER- 'THE AWARDS IN THESE CASES HAVE BEEN MADE UNDER THE PROVISIONS OF LAND ACQUISITION ACT, 1894/STATE POLI CY ON LAND ACQUISITION. IN THE LAND ACQUISITION ACT 1894 & STA TE'S LAND ACQUISITION POLICY NO PROVISION IS EXISTING UNDER W HICH 12% INTEREST FROM THE DATE OF NOTIFICATION U/S 4 CAN BE AWARDED. IN FACT U/S 23 (1A) OF LAND ACQUISITION ACT 1894 AMOUN T OF MARKET VALUE OF LAND HAS TO BE ENHANCED @ 12% FROM THE DAT E OF NOTIFICATION PUBLISHED U/S 4. IN THE STANDING ORDER 28 THIS AMOUNT FINDS MENTION IN PARA 31-A(I). SO THE WORD I NTEREST' IN DISTRICT PRICE FIXATION COMMITTEE'S PROCEEDINGS AND ITS INCORPORATION IN THE AWARD IS MISNOMER AND IT IS TO BE READ AND TREATED AS 12% ENHANCED AMOUNT. INTEREST COMPONENT STARTS ON MARKET VALUE OF LAND UNDER SECTION 34 ON ACCOUNT OF LATE PAYMENT ON OR AFTER TAKING THE POSSESSION OF ACQUIR ED LAND. THE INCOME TAX AUTHORITIES MAY BE APPRISED ABOUT THE AB OVE LEGAL & FACTUAL POSITION. ALTHOUGH THIS IS A PURE CLERICAL MISTAKE BUT THE T IME PERIOD FOR CORRECTIONS HAS IN VIEW OF PROVISIONS CONTAINED IN SECTION 13A OF THE LAND ACQUISITION 1984.' IN THIS REGARD, THE COMPETENT AUTHORITY -CUM- DISTT REVENUE OFFICER, LUDHIANA ISSUED CLARIFICATION TO THE CHIEF COMMISSIONER OF INCOME TAX CHANDIGARH VIDE LETTER D ATED 01 .08.2014 CLARIFYING THAT THE WORD 'INTEREST' @ 12% PER ANNUM MAY BE READ AS 'ENHANCED COMPENSATION' @ 12% PER ANNUM FOR ALL THE LAND AWARDS. 5.2 AS PER THE HON'BLE SUPREME COURT OF INDI A, COMMISSIONER OF INCOME TAX FARIDABAD VS. GHANSHAYAM (HUF) ON 16. 07.2009, CIVIL APPEAL NO. 4401 OF 2009, IT IS HELD AS UNDER: - '20. WE ALSO QUOTE HEREIN BELOW SECTION 28 OF THE 1 894 ACT WHICH READS AS UNDER: 28 COLLECTOR MAY BE DIRECTED TO PAY INTEREST ON EXC ESS COMPENSATION. 5 IF THE SUM WHICH, IN THE OPINION OF THE COURT, THE COLLECTOR OUGHT TO HAVE AWARDED AS COMPENSATION IS IN EXCESS OF THE SUM WHICH THE COLLECTOR DID AWARD AS COMPENSATION, THE AWARD OF THE COURT MAY DIRECT THAT THE COLLECTOR SHALL PAY I NTEREST ON SUCH EXCESS AT THE RATE OF [NINE PER CENTUM] PER AN NUM FROM THE DATE ON WHICH HE TOOK POSSESSION OF THE LAND TO THE DATE OF PAYMENT OF SUCH EXCESS INTO COURT.' 21. WE ALSO QUOTE HEREIN BELOW SECTION 34 OF THE 18 94 WHICH READS AS UNDER: '34. PAYMENT OF INTEREST- WHEN THE AMOUNT OF SUCH COMPENSATION IS NOT PAID OR DEPOSITED ON OR BEFORE TAKING POSSESSION OF THE LAND, THE COL LECTOR SHALL PAY THE AMOUNT AWARDED WITH INTEREST THEREON AT THE RATE OF NINE PER CENTUM PER ANNUM FROM THE TIME OF SO TAKIN G POSSESSION UNTIL IT SHALL HAVE BEEN SO PAID OR DEPO SITED. PROVIDED THAT IF SUCH COMPENSATION OR ANY PART THE REOF IS NOT PAID OR DEPOSITED WITHIN A PERIOD OF ONE YEAR FROM THE DATE ON WHICH POSSESSION IS TAKEN, INTEREST AT THE RATE OF FIFTEEN PER CENT PER ANNUM SHALL BE PAYABLE FROM THE DATE OF EX PIRY OF THE SAID PERIOD OF ONE YEAR ON THE AMOUNT OF COMPENSATI ON OR PART THEREOF WHICH HAS NOT BEEN PAID OR DEPOSITED BEFORE THE DATE OF SUCH EXPIRY.' 22. SECTION 23(1 A) WAS INTRODUCED IN THE 1894 ACT TO MITIGATE THE HARDSHIP CAUSED TO THE OWNER OF THE LAND WHO IS DEPRIVED OF ITS ENJOYMENT BY TAKING POSSESSION FROM HIM AND USI NG IT FOR PUBLIC PURPOSE, BECAUSE OF CONSIDERABLE DELAY IN MA KING THE AWARD AND OFFERING PAYMENT THEREOF [SEE ASSISTANT COMMISSIONER, GADAG SUB-DIVISION, GADAG V. MATHAPAT HI BASAVANNEWWA AND OTHERS- AIR 1995 SC 2492]. TO OBVI ATE SUCH HARDSHIP, SECTION 23(1A) WAS INTRODUCED AND TH E LEGISLATURE ENVISAGED THAT THE OWNER IS ENTITLED TO 12% PER ANNUM ADDITIONAL AMOUNT ON THE MARKET VALUE FOR A P ERIOD COMMENCING ON OR FROM THE DATE OF PUBLICATION OF TH E NOTIFICATION UNDER SECTION 4(1) OF THE 1894 ACT UPT O THE DATE OF THE AWARD OF THE COLLECTOR OR THE DATE OF TAKING PO SSESSION OF THE LAND, WHICHEVER IS EARLIER. THE ADDITIONAL AMOU NT PAYABLE UNDER SECTION 23(1A)OF THE 1894 ACT IS NEITHER INTE REST NOR SOLATIUM. IT IS AN ADDITIONAL COMPENSATION DESIGNED TO COMPENSATE THE OWNER OF THE LAND, FOR THE RISE IN P RICE DURING THE PENDENCY OF THE LAND ACQUISITION PROCEEDINGS. I T IS A MEASURE TO OFFSET THE EFFECT OF INFLATION AND THE C ONTINUOUS RISE IN THE VALUE OF PROPERTIES. [SEE; STATE OF TAMIL NA DU AND OTHERS ETC. V. L KRISHNAN AND OTHERS ETC. - AIR 1996 SC 49 7]. 6 THEREFORE, THE AMOUNT PAYABLE UNDER SECTION 23(1 A) OF THE 1894 ACT IS AN ADDITIONAL COMPENSATION IN RESPECT T O THE ACQUISITION AND HAS TO BE RECKONED AS PART OF THE M ARKET VALUE OF THE LAND. SUB-SECTION (1A) OF SECTION 23 WAS INTRODUCED BY LAND ACQUISITION (AMENDMENT) ACT, 1984. IT PROVIDES THAT IN CASE THE COURT SHALL AWARD AN AMOUNT AS ADDITIONAL COMPENSATION AT THE RATE OF 12% PER ANNUM-DN THE MA RKET VALUE OF THE LAND FOR THE PERIOD COMMENCING ON AND FROM THE DATE OF PUBLICATION OF THE NOTIFICATION UNDER SECTI ON 4(1) TO THE DATE OF THE AWARD OF THE COLLECTOR OR TO THE DATE O F TAKING POSSESSION OF THE LAND, WHICHEVER IS EARLIER. IN OT HER WORDS SUB- SECTION (1A) OF SECTION 23 PROVIDES FOR ADDITI ONAL COMPENSATION. THE SAID SUB-SECTION TAKES CARE OF IN CREASE IN THE VALUE AT THE RATE OF 12% PER ANNUM. 23. IN ADDITION TO THE MARKET VALUE OF THE LAND, A S ABOVE PROVIDED, THE COURT SHALL IN EVERY CASE AWARD A SUM OF 30% ON SUCH MARKET VALUE, IN CONSIDERATION OF THE COMPULSO RY NATURE OF ACQUISITION. THIS IS UNDER SECTION 23(2) OF THE 189 4 ACT. IN SHORT, SECTION 23(2) TALKS ABOUT SOLATIUM. AWA RD OF SOLATIUM IS MANDATORY. SIMILARLY, PAYMENT OF AD DITIONAL AMOUNT UNDER SECTION 23(1 A) IS MANDATORY. THE AWAR D OF INTEREST UNDER SECTION 28 OF THE 1894 ACT IS DISCRE TIONARY. SECTION 28 APPLIES WHEN THE AMOUNT ORIGINALLY AWARD ED HAS BEEN PAID OR DEPOSITED AND WHEN THE COURT AWARDS EX CESS AMOUNT. IN SUCH CASES INTEREST ON THAT EXCESS ALONE IS PAYABLE. SECTION 28 EMPOWERS THE COURT TO AWARD INTEREST ON THE EXCESS AMOUNT OF COMPENSATION AWARDED BY IT OVER THE AMOUN T AWARDED BY THE COLLECTOR. THE COMPENSATION AWARDED BY THE COURT INCLUDES THE ADDITIONAL COMPENSATION AWARDED UNDER SECTION 23(1A}AND THE SOLATIUM UNDER SECTION 23(2) OF THE SAID ACT. THIS AWARD OF INTEREST IS NOT MANDATORY BUT IS LEFT TO THE DISCRETION OF THE COURT. SECTION 28 IS APPLICABLE O NLY IN RESPECT OF THE EXCESS AMOUNT, WHICH IS DETERMINED BY THE CO URT AFTER A REFERENCE UNDER SECTION 18 OF THE 1894 ACT. SECTION 28 DOES NOT APPLY TO CASES OF UNDUE DELAY IN MAKING AWARD FOR COMPENSATION [SEE: RAM CHAND & OTHERS ETC V. UNION OF INDIA & ORS. -SCC 44]. IN THE CASE OF SHREE VIJAY COTTON & OIL MILLS LTD. V. STATE OF GUJRAT - (1991) 1 SCC 262, THIS CO URT HAS HELD THAT INTEREST IS DIFFERENT FROM COMPENSATION. 24. TO SUM UP, INTEREST IS DIFFERENT FROM COMPENSAT ION. HOWEVER, INTEREST PAID ON THE EXCESS AMOUNT UNDER S ECTION 28 OF THE 1894 ACT DEPENDS UPON A CLAIM BY THE PERSON WHOSE LAND IS ACQUIRED WHEREAS INTEREST UNDER SECTION 34 IS_F OR DELAY IN MAKING PAYMENT. THIS VITAL DIFFERENCE NEEDS TO BE K EPT IN MIND IN DECIDING THIS MATTER. INTEREST UNDER SECTION 28 IS PART OF THE 7 AMOUNT OF COMPENSATION WHEREAS INTEREST UNDER SECTI ON 34 IS ONLY FOR DELAY IN MAKING PAYMENT AFTER THE COMPENSA TION AMOUNT IS DETERMINED. INTEREST UNDER SECTION 28 IS A PART OF \ ENHANCED VALUE OF THE LAND WHICH IS NOT THE CASE IN THE MATTER OF PAYMENT OF INTEREST UNDER SECTION 34.' 5.3 FURTHER, RELIANCE IS MADE IN THE CASE OF HON' BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF JAGMAL SINGH VS. STATE OF HARYANA & ANR. CR. NO. 7740 OF 2012 DATED 18.07.2 013., WHEREIN IT WAS HELD THAT 'WHAT CAN BE PREVENTED EVEN IN THE FIRST PLACE BY N OT REQUIRING A IDS TO BE APPLIED FOR COMPENSATION RELATABLE TO S ECTION 23 (1A), 23(2) AND 28 OF THE LAND ACQUISITION ACT, IN RESPECT OF THE ACQUISITION OF AGRICULTURAL LAND, IT SHALL NOT BE UNNECESSARILY GONE THROUGH.' 5.4 A) THE ASSESSING OFFICER HAS REFERRED THE CASE OF BIKRAM SINGH & ORS. VS. THE LAND ACQUISITION COLLECTOR & O RS. (1997) 10 SCC 243. IN THIS CASE THE HON'BLE SUPREME COURT IN PARA 8 OF THE JUDGMENT HELD THAT 'IT WOULD MEAN THAT THE INTEREST RECEIVED AS INCOME ON THE DELAYED PAYMENT OF THE COMPENSATION DETERMINED UNDE R SECTION 28 OR 31 OF THE ACQUISITION ACT IS A TAXABLE EVENT. THEREFORE, WE HOLD THAT IT IS A REVENUE RECEIPT EXIGIBLE TO TA X UNDER SECTION 4 OF THE INCOME TAX ACT. SECTION 194A OF TH E ACT HAS NO APPLICATION FOR THE PURPOSE OF THIS CASE AS IT ENCO MPASSES DEDUCTION OF THE INCOME AT THE SOURCE.' B) IN THE CASE OF KARAN SINGH AND ORS. THE UNION OF INDIA AND ORS. (CWP NO. 3477 OF 2006) ORDER DATED 06. 09.2013, THE HON'BLE PUNJAB AND HARYANA HIGH COURT DEALT WI TH THE QUESTION OF TAX DEDUCTED AT SOURCE ON THE ELEMENT O F INTEREST WHICH WAS PAID ON ACCOUNT OF DELAY IN PAYMENT OF EN HANCED COMPENSATION REGARDING ACQUISITION OF THEIR AGRICUL TURAL LAND. C) IN THE CASE OF HARBANS KAUR AND ORS. VS. THE U NION OF INDIA AND ORS. (CWP NO. 7753 OF 2011) ORDER DATED 16.01.2012. IN THIS CASE ALSO THE HON'BLE PUNJAB AN D HARYANA HIGH COURT OBSERVED THAT IT IS NOT IN DISPUTE THAT PAYMENT WHICH HAS BEEN RELEASED TO THE PETITIONERS IS ON ACCOUNT OF INTEREST PAID BY THE DEPARTMENT. D) FURTHER, THE ASSESSING OFFICER HAS ALSO RELIED IN THE CASE OF KULWANT RAI AND ORS. VS. STATE OF HARYANA AND OR S. (CWP NO. 10333 OF 2011}, GURBACHAN SINGH VS. STATE OF HA RYANA AND ORS. (CWP NO.10417 OF 2011) AND LEELA WATI AND ORS VS. STATE 8 OF HARYANA AND ORS.(CWP NO. 10481 OF 2011}-DECIDED BY THE HON'BLE PUNJAB AND HARYANA HIGH COURT BY COMMON ORD ER DATED 02.06.2011. IN THIS CASE ALSO THE ISSUE WAS REGARDING RECEIPT OF ENHANCED COMPENSATION AND INTEREST PAID THEREON ON ACQUISITION OF AGRICULTURAL LAND. E) THE ASSESSING OFFICER HAS ALSO RELIED IN THE C ASE OF RAMESHWAR S/O DHANNALAL AND ORS. VS. UJJAIN DEVELOP MENT AUTHORITY AND ORS. W.P. NO. 2153/2011 OF THE HON'BL E HIGH COURT OF MADHYA PRADESH. IN THIS CASE THE HIGH COURT OF MADHYA PRADESH HELD AS UNDER- '10 THE ACQUISITION IS OF THE YEAR 2001 WHILE THE COMPENSATION HAS BEEN PAID SOMEWHERE IN THE YEAR 20 09. KEEPING IN VIEW THE LAW LAID DOWN BY THE HON'BLE AP EX COURT IN THE MATTER OF BIKRAM SINGH VS. LAND ACQUIS ITION COLLECTOR, REPORTED IN (1997) 10 SCC 423, THIS COU RT IS OF THE VIEW THAT INTEREST RECEIVED ON DELAYED PAYME NT IS A REVENUE RECEIPT EXIGIBLE TO INCOME -TAX. SINCE THE AMOUNT HAS ALREADY BEEN DEPOSITED BY THE RESPONDENT UJJAIN DEVELOPMENT AUTHORITY AND THE DEDUCTION IS IN ACCORDANCE WITH SECTION 194-A OF THE ACT., THEREFOR E, THIS COURT FINDS THAT NO ILLEGALITY HAS BEEN COMMITTED B Y THE LEARNED COURT BELOW IN UPHOLDING THE ACTION TAKEN B Y RESPONDENT UJJAIN DEVELOPMENT AUTHORITY IN DEDUCTIN G THE AMOUNT.' F) THE ASSESSING OFFICER HAS ALSO RELIED IN THE C ASE OF SATISH BHARDWAJ & ORS. VS. NAZIR & ORS. COCP MO. 1941 OF 2011. WHEREIN IT IS HELD THAT:- HON'BLE HIGH COURT OF PUNJAB & HARYANA VIDE THEIR ORDER DATED 01.09,2011 IN THE CASE OF SATISH BHARDW AJ & ORS. VS. NAZIR & ORS. COCP NO 1941 OF 2011 HAVE HEL D THAT ' IDS IS DEDUCTIBLE IN SO FAR AS THE COMPONENT OF INTEREST IS CONCERNED.' IT IS NOTICED THAT THE CASE LAWS REFERRED IN THE AS SESSMENT ORDER REFER TO RECEIPT OF ENHANCED COMPENSATION, DE LAY IN PAYMENT OF ENHANCED COMPENSATION AND INTEREST ON WH ICH IDS IS REQUIRED TO BE DEDUCTED. IN NONE OF THE CASES, I SSUE OF DEDUCTION OF IDS ON PAYMENT OF COMPENSATION WHICH I S PAID AT THE TIME OF ACQUISITION OF LAND AS PER LAND ACQUISI TION ACT OF 1894 HAS BEEN DEALT WITH. IN THE PRESENT CASE, AWARD WAS GIVEN AS PER 31A(I) OF THE STANDING ORDER NO. 28 OF 'THE PUNJAB GOVT WHICH-IS CORRESPONDING TO PAYMENT MADE AS PER SECTION 23, 2 3(1-A), 9 23(2) OF LAND ACQUISITION ACT, 1894. THE HON'BL E SUPREME COURT HAS HELD THAT PAYMENT OF MARKET VALUE OF LAND ACQUISITION PLUS ENHANCED COMPENSATION @ 12% PER ANNUM AND PAYM ENT OF SOLATIUM @ 30% OF MARKET VALUE OF LAND IS COMPENSAT ION FOR THE VALUE OF LAND ONLY. THEREFORE, AWARD IN THE PRE SENT CASE GIVEN UNDER SECTION 31A(I) OF STANDING ORDER NO. 28 OF PUNJAB GOVT FOR ACQUISITION OF LAND WHICH IS CORRESPONDING TO PAYMENT MADE U/S 23, 23(1)(A), 23(2) OF LAND ACQUISITION AC T, 1894 HAS TO BE RECKONED AS PAYMENT FOR THE ACQUISITION OF LA ND. IT DID NOT INCLUDE ANY PAYMENT AS MENTIONED IN SECTION 28 OR 34 OF THE LAND ACQUISITION ACT, 1894. IN VIEW OF THE FACT S OF THE CASE, ADDITIONAL AMOUNT PAID @ 12% PER ANNUM PAID AS PER SECTION 23(1A) OF LAND ACQUISITION ACT OF 1894, IS NOT INTE REST INCOME AS HAS BEEN OBSERVED BY THE HON'BLE SUPREME COURT I N THE CASE OF CIT FARIDABAD VS. GHANSHAYAM (HUF) REFERRED ABOV E. THIS REPRESENTS ADDITIONAL COMPENSATION TO TAKE CARE OF INCREASE IN THE MARKET VALUE OF LAND. THE PAYMENT MADE IN QUEST ION WAS MADE AS PER 23(1A) OF THE LAND ACQUISITION ACT, 189 4 WHICH WAS MENTIONED AS 'INTEREST' IN THE AWARD OF COMPETE NT AUTHORITY. CLARIFICATION IN THIS REGARD HAS BEEN IS SUED BY SPECIAL SECRETARY REVENUE, GOVERNMENT OF PUNJAB. LE TTER WAS ALSO ISSUED TO THE CHIEF COMMISSIONER OF INCOME TAX CHANDIGARH CLARIFYING THE POSITION. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE IMPUGNED AMOUNT WAS ADDITIONAL COMPENSATION PAID AS PER SECTION 23(1A) OF LAND ACQ UISITION ACT OF 1894 AND NOT LIABLE FOR DEDUCTION OF TAX U/S 194A OF THE IT. ACT, 1961. IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COUR T IN THE CASE OF CIT FARIDABAD VS. GHANSHAYAM (HUF) AND HON'BLE PUNJAB & HARYANA HIGH IN THE CASE OF JAGMAL SINGH V S. STATE OF HARYANA & ANR, THE AMOUNT MENTIONED AS INTEREST @ 21 % IN THE AWARD OF COMPETENT AUTHORITY WHICH HAS BEEN PAID AS PER SECTION 23{1A) OF LAND ACQUISITION ACT OF 189 4 @ 12% PER HUM IS HELD TO BE ADDITIONAL COMPENSATION NOT L IABLE FOR DEDUCTION OF TAX AT SOURCE U/S 194A OF THE IT. ACT, 1961. IN VIEW OF THE ABOVE APPEAL IS ALLOWED ON THIS GROUND . AGAINST THE ABOVE ORDER, THE REVENUE IS IN APPEAL B EFORE US. 5. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. LD. DR SHRI S.K. MITTAL SUPPORTED THE GROUND OF THE REVENUE. IN THIS GROUND IT HAS BEEN URGED THAT LD. CIT(A) HAS ERRED BY IGNORING THE D ECISION OF HON'BLE PUNJAB & 10 HARYANA HIGH COURT IN THE CASE OF MANJIT SINGH (HUF ) VS. UOI & OTHERS AND SUNDER LAL AND ANR VS. UOI (SUPRA). 6. PER CONTRA, LD. COUNSEL FOR THE ASSESSEE SHRI TE J MOHAN SINGH, SUPPORTED THE ORDER OF THE LD. CIT(A). HE SUBMITTED THAT THIS IS NOT A CASE OF PAYMENT OF INTEREST. HE SUBMITTED THAT BY INADVERTENT MISTAKE, THE TERM INTEREST HAS BEEN USED IN ESSENCE IT IS ENHANCED COMPENSATION. IN THI S REGARD, HE REFERRED TO THE LETTER OF THE COMPETENT AUTHORITY DATED 30.5.2014 T O THE CIT(A) LUDHIANA ANNEXED IN PAPER BOOK AT PAGE NO. 25. THE SAID LET TER HAS STATED THAT THERE IS A MISTAKE IN THE AGRICULTURAL LAND ACQUISITION AWARD I.E WORD INTEREST HAS BEEN RECORDED INADVERTENTLY IN LIEU OF ENHANCED COMPENS ATION. LD. COUNSEL FURTHER REFERRED TO THE LETTER OF THE COMPETENT AUTHORITY T O THE CHIEF COMMISSIONER OF INCOME TAX, CHANDIGARH PLACED IN PAPER BOOK AT PAGE 29 IN WHICH ON THE IMPUGNED SUBJECT IT WAS MENTIONED THAT THE WORD IN TERST @ 12% PER ANNUM SHOULD BE READ AS ENHANCED COMPENSATION @ 12% FOR ALL THE LAND AWARDS. LD. COUNSEL FURTHER REFERRED TO THE REMAND REPORT OF TH E ASSESSING OFFICER PLACED IN PAPER BOOK AT PAGE NO. 36 ON THE SUBJECT. THIS READ S AS UNDER:- AFTER, GOING THROUGH THE WRITTEN SUBMISSION OF THE PR FILED BEFORE YOUR HONOUR AS WELL AS TO THIS OFFICE AND AF TER RECORDING THE STATEMENT OF THE PROJECT- MANAGER F F INANCE (DFCCIL, AMBALA), THE COMMENTS ON THE SUBMISSIONS A RE AS UNDER:- THE PERUSAL OF MEMO NO 1490 DATED 21.07.2014 ISSUED BY THE SPECIAL SECRETARY REVENUE (K) TO THE DISTRICT REVEN UE OFFICER, LUDHIANA THAT INTEREST IN DISTRICT PRICE F IXATION COMMITTEE'S PROCEEDINGS AND ITS INCORPORATION IN TH E AWARD IS MISNOMER AND IS TO BE READ AND TREATED AS 12% EN HANCE AMOUNT.. 'INTEREST COMPONENT STARTS ON MARKET VALUE OF LAND U/S 34 ON ACCOUNT OF LATE PAYMENT ON OR AFTER TAKIN G, THE POSSESSION OF ACQUIRED LAND AND THE INCOME TAX AU THORITY MAY BE APPRISED ABOUT THE LEGAL AND FACTUAL POSITION IN ACCORDANCE VIDE ENDST. NO. 1719 DATED 0 1.08.2014, THE COMPETENT AUTHORITY, DISTRICT REVENUE OFFI CER, 11 LUDHIANA INTIMATED THE INCOME TAX CONCERNED AUTHO RITIES THAT THE WORD INTEREST @ 12% PER ANNUM MAY BE READ AS ENHANCED COMPENSATION @ 12% PER ANNUM FOR ALL THE LAND AWARDS. FURTHER, DISTRICT REVENUE OFFICER, LUDHIANA HAS CLARIFIED IN THE SAID ORDER THAT I AM OF THE CONSI DERED VIEW THAT THE WORD INTEREST HAS BEEN INADVERTENTLY ME NTIONED IN THE ABOVE LAND AWARD U/S 20F OF RAILWAY ACT, IN FA CT, THIS IS ENHANCED COMPENSATION/ ADDITIONAL PRICE @ 12% PER A NNUM IN TERM OF PARA 31-A(1) OF STANDING ORDER NO. 28 A ND PARA. 23 (1-A) OF LAND ACQUISITION ACT, 1894.' REFERRING TO ABOVE, LD. COUNSEL FOR THE ASSESSEE SU BMITTED THAT THIS IS A PURE CASE OF ENHANCED COMPENSATION. THE WORD INTEREST HA S BEEN ERRONEOUSLY MENTIONED IN THE AWARD. HENCE, LD. COUNSEL SUBMITTE D THAT THERE IS NO REASON AS TO WHY A WRONG NOMENCLATURE SHOULD BE THE BASIS OF THE ASSESSMENT. HE SUBMITTED THAT LD. CIT(A) HAS PASSED A REASONABLE ORDER. IT DOES NOT NEED ANY INTERFERENCE. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. WE FIND THAT AS PER PROVISIONS OF CLAUSE (B) OF SECTION 145A OF THE INC OME TAX ACT, 1961 INTEREST RECEIVED BY AN ASSESSEE ON COMPENSATION OR ON ENHAN CED COMPENSATION AS THE CASE MAY BE, SHALL BE DEEMED TO BE THE INCOME OF TH E YEAR IN WHICH IT IS RECEIVED. FURTHER AS PER PROVISIONS OF SECTION 56 ( VIII) OF THE INCOME TAX ACT, 1961, INCOME BY WAY OF INTEREST RECEIVED ON COMPENS ATION OR ENHANCED COMPENSATION REFERRED TO IN CLAUSE (B) OF SECTION 1 45A SHALL BE CHARGEABLE TO INCOME-TAX UNDER THE HEAD 'INCOME FROM OTHER SOURCE S.' TDS IS DEDUCTED U/S 194A ON THE PAYMENT OF INTEREST OTHER THAN 'INTERES T ON SECURITIES'. ALSO, AS PER PROVISIONS OF SECTION 194LA, TDS IS DEDUCTED ON PAY MENT OF COMPENSATION ON ACQUISITION OF CERTAIN IMMOVABLE PROPERTY OTHER THA N AGRICULTURAL LAND. FURTHERMORE, THE COMPETENT AUTHORITY IN THIS REGARD HAS CLEARLY CLARIFIED THAT WORD INTEREST HAS BEEN WRONGLY USED. IT IS IN FA CT AN ENHANCED COMPENSATION. THIS STATEMENT OF THE COMPETENT AUTHORITY IS UNAMBI GUOUS AND IT HAS ALSO BEEN ACCEPTED BY THE ASSESSING OFFICER IN THE REMAND REPORT. IT IS 12 UNDISPUTED THAT THE PAYMENT IN THIS REGARD DOES NOT RELATE TO ANY AWARD BY THE COURT REGARDING PAYMENT OF INTEREST. THE PAYMENT HA S BEEN MADE AS PER SECTION 23 (1A) OF THE LAND ACQUISITION ACT, 1894 WHICH WAS ERRONEOUSLY MENTIONED AS INTEREST IN THE AWARD OF COMPETENT AUTHORITY. THE C LARIFICATION IN REGARD HAS BEEN ISSUED BY THE SPECIAL SECRETARY REVENUE, GOVER NMENT OF PUNJAB. LETTER WAS ALSO ISSUED TO THE CHIEF COMMISSIONER OF INCOME TAX, CHANDIGARH CLARIFYING THE POSITION. IN THESE CIRCUMSTANCES, WE AGREE WITH THE LD. CIT(A) THAT IMPUGNED AMOUNT WAS ADDITIONAL COMPENSATION PA ID AS PER SECTION 23(IA) OF THE LAND ACQUISITION ACT OF 1894 AND NOT LIABLE TO DEDUCTION OF TAX U/S 194A OF THE I.T. ACT. IT IS SETTLED LAW THAT IT IS THE S UBSTANCE OF THE TRANSACTION WHICH HAS TO BE TAKEN INTO ACCOUNT IN ASSESSMENT PROCEEDI NGS AND NOT THE NOMENCLATURE TO THE SAME. THE REVENUE IN GROUNDS OF APPEAL HA S REFERRED TO THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF MANJIT SINGH (HUF) VS. UOI AND OTHERS (SUPRA). THE LD. DR WAS NOT AT ALL IN A POSITION TO EXPLAIN US TO HOW THIS DECISION HELPS THE CASE OF REVENUE. ACCORDINGL Y, WE DO NOT FIND ANY MERIT IN THE GROUNDS RAISED BY THE REVENUE. ACCORDINGLY, WE UPHOLD THE ORDER OF LD. CIT(A). 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.06.2016 SD/- SD/- (BHAVNESH SAINI) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30 TH JUNE, 2016 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR