Radhakisan Devkinandan Brijwasi, Latur V. Assistant Commissioner of Income tax, Latur

ITA 1434/PUN/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2419 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 06-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Keywords: Deemed to accrue or arise in india
• Section: 143(3); 45(5); 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 14 34 /P U N/201 7 / ASSESSMENT YEAR : 20 13 - 14 RADHAKISHAN DEVKINANDAN BRIJWASI, AKASH FOOD PRODUCTS, SALE GALLI, LATUR - 413512 . / APPELLANT PAN: AEOPB3486P VS. THE ASST. COMMISSIONER OF INCOME TAX, LATUR CIRC LE, LATUR . / RESPONDENT . / ITA NO. 1435 /P U N/201 7 / ASSESSMENT YEAR : 2013 - 14 SHRI GOPAL RADHAKISHAN BRIJWASI, AKASH FOOD PRODUCTS, SALE GALLI, LATUR - 413512 . / APPELLANT PAN: AEOPB3518A V S. THE ASST. COMMISSIONER OF INCOME TAX, LATUR CIRCLE, LATUR . / RESPONDENT / APPELLANT BY : NONE / RESPONDENT BY : SHRI M.K. VERMA / DATE OF HEARING : 06 . 0 6 .201 9 / DATE OF PRONOUNCEMENT: 21 . 0 6 .201 9 ITA NO S . 1434 & 1435 /P U N/20 1 7 RADHAKISHAN DEVKINANDAN BRIJWASI & ANR 2 / ORDER PER SUSHMA CHOWLA, J M : BOTH T HE APPEAL S FILED BY CONNECTED ASSESSEE ARE AGAINST RESPECTIVE ORDER S OF CIT (A) - 2 , AURANGABAD , BOTH DATED 21 . 0 3 .201 7 RELATING TO ASSESSMENT YEAR 20 13 - 14 AGAIN ST RESPECTIVE ORDER S PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. BOTH THE APPEALS RELATING TO CONNECTED ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, IN ORDER TO ADJUDICATE THE ISSUES, REFERENCE IS BEING MADE TO THE FACTS AND ISSUES IN ITA NO.1434/PUN/2017. 3. THE ASSESSEE IN ITA NO.1434/PUN/2017 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1) ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE AND IN L AW THE LD. CIT(A) - AURANGABAD WAS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE A. O . WHEREIN THE ADDITION OF RS.96,31,167/ - WAS MADE BY THE A. O . INVOKING THE PROVISIONS OF S. 56(2)(VIII) OF THE ACT. THE LD. CIT(A) OUGHT TO HAVE CONSIDE RED THAT THE CLAIM OF THE ASSESSEE WAS COVERED BY S. 10(37) OF THE ACT AND THEREFORE, THE ENHANCED COMPENSATION RECEIVED WAS EXEMPT. THE EXEMPTION BE GRANTED TO THE APPELLANT U/S 10(37) OF THE ACT. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. GOVINDBHAI MAMAIYA (2014) 367 ITR 498 (SC) FOLLOWING JUDGMENT OF SUPREME COURT IN GHANASHYM (HUF) (SUPRA) HAD HELD THAT THE INTEREST UNDER S. 28 UNLIKE INTEREST U/S 34 AND ADDITIONAL AMOUNT UNDER S.23( 1A) FORMED PART OF ENHANCED COMPENSATION ONLY AND WAS THEREFORE, EXEMPT U/S 10(37) OF THE ACT. THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THE LEGAL POSITION IN ITS PROPER PERSPECTIVE. IT BE HELD ACCORDINGLY. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE OBSERVATIONS OF THE LD. CIT(A) IN THE APPEAL ORDER IN THE END OF PARA - 4.7 THAT THE S. 10(37) HAS NOT EXEMPTED THE INTEREST ON COMPENSATION BUT ONLY THE COMPENSATION AMOUNT ARE NOT CORRECT. THE OBSERVATION RUNS COUNTER FACTUALLY AND LEGALLY THE O BSERVATIONS OF HON'BLE SUPREME COURT IN ITA NO S . 1434 & 1435 /P U N/20 1 7 RADHAKISHAN DEVKINANDAN BRIJWASI & ANR 3 GOVINDBHAI MAMAIYA'S CASE (SUPRA) FOLLOWING GHANSHYAM (HUF) CASE (SUPRA). THE INTEREST BEING THE ACCRETION TO VALUE OF THE ACQUIRED ASSET WOULD ALSO BE EXEMPT UNDER 10(37) OF THE ACT. 4) ON THE FACTS AND CIRCUMSTANC ES OF THE CASE AND IN LAW AND IN THE ALTERNATIVE AND IN THE EVENT OF NOT ACCEPTING THE CLAIM OF EXEMPTION UNDER S. 10(37) OF THE ACT THE COMPENSATION AND ENHANCED COMPENSATION BEING ACCRETION TO THE VALUE OF THE LAND ACQUIRED THE CAPITAL GAIN ARISES TAXABL E UNDER THE ACT. THEREFORE, THE A.O. BE DIRECTED TO COMPUTE THE LTCG ACCORDINGLY. 4. THE APPEAL WAS FIXED FOR HEARING. HOWEVER, NOTICE OF HEARING SENT TO THE ASSESSEE BY RPAD HAS BEEN RETURNED BACK AND EVEN AD IS ATTACHED THERETO. THERE IS NO OTHER COMM UNICATION ADDRESS AVAILABLE. HENCE, WE PROCEED TO DECIDE THE PRESENT APPEALS AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. 5. THE ISSUE WHICH ARISES IN THE PRESENT APPEALS IS AGAINST INTEREST RECEIVED ON ENHANCED COMPENSATION UND ER SECTION 28 OR UNDER SECTION 34 OF LAND ACQUISITION ACT , WHETHER THE SAME IS TAXABLE IN THE HANDS OF ASSESSEE OR NOT. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HAS FAIRLY POINTED OUT THAT THE ISSUE RAISED IN THE PRESENT APPEALS STANDS C OVERED BY ORDER OF TRIBUNAL IN EARLIER YEARS , WHEREIN THE ISSUE HAS BEEN REMITTED BACK TO THE FILE OF ASSESSING OFFICER . 7. THE SAID ISSUE HAS BEEN DELIBERATED UPON BY THE HON'BLE SUPREME COURT IN LATEST DECISION IN CIT VS. CHET RAM (HUF) (2018) 400 ITR 2 3 (SC), WHEREIN IT HAS TAKEN NOTE OF EARLIER DECISION OF HONBLE APEX COURT IN CIT VS. GHANSHYAM (HUF) (2009) 315 ITR 1 (SC) AND HAVE HELD AS UNDER: - ITA NO S . 1434 & 1435 /P U N/20 1 7 RADHAKISHAN DEVKINANDAN BRIJWASI & ANR 4 3. WE HAVE HEARD MS. PINKY ANAND, LEARNED ADDITIONAL SOLICITOR GENERAL APPEARING FOR THE APPELLANT HEREIN . SHE HAS BROUGHT THE ATTENTION OF THIS COURT TO THE DECISION IN THE CASE OF COMMISSIONER OF INCOME TAX, FARIDABAD V. GHANSHYAM (HUF) REPORTED IN (2009) 8 SCC 412 WHEREIN THE PROVISIONS OF SECTION 45(5) OF THE INCOME TAX ACT, 1961 WERE CONSIDERED AND THIS COURT IN PARAGRAPHS 53 TO 56 HAS HELD THAT IN VIEW OF THE AMENDMENT IN THE INCOME TAX ACT, THE PERSON WHO HAS RECEIVED ENHANCED COMPENSATION AND INTEREST THEREON EVEN BY AN INTERIM ORDER PASSED BY THE COURT WOULD BE ASSESSED TO TAX FOR THAT ENHANCED COMPEN SATION. PARAGRAPHS 53 TO 56 OF THE ABOVE JUDGMENT READ AS UNDER: 53. THE SCHEME OF SECTION 45 (5) OF THE 1961 ACT WAS INSERTED W.E.F. 1 - 4 - 1988 AS AN OVERRIDING PROVISION. AS STATED ABOVE, COMPENSATION UNDER THE LA ACT, 1894, ARISES AND IS PAYABLE IN MU LTIPLE STAGES WHICH DOES NOT HAPPEN IN CASES OF TRANSFERS BY SALE, ETC. HENCE, THE LEGISLATURE HAD TO STEP IN AND SAY THAT AS AND WHEN THE ASSESSEE CLAIMANT IS IN RECEIPT OF ENHANCED COMPENSATION IT SHALL BE TREATED AS DEEMED INCOME AND TAXED ON RECEIPT BASIS. OUR ABOVE UNDERSTANDING IS SUPPORTED BY INSERTION OF CLAUSE (C) IN SECTION 45 (5) W.E.F. 1 - 4 - 2004 AND SECTION 155(16) WHICH REFERS TO A SITUATION OF A SUBSEQUENT REDUCTION BY THE COURT, TRIBUNAL OR OTHER AUTHORITY AND RECOMPUTATION/AMENDMENT OF THE ASSESSMENT ORDER. 54. SECTION 45(5) READ AS A WHOLE [INCLUDING CLAUSE (C)] NOT ONLY DEALS WITH REWORKING AS URGED ON BEHALF OF THE ASSEESS BUT ALSO WITH THE CHANGE IN THE FULL VALUE OF THE CONSIDERATION (COMPUTATION) AND SINCE THE ENHANCED COMPENSATION/CO NSIDERATION (INCLUDING INTEREST UNDER SECTION 28 OF THE 1894 ACT) BECOMES PAYABLE/PAID UNDER THE 1894 ACT AT DIFFERENT STAGES, THE RECEIPT OF SUCH ENHANCED COMPENSATION/CONSIDERATION IS TO BE TAXED IN THE YEAR OF RECEIPT SUBJECT TO ADJUSTMENT, IF ANY, UNDE R SECTION 155 (16) OF THE 1961 ACT, LATER ON. HENCE, THE YEAR IN WHICH ENHANCED COMPENSATION IS RECEIVED IS THE YEAR OF TAXABILITY. CONSEQUENTLY, EVEN IN CASES WHERE PENDING APPEAL, THE COURT/TRIBUNAL/AUTHORITY BEFORE WHICH APPEAL IS PENDING, PERMITS THE C LAIMANT TO WITHDRAW AGAINST SECURITY OR OTHERWISE THE ENHANCED COMPENSATION (WHICH IS IN DISPUTE) THE SAME IS LIABLE TO BE TAXED UNDER SECTION 45(5) OF THE 1961 ACT. THIS IS THE SCHEME OF SECTION 45(5) AND SECTION 155 (16) OF THE 1961 ACT. WE MAY CLARIFY T HAT EVEN BEFORE THE INSERTION OF SECTION 45(5)(C) AND SECTION 155(16) W.E.F. 1 - 4 - 2004, THE RECEIPT OF ENHANCED COMPENSATION UNDER SECTION 45(5)(B) WAS TAXABLE IN THE YEAR OF RECEIPT WHICH IS ONLY REINFORCED BY INSERTION OF CLAUSE (C) BECAUSE THE RIGHT TO R ECEIVE PAYMENT UNDER THE 1894 ACT IS NOT IN DOUBT. 55. IT IS IMPORTANT TO NOTE THAT COMPENSATION, INCLUDING ENHANCED COMPENSATION/CONSIDERATION UNDER THE 1894 ACT, IS BASED ON THE FULL VALUE OF PROPERTY AS ON THE DATE OF NOTIFICATION UNDER SECTION 4 OF TH AT ACT. WHEN THE COURT/TRIBUNAL DIRECTS PAYMENT OF ENHANCED COMPENSATION UNDER SECTION 23(I - A), OR SECTION 23(2) OR UNDER SECTION 28 OF THE 1894 ACT IT IS ON THE BASIS THAT AWARD OF THE COLLECTOR OR THE COURT, UNDER REFERENCE, HAS NOT COMPENSATED THE OWNER FOR THE FULL VALUE OF THE PROPERTY AS ON DATE OF NOTIFICATION. 56. HAVING SETTLED THE CONTROVERSY GOING ON FOR THE LAST TWO DECADES, WE ARE OF THE VIEW THAT IN THIS BATCH OF CASES WHICH RELATE BACK TO ASSESSMENT YEARS 1991 - 1992 AND 1992 - 1993, POSSIBLY TH E PROCEEDINGS UNDER THE LA ACT, 1894 WOULD HAVE ENDED. IN A NUMBER OF ITA NO S . 1434 & 1435 /P U N/20 1 7 RADHAKISHAN DEVKINANDAN BRIJWASI & ANR 5 CASES WE FIND THAT PROCEEDINGS UNDER THE 1894 ACT HAVE BEEN CONCLUDED AND TAXES HAVE BEEN PAID. 8. NOW, COMING TO THE FACTS OF PRESENT CASE, WE FIND THAT THE ASSESSEE HAS CHALLENGED TH E ORDERS OF AUTHORITIES BELOW, WHEREIN THE ADDITION UNDER SECTION 56(2)(VIII) OF THE ACT HAS BEEN MADE AT 96,31,167/ - IN ITA NO.1434/PUN/2017 AND 96,31,167/ - IN ITA NO.1435/PUN/2017. THE CASE OF ASSESSEE BEFORE THE REVENUE AUTHORITIES WAS THAT THE ALL EGED INTEREST WAS PART OF ENHANCED COMPENSATION AND WAS EXEMPT FROM TAX UNDER SECTION 10(37) OF THE ACT. THE POINT OF VERIFICATION IS WHETHER INTEREST RECEIVED IS UNDER SECTION 28 OR 34 OF THE LAND ACQUISITION ACT. 9. THE HON'BLE SUPREME COURT HAS HELD THAT INTEREST RECEIVED UNDER SECTION 28 OF THE ACT IS PART OF ENHANCED COMPENSATION / CONSIDERATION, WHICH IS TO BE TAKEN NOTE OF WHILE COMPUTING INCOME FROM LONG TERM CAPITAL GAINS IN LINE WITH PROVISIONS OF SECTION 45(5) OF THE ACT. IN OTHER WORDS, I T IS NOT TO BE TAXED AS INCOME FROM OTHER SOURCES IN THE HANDS OF ASSESSEE. HOWEVER, AS A SIMILE, INTEREST RECEIVED UNDER SECTION 34 OF THE LAND ACQUISITION ACT IS TAXABLE IN THE HANDS OF ASSESSEE AS INCOME FROM OTHER SOURCES. SINCE THE ASSESSEE HAS FAILED TO PUT AN APPEARANCE BEFORE US, WE REMIT THE ISSUE OF VERIFICATION OF INTEREST RECEIVED BY ASSESSEE UNDER THE LAND ACQUISITION ACT, TO THE FILE OF ASSESSING OFFICER, WHO SHALL VERIFY THE STAND OF ASSESSEE. IN CASE, INTEREST IS RECEIVED UNDER SECTIO N 28 OF THE LAND ACQUISITION ACT, THEN THE SAME IS ASSESSABLE AS COMPENSATION UNDER SECTION 45(5) OF THE ACT, OTHERWISE, IF RECEIVED UNDER SECTION 34 OF THE SAID ACT, THEN THE SAME IS TAXABLE IN THE HANDS OF ASSESSEE. THE ASSESSING OFFICER SHALL AFFORD RE ASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AND QUANTIFY THE INCOME. SIMILAR VIEW HAS BEEN TAKEN ITA NO S . 1434 & 1435 /P U N/20 1 7 RADHAKISHAN DEVKINANDAN BRIJWASI & ANR 6 BY THE TRIBUNAL IN BUNCH OF APPEALS WITH LEAD ORDER IN RAMCHANDRA NIVRUTI BARURE VS. ITO IN ITA NO.1724/PUN/2017, RELATING TO ASSESSMENT YEAR 2012 - 1 3, ORDER DATED 03.10.2018. THE GROUNDS OF APPEAL RAISED IN BOTH THE APPEALS ARE THUS, ALLOWED FOR STATISTICAL PURPOSES. 10 . IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 21 ST DAY OF JUNE , 201 9 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 21 ST JUNE , 201 9 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / TH E APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 2 , AURANGABAD ; 4. THE PR. CIT - 2 , AURANGABAD ; 5. 6. , , / DR B , ITAT, PUNE ; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE