Piyushkumar P Patel, Vadodara V. The ITO, Ward-1(3)(2), Vadodara

ITA 1700/AHD/2019

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 9509 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-09-2022
• Assessment Year: 2009-2010
• Appeal Filed On: 13-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; TDS
• Section: 147; 148; 37; 28; 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER I.T .A . No .1 70 0/ Ah d/2 01 9 (As se ss me nt Y ea r: 20 09- 10 ) Pi yu s h ku mar P P at e l 1/1 37 , At T ul si ga m , Ti mba R oa d, V ac hh esa r, Sa vli , Va do da ra- 38 70 01 Vs. IT O W ar d- 1( 3) (2 ), Ah me da bad [ PAN N o. BC NP P 09 82 L] (Appellant) .. (Respondent) Appellant by : Shri S. N. Divatia, Advocate Respondent by: Shri Mukesh Sharma Dat e of H ea ri ng 21.09.2022 Dat e of P ro no un ce me nt 31.10.2022 O R D E R This appeal is filed by the assessee against the order dated 01.08.2019 passed by the Ld. CIT(Appeals)-5, Vadodara for A.Y. 2009-10. 2. The grounds of appeal raised by the assessee read as under: “1.1 The order passed u/s.250 on 1-8-2019 for A.Y.2009-10 by CIT(A)-5, Vadodara upholding the addition of Rs.22,45,995/- is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the submissions made and evidence produced by the appellant with regard to the impugned addition. 2.1 The Ld CIT(A) has grievously erred in law and facts in upholding the validity of reopening u/s 147 and notice u/s.148 dated 31.03.2016 though the conditions precedent were not fulfilled. 3.1 The Ld. CIT(A) has grievously erred in law and on facts in confirming addition of Rs.22,45,995/- towards delayed payment interest on compensation received on acquisition of land. 3.2 That in the facts and circumstances of the case as well as in law, the Ld. CIT(A) ought not to have upheld the addition of Rs.22,45,995/- towards delayed payment interest on compensation received on acquisition of land. 3.3 Both the lower authorities have failed to appreciate in right perspective the law relating to interest on enhanced compensation and they ought to have allowed spread over of the interest over the earlier years. It is, therefore, prayed that the addition of Rs.22,45,995/- upheld by the CIT(A) may kindly be deleted.” 3. The assessee is an individual and derives income mainly from interest on deposits. The assessee had not filed return of income for A.Y. ITA No.1700/Ahd/2019 Piyushkumar P Patel vs. ITO Asst.Year –2009-10 - 2 - 2009-10 u/s 139(1) in view of income below taxable limit. The Assessing Officer issued notice u/s 148 on 31.03.2016. The assessee filed his return for A.Y. 2009-10 on 11.05.2016 declaring total income of Rs. 2,20,820/-. The copy of reasons recorded was provided on 05.08.2016 to the assessee. The Assessing Officer observed that the assessee had not disclosed interest income of Rs. 1,58,559/- on FDRs with PNB. Further, though the assessee had claimed TDS of Rs. 2,16,750/- on delayed interest on compensation towards land acquisition by Sardar Sarovar Nigam Ltd. the interest of Rs. 22,45,995/- was not included in the return nor he had applied for spread over of interest over years. Hence, the Assessing Officer made addition of Rs. 22,45,995/- on account of interest on enhanced compensation. 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. The Ld. AR submitted that the assessee was an agriculturist since long and his land bearing Survey No. 30 at Village Tulsi Gam District Savli was acquired on 18.12.1991 by the State Government. He was awarded enhanced compensation of Rs. 9,30,019/- by the order of District Court on 26.10.2007 and further interest of Rs. 22,45,995/- on such compensation. The Ld. AR submitted that the assessee received the interest of Rs. 22,45,995/- on enhanced compensation during the financial year 2008-09. Government deducted tax at source of Rs. 2,31,337/- on the said interest and paid net amount of Rs. 29,44,676/- on 22.09.2008. The Ld. AR further submitted that Assessing Officer made addition on account of interest received on enhanced compensation as per provision of Section 145A(b) which was inserted by Finance Act, 2009 w.e.f. 01.04.2010, hence basis on which the Assessing Officer made addition was not part of statute during the financial year 2008-09 relevant to A.Y. 2009-10. Thus, the Ld. AR submitted that the addition was not valid in law and should be deleted. The ITA No.1700/Ahd/2019 Piyushkumar P Patel vs. ITO Asst.Year –2009-10 - 3 - Ld. AR further submitted that the interest on enhanced compensation was offered by spreading over the period from date of possession till the date of payment in view of the decision in case of Rama Bai 181 ITR 400. The Ld. AR submitted that Section 145A(b) was not applicable for the year under appeal. The Ld. AR submitted that the CIT(A) rejected the contentions of the assessee relying upon the decision in case of CIT vs. Ghanshyam HUF and further that interest income was never shown in ITR for earlier years. The Ld. AR relied upon the decision of the Jurisdictional High Court in case of Movaliya Bhikhubhai Balabhai vs. ITO 388 ITR 343 (Guj. HC). 6. The Ld. DR submitted that the decision of the Hon’ble Supreme Court in case of Ghanshyam (HUF) 182 Taxman 368 (SC) was properly applied by the CIT(A) as interest on excess compensation u/s 28 of Land Acquisition Act form part of enhanced compensation u/s 45(5)(b) and therefore are taxable as held in that case. In the present case the assessee received interest on enhanced compensation and the same is taxable in A.Y. 2009-10 as per Section 145A(b) of the Act. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). 7. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that provisions of Section 145A(b) of the Income Tax Act, 1961 was inserted by Finance Act, 2009 w.e.f. 01.04.2010, thus the same is not applicable from A.Y. 2009-10 as the effective date for applicability of the said Section is 01.04.2010 whereas the assessee received the interest on enhanced compensation on 22.09.2008 i.e. F.Y. 2008-09 relevant to A.Y. 2009-10. Besides this, the Hon’ble Gujarat High Court in case of Movaliya Balabhai (supra) after considering the decision of the Hon’ble Supreme Court in case of Ghanshyam (HUF)’s case (Supra) held that interest under Section 28 of the Act of 1894 partakes the character of compensation and does not fall within the ambit of the ITA No.1700/Ahd/2019 Piyushkumar P Patel vs. ITO Asst.Year –2009-10 - 4 - expression “interest” as contemplated in Section 145A of the Income Tax Act, 1961. Thus, the ratio of the jurisdictional High Court in case of Movaliya Balabhai is squarely applicable in the present case. The Assessing Officer as well as the CIT(A) failed to take cognisance of the correct interpretation of the decision of the Hon’ble Apex Court in case of Ghanshyam (HUF)’s case (Supra), therefore, the addition made by the Assessing Officer does not survive. The appeal of the assessee is allowed. 8. In result, appeal of the assessee is allowed. This Order pronounced in Open Court on 31/10/2022 Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad; Dated 31/10/2022 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 28.10.2022(The order is dictated in her own computer) 2. Date on which the typed draft is placed before the Dictating Member 28.10.2022 3. Other Member..................... 4. Date on which the approved draft comes to the Sr.P.S./P.S .10.2022 5. Date on which the fair order is placed before the Dictating Member for pronouncement .10.2022 6. Date on which the fair order comes back to the Sr.P.S./P.S 31.10.2022 7. Date on which the file goes to the Bench Clerk 31.10.2022 8. Date on which the file goes to the Head Clerk.......................................... 9. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 10. Date of Despatch of the Order..........................................