ITO, Erode V. S.Narayanan, Erode

ITA 188/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5928 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 03-07-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 01-02-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASISH TRIPATHI
• Assessee Lawyers: N C RAVIKRISHNAN
• Section: 45(5); 56; 28; 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI ... , , # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER /. I.T.A. NO. 188/MDS/2017 & C.O. NO. 32/MDS/2017 / ASSESSMENT YEAR : 2013-14 THE INCOME TAX OFFICER, WARD 1(2), ERODE. VS. SHRI S. NARAYANAN, NO. 207, AGRAHARAM STREET, ERODE 638 001. [PAN: BKFPS 9440G] ( % /APPELLANT) ( &'% /RESPONDENT & CROSS OBJECTOR) % ( / APPELLANT BY : SHRI ASISH TRIPATHI, JCIT &'% ( / RESPONDENT BY : SHRI N.C. RAVIKRISHNAN, ADVOCATE ( /DATE OF HEARING : 12.09.2017 ( /DATE OF PRONOUNCEMENT : 31.10.2017 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE REVENUE FILED AN APPEAL AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-3, COIMBATORE, IN ITA NO. 4/16 -17 DATED 22.11.2016 :-2-: ITA NO. 188/MDS/2017 CO NO. 32/MDS/2017 FOR ASSESSMENT YEAR 2013-14 AND THE ASSESSEE FILED THE CO IN ITA NO. 32/2017. 2. SHRI. S. NARAYANAN, THE ASSESSE, AN INDIVIDUAL A DMITTED HIS INCOME FROM BROKERAGE. WHILE MAKING THE ASSESSMENT FOR ASSESSMENT YEAR 2013-14, THE AO FOUND THAT THE ASSESSEES LANDS IN MUTHAMPALAYAM VILLAGE, ERODE DISTRICT BELONGING TO HIM AND OTHERS WAS ACQU IRED BY THE STATE GOVERNMENT IN 1991 AND THE COMPENSATION WAS SANCTIO NED BY THE AWARD NO. 2/2009 DATED 21.06.2000. THE ASSESSEE WENT ON APPE AL AGAINST THE ORDER REQUESTING FOR ENHANCED COMPENSATION TO THE HIGH CO URT, WHICH PASSED THE ORDER ON 02.06.2009. SUBSEQUENTLY, HONBLE SUPREME COURT HAS AWARDED ENHANCED COMPENSATION ALONG WITH INTEREST. ON PERU SING THE CALCULATION SHEET DULY ENDORSED BY THE EXECUTIVE ENGINEER AS WE LL AS THE REVENUE DISTRICT OFFICER, THE AO NOTED THAT THE ASSESSEE HAS BEEN AW ARDED THE COMPENSATION FOR THE LAND AS WELL AS INTEREST ON THE COMPENSATIO N AND THE ASSESSEE HAS RECEIVED RS. 2,44,56,449/- TOTAL INTEREST. INVOKING SECTION 145A(B) R.W.S. 56(III) R.W.S. 57(IV), THE ASSESSING OFFICER ADDED 50% OF THE INTEREST RECEIPT AT RS. 1,22,28,224/- TO THE RETURN INCOME. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE CIT(A) APPLYING THE R ATIO OF THE SUPREME COURT IN THE CASE OF CIT FARIDABAD VS GANSHAYAM (HUF) 315 ITR 1 SC HELD THAT SINCE THE LAND COMPULSORILY ACQUIRED BY THE STATE GOVERNMENT IS AGRICULTURAL :-3-: ITA NO. 188/MDS/2017 CO NO. 32/MDS/2017 IN NATURE , THE INTEREST RECEIVED IS PART OF ENHA NCED COMPENSATION AND HENCE THE COMPENSATION AS WELL AS THE ENHANCED COMPENSAT ION IS AN INCOME WHICH IS EXEMPTED U/S. 10(37) . SINCE IT DOES NOT FORM PA RT OF THE TOTAL INCOME, THE PROVISIONS OF SECTION 56 DO NOT APPLY. AGGRIEVED, THE REVENUE FILED THIS APPEAL. THE ASSESSEE FILED THE CO SUPPORTING THE ORDER OF THE CIT (A). 3. THE REVENUE MAINLY CHALLENGED THE CIT (A) ORDER FOR THE REASON THAT THE ASSESSEE HAS RECEIVED INTEREST @ 9% AS WEL L AS 15% P.A. AS PER THE WORK SHEET PROVIDED BY THE REVENUE DIVISIONAL OFFIC ER, ERODE . THE INTEREST RECEIVED @ 15% P.A. IS IN THE NATURE OF INTEREST FO R THE DELAYED PAYMENT AND HENCE TAXABLE FOR WHICH NO EXEMPTION CAN BE GRANTED . THE CIT (A) OUGHT TO HAVE APPRECIATED THAT THE INTEREST RECEIVED BY THE ASSESSEE IS IN THE NATURE OF INTEREST FOR DELAYED PAYMENT AS ENVISAGED IN SECTIO N 34 OF THE LAND ACQUISITION ACT, 1894 WHICH IS SUBSTANTIATED BY TH E WORKING SHEET ISSUED BY THE REVENUE DIVISIONAL OFFICER, ERODE. THE AO WAS RIGHT IN CONSIDERING THE INTEREST SO RECEIVED WHICH IS NOT PART OF THE COMPE NSATION AS INCOME OF THE ASSESSEE IN TERMS OF THE PROVISIONS OF SECTION 56 (2)(VIII) R.W.S. 145A. 4. WE HEARD THE RIVAL CONTENTIONS, GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. THE SUPREME COURT IN THE CASE O F CIT, FARIDABAD VS GANSHYAM (HUF) 2009, 315 ITR 1 SC AFTER ANALYSING VARIOUS PROVISIONS OF :-4-: ITA NO. 188/MDS/2017 CO NO. 32/MDS/2017 THE LAND ACQUISITION ACT, 1894 HELD , INTER ALIA, THAT SECTION 23(1A) PROVIDES FOR ADDITIONAL AMOUNT. IT TAKES CARE OF INCREASE IN THE VALUE AT THE RATE OF 12 % PER ANNUM. SIMILARLY, UNDER SECTION 23(2) OF THE 1894 ACT , THERE IS A PROVISION FOR SOLATIUM WHICH ALSO REPRESENTS PART O F ENHANCED COMPENSATION. SIMILARLY, SECTION 28 EMPOWERS THE COURT IN ITS DIS CRETION TO AWARD INTEREST ON THE EXCESS AMOUNT OF COMPENSATION OVER AND ABOVE WH AT IS AWARDED BY THE COLLECTOR. IT INCLUDES ADDITIONAL AMOUNT UNDER SECT ION 23(1A) AND SOLATIUM UNDER SECTION 23(2) OF THE SAID ACT. SECTION 28 OF THE 1894 ACT APPLIES ONLY IN RESPECT OF THE EXCESS AMOUNT DETERMINED BY THE COUR T AFTER REFERENCE UNDER SECTION 18 OF THE 1894 ACT. IT DEPENDS UPON THE CLA IM, UNLIKE INTEREST UNDER SECTION 34 WHICH DEPENDS ON UNDUE DELAY IN MAKING T HE AWARD. IT IS TRUE THAT 'INTEREST' IS NOT COMPENSATION. IT IS EQUALLY TRUE THAT SECTION 45(5) OF THE (IT) 1961 ACT REFERS TO COMPENSATION. BUT AS DISCUSSED HEREINABOVE, WE HAVE TO GO BY THE PROVISIONS OF THE 1894 ACT WHICH AWARDS ' INTEREST' BOTH AS AN ACCRETION IN THE VALUE OF THE LANDS ACQUIRED AND IN TEREST FOR UNDUE DELAY. INTEREST UNDER SECTION 28 UNLIKE INTEREST UNDER SEC TION 34 IS AN ACCRETION TO THE VALUE, HENCE IT IS A PART OF ENHANCED COMPENSAT ION OR CONSIDERATION WHICH IS NOT THE CASE WITH INTEREST UNDER SECTION 34 OF T HE 1894 ACT. SO ALSO ADDITIONAL AMOUNT UNDER SECTION 23(1A) AND SOLATIUM UNDER SECTION 23(2) OF THE 1961 ACT FORMS PART OF ENHANCED COMPENSATION UNDER SECTION 45(5)(B) OF THE 1961 ACT. :-5-: ITA NO. 188/MDS/2017 CO NO. 32/MDS/2017 5.1 SECTION 10 (37) OF THE INCOME TAX ACT,1961 IS E XTRACTED AS UNDER: 37. IN THE CASE OF AN ASSESSEE, BEING AN INDIVIDU AL OR A HINDU UNDIVIDED FAMILY, ANY INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS ARISING FROM THE TRANSFER OF AGRICULTURAL LA ND, WHERE- (I) SUCH LAND IS SITUATE IN ANY AREA REFERRED TO IN ITE M (A) OR ITEM (B) OF CUB-CLAUSE (III) OF CLAUSE (14) OF SECT ION 2; (II) SUCH LAND, DURING THE PERIOD OF TWO YEARS IMMEDIATE LY PRECEDING THE DATE OF TRANSFER, WAS BEING USED FOR AGRICULTURAL PURPOSES BY SUCH HINDU UNDIVIDED FAMIL Y OR INDIVIDUAL OR A PARENT OF HIS; (III) SUCH TRANSFER IS B WAY OF COMPULSORY ACQUISITION UN DER ANY LAW, OR A TRANSFER THE CONSIDERATION FOR WHICH IS D ETERMINED OR APPROVED BY THE CENTRAL GOVERNMENT OR THE RESERV E BANK OF INDIA; (IV) SUCH INCOME HAS ARISEN FROM THE COMPENSATION OR CONSIDERATION FOR SUCH TRANSFER RECEIVED BY SUCH AS SESSEE ON OR AFTER THE 1 ST DAY OF APRIL, 2004. EXPLANATION FOR THE PURPOSE OF THIS CLAUSE, THE E XPRESSION COMPENSATION OR CONSIDERATION INCLUDES THE COMPEN SATION OR CONSIDERATION ENHANCED OR FURTHER ENHANCED BY ANY C OURT, TRIBUNAL OR OTHER AUTHORITY; 5.2 FROM THE ABOVE, IT IS CLEAR THAT BUT FOR THE I NTEREST GRANTED U/S. 34 OF THE LAND ACQUISITION ACT, 1894, ALL OTHER GRANTS/AWARDS UNDER THE LAND ACQUISITION ACT, 1894 ARE ACCRETION TO THE VALUE IE PART OF THE COMPENSATION FOR THE AGRICULTURAL LAND OR CONSIDERA TION TOWARDS THE AGRICULTURAL LAND , CHARGEABLE UNDER THE HEAD CAPI TAL GAINS ARISING FROM THE :-6-: ITA NO. 188/MDS/2017 CO NO. 32/MDS/2017 TRANSFER OF AGRICULTURAL LAND BUT EXEMPT U/S10 (37 ), SUPRA. HOWEVER, THE INTEREST GRANTED U/S. 34 OF THE LAND ACQUISITION AC T, 1894 IS NOT PART OF COMPENSATION OR CONSIDERATION ENHANCED BY ANY COURT , TRIBUNAL OR OTHER AUTHORITY AND HENCE THE INTEREST RECEIVED U/S. 34 O F THE LAND ACQUISITION ACT, 1894 BECOMES AN INCOME OF THE ASSESSEE WITHIN THE SCOPE OF SECTION 56(2)(VIII) R.W.S. 145A. NEITHER THE ASSESSING OFF ICER NOR THE CIT (A) HAS GIVEN THE BREAK-UP OR THE COMPONENTS OF THE C OMPENSATION INCLUDING THE ENHANCED COMPENSATION OR CONSIDERATION FOR THE AGRI CULTURAL LAND AND THE INTEREST RECEIVED U/S 34 OF THE LAND ACQUISITION A CT, 1894. 6. IN THE CIRCUMSTANCE, WE DEEM IT FIT TO SET ASIDE THE ORDER OF THE CIT (A) AND RESTORE THE MATTER TO THE AO. THE A O SHALL RE-EXAMINE THE MATTER ON THE ABOVE LINES AND AFTER GIVING ADEQUATE OPPORTUNITY TO THE ASSESSEE , CHARGE THE INTEREST GRANTED U/S. 34 OF THE LAND ACQUISITION ACT, 1894 AS AN INCOME U/S. 145A R.W.S. 56(2)(VIII) R .W.S. 57. TO THIS EXTENT, THE REVENUES APPEAL IS TREATED AS ALLOWED. W E HAVE CONSIDERED THE CO FILED BY THE ASSESSEE , TO THE EXTENT THE REV ENUES APPEAL IS TREATED AS ALLOWED , THE CO IS TREATED AS DISMISSED. :-7-: ITA NO. 188/MDS/2017 CO NO. 32/MDS/2017 7. IN THE RESULT, REVENUES APPEAL IN ITA NO. 188/M DS/2017 IS TREATED AS ALLOWED AND THE ASSESSEES C O N O. 32/MDS/2017 IS TREATED AS DISMISSED. ORDER PRONOUNCED ON 31 ST OCTOBER, 2017 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) /ACCOUNTANT MEMBER /CHENNAI, 0 /DATED: 31 ST OCTOBER, 2017 JPV ( &12 32 /COPY TO: 1. %/ APPELLANT 2. &'% /RESPONDENT 3. 4 ) (/CIT(A) 4. 4 /CIT 5. 2 & /DR 6. 7 /GF