N Baskar, Chennai V. ITO, Corporate Ward-3(2), Chennai

ITA 2202/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5622 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 08-09-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN JCIT D R
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Capital asset; Principle of natural justice
• Section: 143(3); 2(14); 147; 148; 28

Judgement Text

, A/ SMC , IN THE INCOME TAX APPELLATE TRIBUNAL A/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER I.T.A.NO.2202 /MDS./2017 ( ASSESSMENT YEAR : 2012-13 ) SHRI N.BASKAR , 72,MAIN ROAD, MANGADU, CHENNAI 600 122. VS. THE INCOME TAX OFFICER, CORPORATE CIRCLE 3(2), CHENNAI-34. PAN AHGPB 3495 A ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MR.A.S.SRIRAMAN,ADVOCATE / RESPONDENT BY : MR.B.SAGADEVAN, JCIT, D.R ! ' / DATE OF HEARING : 27.11.2017 #$%& ! ' /DATE OF PRONOUNCEMENT : 20.12.2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-11, CHENN AI DATED 27.07.2017 PERTAINING TO ASSESSMENT YEAR 2012-13. ITA NO. 2202/MDS/2017 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS FOR A DJUDICATION. 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS) 11, CHENNAI DATED 27.07.2017 IN I.T.A.NO.122/CIT(A)-11/2016-17 FOR THE ABOVE MENTIONED ASSESSMENT YEAR IS CONTRARY TO LAW, FACTS , AND IN THE CIRCUMSTANCES OF THE CASE. 2. THE CIT (APPEALS) ERRED IN DISMISSING THE GROUND S CHALLENGING THE VALIDITY OF THE RE-ASSESSMENT COMPLETED U/S 143(3) R/W SECTI ON 147 OF THE1- ACT WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION AND OUGHT TO HAVE APPRECIATED THAT THE ORDER OF RE-ASSESSMENT WAS PAS SED OUT OF TIME, (INVALID, PASSED WITHOUT JURISDICTION AND NOT SUSTA INABLE BOTH ON FACTS AND IN LAW. 3. THE CIT (APPEALS) ERRED IN CONFIRMING THE TAXABI LITY OF INTEREST ON ENHANCED COMPENSATION FOR COMPULSORY ACQUISITION OF AGRICULTURAL LANDS AMOUNTING TO ` 77,57,030/- ON THE APPLICATION OF SECTION 56(2)(VII I) OF THE ACT IN THE COMPUTATION OF TAXABLE TOTAL INCOME WITH OUT ASSIGNING PROPER REASONS AND JUSTIFICATION. 4. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE ASSESSMENT OF THE NET CONSIDERATION/INTEREST AT ` 38,78,515/- AFTER GRANTING DEDUCTION U/S 57(4) OF THE ACT WAS WRONG, ERRONEOUS, UNJUSTIFIED, INCORREC T AND NOT SUSTAINABLE IN LAW. 5. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE CONCLUSIONS REACHED TO TAX THE INTEREST ON THE ENHANCED COMPENSATION FOR THE A CQUISITION OF THE EXEMPTED CAPITAL ASSET ESPECIALLY ON THE MISCONSTRU CTION OF THE PROVISIONS OF SECTION 145A (B) OF THE ACT WERE WRONG, ERRONEOU S, UNJUSTIFIED, INCORRECT AND NOT SUSTAINABLE IN LAW. 6. THE CIT (APPEALS) WENT WRONG IN RECORDING THE FI NDINGS IN THIS REGARD IN PARA 5.3.2 OF THE IMPUGNED ORDER WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION. 7. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE DECISIONS RELIED UPON IN PARA 5.3.3 HAD NO APPLICATION TO THE FACTS OF THE C ASE AND CITED & RELIED UPON OUT OF CONTEXT, THEREBY VITIATING THE DECISION RENDERED IN PARA 5.3.2 OF THE IMPUGNED ORDER. 8. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THER E WAS NO PROPER OPPORTUNITY GIVEN BEFORE PASSING OF THE IMPUGNED OR DER AND ANY ORDER PASSED IN VIOLATION OF THE PRINCIPLES NATURAL JUSTI CE WOULD BE NULLITY IN LAW. ITA NO. 2202/MDS/2017 3 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND FOR THE ABOVE ASSESSMENT YEAR THE RETURN OF INCOME WAS FILED ON 08.09.2015 ELECTRONICALLY IN RESPONSE TO THE REOPEN ING NOTICE U/S 148 OF THE ACT DATED 13.03.2015 IN ADMITTING THE TAXABL E TOTAL INCOME AT ` 52,36,190/- INCLUDING INCOME FROM CAPITAL GAINS AT ` 46,73,137/-. LATER, THE ASSESSEE FILED ANOTHER RETURN ON 04.03. 2016 ADMITTING THE TAXABLE TOTAL INCOME AT ` 5,63,050/- WITHDRAWING THE INCOME ORIGINALLY ADMITTED UNDER THE HEAD CAPITAL GAINS. 3.1 HOWEVER, THE INCOME TAX OFFICER, CORPORATE WAR D 3(2), CHENNAI VIDE HIS RE-ASSESSMENT ORDER DATED 23.03.20 16 U/S 143(3) R/W SECTION 147 OF THE ACT HAD BROUGHT TO TAX ` 38,78,5151- U/S 56(2)(VIII) R.W SECTION 57(IV) OF THE ACT IN THE CO MPUTATION OF TAXABLE TOTAL INCOME. THE ASSESSEE RECEIVED TOTAL COMPENSA TION OF ` 2,57,93,257/- INCLUDING INTEREST ON COMPULSORY ACQU ISITION OF AGRICULTURAL PROPERTY. OUT OF THIS, INTEREST WAS ` 77,57,030/-. OUT OF THIS, DEDUCTION AT 50% WAS GRANTED U/S 56(2)(VIII) R.W SECTION 57(IV) OF THE ACT AND THE AO BROUGHT THE BALANCE AMOUNT OF ` 38,78,5151- BY RE-OPENING OF ASSESSMENT U/S.147 OF THE ACT. AGGR IEVED BY THE ORDER OF LD. ASSESSING OFFICER, THE ASSESSEE OBJECTED THE RE-OPENING OF ITA NO. 2202/MDS/2017 4 ASSESSMENT BEFORE THE LD. ASSESSING OFFICER AS WELL AS BEFORE THE LD.CIT(A). 4. BEFORE BENCH, AT THE TIME OF HEARING, THE LD.A. R DID NOT PRESS THE GROUND RELATING TO RE-OPENING OF ASSESSMENT. A CCORDINGLY, THIS GROUND STANDS DISMISSED AS NOT PRESSED. 5. HOWEVER, THE LD.A.R SUBMITTED THAT INTEREST REC EIVED ON COMPULSORY ACQUISITION OF AGRICULTURAL LAND IS NOTH ING BUT ENHANCED COMPENSATION ON THE LAND ACQUIRED BY THE AUTHORITIE S AND IT IS TO BE EXEMPTED U/S.10(37) OF THE ACT. FOR THAT PURPOSE, LD.A.R RELIED ON THE FOLLOWING ORDERS OF TRIBUNAL. A) IN THE CASE OF P.SUSHEELA VS. I.T.O REPORTED I N (2016) 48 CCH 0264 (HYD. TRIB.) B) IN THE CASE OF URVI CHIRAG SHETH VS. I.T.O RE PORTED IN (2016) 47 CCH 0414 (AHD. TRIB.) 6. ON THE OTHER HAND, LD.D.R SUBMITTED THAT INTERE ST RECEIVED ON DELAYED PAYMENT OF ENHANCED COMPENSATION IN RESPECT OF COMPULSORY ACQUISITION OF AGRICULTURAL LAND CANNOT BE TREATED AS ITA NO. 2202/MDS/2017 5 EXEMPTED INCOME AND IT IS TO BE TAXED IN TERMS OF S EC. 56(2)(VIII) R.W SECTION 57(IV) OF THE ACT. 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN MY OPINION, THE ARGUMENT OF THE LD.A.R IS HAVING NO MERIT. INTEREST ON DELAYED PAYMENT OF ENHANCED COMPENSATIO N IN RESPECT OF ACQUISITION OF IMMOVABLE PROPERTY IS A REVENUE RECE IPT AND IT IS TO BE TAXED AND CANNOT BE EXEMPTED U/S.10(37) OF THE ACT AND IT CANNOT BE CONSIDERED AS A PART OF CONSIDERATION RECEIVED IN R ESPECT OF AGRICULTURAL LAND SPECIFIED US.2(14)(IV) OF THE ACT . THIS VIEW OF MYSELF IS FORTIFIED BY THE FOLLOWING JUDGEMENTS:- A. KAMAIL SINGH V. STATE OF HARYANA* [2009] 184 TAXM AN 257 (PUNI. & HAR.) SECTION 1 94A OF THE INCOME-TAX ACT, 1961 - DEDUCTION OF TAX AT S OURCE INTEREST OTHER THAN INTEREST ON SECURITIES - WHETHER INTERES T ON DELAYED PAYMENT OF ENHANCED COMPENSATION IN RESPECT OF ACQISITION OF I MMOVABLE PROPERTY IS REVENUE RECEIPT EXIGIBLE TO TAX UNDER SECTION 4 AND , THEREFORE, IS LIABLE TO DEDUCTION OF TAX AT SOURCE UNDER SECTION 194A- HELD , YES SECTION 194-LA OF THE INCOME-TAX ACT, 161 - DEDUCTION OF TAX AT SO URCE - ACQUISITION OF CERTAIN IMMOVABLE PROPERTY, COMPENSA TION PAYMENT - WHETHER INTEREST ACCRUED ON DELAYED PAYMENT OF AMOUNT OF EN HANCED COMPENSATION IN RESPECT OF ACQUISITION OF AGRICULTURAL LAN4 WOULD P ARTAKE CHARACTER OF ITA NO. 2202/MDS/2017 6 COMPENSATION FOR AGRICULTURAL LAND WHICH IS EXCLU DED FROM OPERATION OF SECTION 194LA- HELD, NO B. TUHI RAM V. LAND ACQUISITION COLLECTOR [1993] 66 TA XMAN 127 (PUNJAB & HARYANA) SECTION 2(14)(III) OF THE INCOME-TAX ACT, 1961 - CAPITAL ASSET - AGRIC ULTURAL LAND - WHETHER SUB-CLAUSE (III) OF CLAUSE (14) OF SECTION 2 IS ULTRA VIRES - HELD, NO. SECTION 2(1A) OF THE INCOME-TAX ACT, 1961 - AGRICUL TURAL INCOME - WHETHER AMOUNTS RECEIVED AS COMPENSATION CONSEQUENT TO COMP ULSORY ACQUISITION OF AGRICULTURAL LAND SPECIFIED UNDER SECTION 2(14) (II I) IS NOT AGRICULTURAL INCOME BUT CAPITAL GAIN AND ELIGIBLE TO INCOME-TAX - HELD, YES - WHETHER INTEREST PAID/PAYABLE FOR PAYING COMPENSATION BELATEDLY IS AGRICULTURAL I NCOME - HELD, NO. SECTION 194A OF THE INCOME-TAX ACT, 1961 - DEDUCTION OF TAX AT S OURCE - REST OTHER THAN INTEREST ON SECURITIES - WHETHER PROVISIONS OF SECTION 194A APPLY TO INTEREST PAID/PAYABLE FOR PAYING COMPENSATION FOR ACQUISITIO N OF LAND AS FALLS UNDER SECTION 2(14)(III) BELATEDLY - HELD, YES. SECTION 4 OF THE INCOME-TAX ACT, 1961 - INCOME - CHARGEABLE A S - WHETHER AMOUNT RECEIVED AS INTEREST ON AMOUNT OF COMPENSATI ON ASSESSED UNDER LAND ACQUISITION ACT, 1894, OR UNDER REQUISITION AND ACQ UISITION OF IMMOVABLE PROPERTY ACT IS INCOME TAXABLE UNDER THE INCOME-TAX ACT - HELD, YES. C. BIKRAM SINGH V. LAND ACGUISITIONCOL1ECTOR [1996] 89 TAXMAN 119 (SC) SECTION 4 READ WITH SECTION 2(28A), OF THE INCOME-TAX ACT, 19 61 INCOME - ASSESSABLE AS - WHETHER INTEREST RECEIVED ON DELAYE D PAYMENT OF COMPENSATION FOR COMPULSORY ACQUISITION DETERMINED UNDER SECTION 28 OR 31 OF THE LAND ACQUISITION ACT, 1894 IS A REVENUE RECEIPT AND, THE REFORE, EXIGIBLE TO TAX - HELD, YES ITA NO. 2202/MDS/2017 7 SECTION 2(28A) OF THE INCOME-TAX ACT, 1 91 - INTEREST - MEANING OF - WHETHER AMENDED DEFINITION OF INTEREST WAS IIRTENDED TO M AKE REVENUE RECEIPT OF INTEREST ON DELAYED PAYMENT OF COMPENSATION FROM NON-TAXABLE - HELD, NO IN MY OPINION, LD.CIT(A) HAS RIGHTLY PLACED RELIAN CE ON THE ABOVE JUDGEMENTS AND HELD AGAINST THE ASSESSEE. HENCE, I DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(APPEALS) AND TH E SAME IS CONFIRMED. THIS GROUND OF APPEAL RAISED BY ASSESSEE IS REJECTE D. 8. BEFORE ME, THE ASSESSEE PLACED ONE MORE ARGUMEN T STATING THAT SPREADING OF INTEREST RECEIVED TO DIFFERENT AS SESSMENT YEARS. IN MY OPINION, THE ASSESSEE IN THIS CASE HAD NOT DEMON STRATED THAT IT IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. HENCE, I T IS TO BE TAXED ON CASH SYSTEM BASIS I.E. RECEIPT BASIS. THIS GROUND O F APPEAL IS ALSO REJECTED. 9. FURTHER, LD.A.R SUBMITTED THAT PROPER OPPORTUNI TY OF HEARING TO THE ASSESSEE BY THE LOWER AUTHORITIES WAS NOT OFFER ED DURING PROCEEDINGS, HENCE THERE IS A VIOLATION OF PRINCIPL ES OF NATURAL JUSTICE. BEFORE ME, THE LD.A.R IS NOT ABLE TO DEMONSTRATE HO W THE OPPORTUNITY ITA NO. 2202/MDS/2017 8 IS NOT GIVEN BY THE LOWER AUTHORITIES IN PROSECUTIN G THE CASE BEFORE THEM. IN THE ABSENCE OF ANY MATERIAL TO SHOW THAT THE LOWER AUTHORITIES FAILED TO GIVE PROPER OPPORTUNITY OF HE ARING TO THE ASSESSEE, THIS GROUND OF APPEAL IS ALSO DISMISSED. 10. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMI SSED. ORDER PRONOUNCED ON 20 TH DECEMBER, 2017 . SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 20 TH DECEMBER, 2017 . K S SUNDARAM. ' ( )!*+ ,+%! / COPY TO: 1 . / APPELLANT 3. ' ' -! () / CIT(A) 5. +0 1 )!)23 / DR 2. / RESPONDENT 4. ' ' -! / CIT 6. 1 45 6 / GF