ACIT, (TDS), Chandigarh V. Sub Divisional Magistrate-cum-Land Acquisition Collector, Rajpura

ITA 25/CHANDI/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5218 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 15-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANAJIT SINGH
• Assessee Lawyers: PARIKSHIT AGGA RWALCA
• Keywords: Competent authority
• Section: 201(1); 56; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH B, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 25/CHD/2016 ASSESSMENT YEAR: 2013-14 THE ACIT (TDS), VS. THE SDM-CUM- CHANDIGARH. LAND ACQUISITION COLLECTOR, MINI SECRETARIAT, RAJPURA. TAN NO. : PTLS14287A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANAJIT SINGH, SR.DR RESPONDENT BY : SHRI PARIKSHIT AGGARWAL,CA DATE OF HEARING : 03.01.2018 DATE OF PRONOUNCEMENT : 22.02.2018 ORDER PER DIVA SINGH,JM THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE ASSAILIN G THE CORRECTNESS OF THE ORDER DATED 29.10.2015 OF CIT(A) PATIALA PERTAINING TO 2013-14 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS : (1) WHETHER IN THE FACT AND CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD.CIT(A) / PATIALA IS RIGHT IN HOLDING THAT PAYMENT MADE BY ASSESSEE IS .OUTSIDE THE AMBIT AND SCOPE OF SECTION 194A. (2) WHETHER THE LD.CIT(A), PATIALA IS JUSTIFIED IN DELE TING THE DEMAND OF RS.56,10,163/- CREATED ON ACCOUNT OF NON DEDUCT ION OF TAX OUT OF INTEREST PAYMENT IGNORING THE FACT THAT CORRIGENDUM OF THE W ARD DATED 12.04.2012 ISSUED BY THE ASSESSEE DEDUCTOR ITSELF , DECLARI NG THE INTEREST AS ADDITIONAL COMPENSATION, RELIED UPON BY THE AO,WAS ISSUED ON 0 4.07.2013 I.E. AFTER A PERIOD OF ABOUT 9 MONTHS FROM THE DATE OF SURVEY/IN SPECTION CARRIED OUT BY THE DEPARTMENT IN THIS CASE ON 25.09.2012,EVEN THOU GH THE AWARD WAS PASSED ON 12.04.2012. IT IS CLEAR THAT THE PLEA TAK EN BY THE ASSESSEE DEDUCTOR DECLARING THE INTEREST PAYMENT AS AD DITIONAL COMPENSATION IS AN AFTER THOUGHT . 2. THE LD. AR, INVITING ATTENTION TO THE COPY OF THE ORDER DATED 30.06.2016 IN ITA 131/CHD/2016 IN THE CASE OF DCIT (TDS) LUDHIANA VS M/S DEDICATED FREIGHT CORRIDOR CORPORATION LTD. SUBMITTED THAT THE POINT AT ISSUE IS FULLY COVERED IN FAVOUR OF THE ASSESSEE. 3. SINCE THE PRESENT APPEAL HAS BEEN FILED BY THE REVEN UE, THE LD. SR. DR WAS REQUIRED TO ADDRESS THE ISSUES. THE LD. SR. DR RELIED UPON THE ASSESSMENT ORDER. ITA 25/CHD/2016 A.Y. 2013-14 PAGE 2 OF 4 4. THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF TDS INSPECTION ON EXAMINATION OF RECORDS OF SDM-CUM-LAC RAJPURA, IT WAS NOTICED THAT PAYMENTS ON ACCOUNT OF LAND ACQUISITION COMPENSATION ALONG WITH INTEREST WAS MADE WITHOUT TDS UNDER SECTION 194A FOR PAYMENT OF INTEREST AMOUNTING TO RS. 2,37,71,875/-. ACCORDINGLY, A SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE REQUIRING THE SAID AUTHORITY TO EXPLAIN WHY IT MAY NOT BE TREATED AS PERSON IN DEFAULT U/S 201/201(1A). IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED THAT NO INTERE ST HAD BEEN PAID AND IT WAS ACTUALLY ADDITIONAL COMPENSATION WHICH HAD WRONGLY BEEN TYPED AS INTEREST. ACCORDINGLY, THE SAME WAS EXPLAINED AS TYPOGRAPHICAL MISTAKE. THE ASSESSEE ALSO STATED THAT IT HAD FILED A COR RIGENDUM OF THE AWARD CORRECTING THE MISTAKE. HOWEVER, THE AO DID NOT A CCEPT THE EXPLANATION IN VIEW OF THE FACT THAT AS PER AWARD DATED 1 2.04.2012 AT PAGE 16 HE NOTED THAT CALCULATION OF INTEREST WAS @ 12% AND T HUS CORRIGENDUM WAS TREATED AS WITHOUT ANY EVIDENCE AND FILED AFTER SHOW CAUSE. 4. IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, THE AS SESSEE REITERATED THE SUBMISSIONS STATING THAT THE AMOUNT WAS ADDITIONAL COMPENSATION AND PAID U/S 12(1A) AND THUS WAS NEITHER INT EREST NOR SOLATIUM. CONSIDERING THE FOLLOWING SUBMISSIONS, THE RELIEF WAS G RANTED TO THE ASSESSEE BY THE CIT(A) HOLDING AS UNDER : 4.3 I HAVE GONE THROUGH THE SUBMISSIONS. SECTION 5 6(2)(VIII) HAS BEEN INSERTED W.E.F. 01.04.2010. IT PROVIDES FOR TREATMENT OF INT EREST RECEIVED ON COMPENSATION OR ENHANCED COMPENSATION AS INCOME FROM OTHER SOURCES. THUS, THIS PROVISION AS INCORPORATED IN THE ACT IS EFFECTIVE FOR ASSESSMENT YEAR CONCERN ED. IN THIS CASE, AS PER DETAILS NOTED BY THE A.O. IN THE ORDER, THE COMPENSATION AMOUNTS TO RS.2 3,77,18,750/- WHILE THE INTEREST ON IT AMOUNTED TO RS.2,37,71,875/- @ OF 12%P.A. THE APPEL LANT HAS CONTENDED THAT ONLY ADDITIONAL COMPENSATION @ 12% IS PAID AS PROVIDED F OR IN THE LAND ACQUISITION ACT WHICH IS MANDATORY IN NATURE AND NECESSARY CORRIGENDUM IN THIS REGARD IS PASSED. THE A.O. HAS NOT COME OUT WITH ANY EVIDENCE THAT THE CORRIGENDUM PASSED IS NOT CORRECT. THE CASE OF THE A.O. IS BUILT UP AROUND THE AWARD GIVEN IN RESPECT OF WHICH ONLY THE CORRIGENDUM IS PASSED. IN THE CASE OF CIT VS. GHANSHAYAM (HUF) 315 ITR 1 ( SC), IT IS OBSERVED THAT SEC. 23(IA) WAS INTRODUCED IN THE 1894 ACT TO MITIGATE T HE HARDSHIP CAUSED TO THE OWNER OF THE LAND WHO IS DEPRIVED OF ITS ENJOYMENT BY TAKING POS SESSION FROM HIM AND USING IT FOR PUBLIC PURPOSE, BECAUSE OF CONSIDERABLE DELAY IN MA KING THE AWARD AND OFFERING PAYMENT THEREOF (SEE: ASSTT. COMMR. GADAG SUB-DIVIS ION, GADAG VS. MATHAPATHI BASAVANNEWA & ORS. AIR 1995 SC 2492]. TO OBVIATE SU CH HARDSHIP, SECTION 23(1A) WAS INTRODUCED AND THE LEGISLATURE ENVISAGED THAT THE O WNER IS ENTITLED TO 12 PER CENT PER ANNUM ADDITIONAL AMOUNT ON THE MARKET VALUE FOR A P ERIOD COMMENCING ON OR FROM THE DATE OF PUBLICATION OF THE NOTIFICATION UNDER S. 4( 1) OF THE 1894 ACT UPTO THE DATE OF THE AWARD OF THE COLLECTOR OR THE DATE OF TAKING POSSES SION OF THE LAND, WHICHEVER IS EARLIER. THE ADDITIONAL AMOUNT PAYABLE UNDER SECTION 23(1 A) OF THE 1894 ACT IS NEITHER INTEREST NOR SOLATIUM. IT IS AN ADDITIONAL COMPENSATION DESI GNED TO COMPENSATE THE OWNER OF THE LAND, FOR THE RISE IN PRICE DURING THE PENDENCY OF THE LAND ACQUISITION PROCEEDINGS. IT IS A MEASURE TO OFFSET THE EFFECT OF INFLATION AND THE C ONTINUOUS RISE IN THE VALUE OF PROPERTIES, [SEE: STATE OF TAMIL NADU & ORS. VS. L KRISHNAN & ORS. AIR 1996 SC 497]. THEREFORE, THE AMOUNT PAYABLE UNDER S. 23( IA) OF T HE 1894 ACT IS AN ADDITIONAL COMPENSATION IN RESPECT TO THE ACQUISITION AND HAS TO BE RECKONED AS PART OF THE MARKET VALUE OF THE LAND. SUB-SECTION, (1A) OF SECTION 23 WAS INTRODUCED IN THE LAND ACQUISITION ITA 25/CHD/2016 A.Y. 2013-14 PAGE 3 OF 4 (AMENDMENT) ACT 1984. IT PROVIDES THAT IN EVERY CAS E THE COURT SHALL AWARD AN AMOUNT AS ADDITIONAL COMPENSATION @ 12 PER CENT PER ANNUM ON THE MARKET VALUE OF THE LAND FOR THE PERIOD COMMENCING ON AND FROM THE DATE OF PUBLI CATION OF THE NOTIFICATION UNDER SEC.4(L) TO THE DATE OF THE AWARD OF THE COLLECTOR OR TO THE DATE OF TAKING POSSESSION OF THE LAND, WHICHEVER IS EARLIER. IN OTHER WORDS SUB-SECTION (1 A) OF SECTION 23 PROVIDES FOR ADDITIONAL COMPENSATION. THE SAID SUB-SECTION TAKES CARE OF IN CREASE IN THE VALUE @ 12 PER CENT PER ANNUM. IN ADDITION TO THE MARKET VALUE OF THE LAN D, AS ABOVE PROVIDED, THE COURT SHALL IN EVERY CASE AWARD A SUM OF 30 PERCENT ON SUCH MARKET VALUE , IN CONSIDERATION OF THE COMPULSORY NATURE OF ACQUISITION. THIS IS UNDER SECTION 23(2) OF THE 1894 ACT. IN SHORT, SECTION 23(2) TALKS ABOUT SOLATIUM. AWARD OF SOLATIUM IS MANDATORY. SIM ILARLY, PAYMENT OF ADDITIONAL AMOUNT UNDER SECTION 23(1 A) IS MANDATORY. THE AWARD OF IN TEREST UNDER SECTION 28 OF THE 1894 ACT IS DISCRETIONARY. SECTION 28 APPLIES WHEN THE AMOUN T ORIGINALLY AWARDED HAS BEEN PAID OR DEPOSITED AND WHEN THE COURT AWARDS EXCESS AMOUN T.. 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 AMOUNT AWARDED BY THE COLLECTOR. THE COMPENSATION AWARDED BY THE COURT INCLUDES THE ADDITIONAL COMPEN SATION AWARDED UNDER SECTION 23(1A) AND THE SOLATIUM UNDER SECTION 23(2) OF THE SAID AC T. THIS AWARD OF INTEREST IS NOT MANDATORY BUT IS LEFT TO THE DISCRETION OF THE COURT. SECTION 28 IS APPLICABLE ONLY IN RESPECT OF THE EXCESS AMOUNT, WHICH IS DETERMINED BY THE COURT AFTER A RE FERENCE UNDER SECTION 18 OF THE 1894 ACT. SECTION 28 DOES NOT APPLY TO CASES OF UNDUE DELAY I N MAKING AWARD FOR COMPENSATION [SEE: RAM CHAND & ORS. VS. UNION OF INDIA & ORS. 1994 (1) SCC 44]. IN THE CASE OF SHREE VIJ'AY COTTON & OIL MILLS LTD. VS. STATE OF GUJARAT (1991) 1 SCC 262, THIS COURT HAS HELD THAT INTEREST IS DIFFERENT FROM COMPENSATION. TO SUM UP, INTEREST IS DIFFERENT FROM COMPEN SATION. HOWEVER, INTEREST PAID ON THE EXCESS AMOUNT UNDER SECTION 28 OF THE 1894 ACT DEPENDS UPO N A CLAIM BY THE PERSON WHOSE LAND IS ACQUIRED WHEREAS INTEREST UNDER SECTION 34 IS FOR D ELAY IN MAKING PAYMENT. THIS VITAL DIFFERENCE NEEDS TO BE KEPT IN MIND IN DECIDING THIS MATTER. I NTEREST UNDER SECTION 28 IS PART OF THE AMOUNT OF COMPENSATION WHEREAS INTEREST UNDER SECTI ON 34 IS ONLY FOR DELAY IN MAKING PAYMENT AFTER THE COMPENSATION AMOUNT IS DETERMINED. INTERE ST UNDER SECTION 28 IS A PART OF ENHANCED VALUE OF THE LAND WHICH IS NOT THE CASE IN THE MATT ER OF PAYMENT OF INTEREST UNDER SECTION 34.' LOOKING INTO THE FACTS OF THE CASE, IT IS NOTED THA T THE APPELLANT HAS SPECIFICALLY SUBMITTED BEFORE THE A.O. THAT IN THIS CASE ONLY AD DITIONAL COMPENSATION U/S 23(1A) OF THE LAND ACQUISITION ACT, 1894 HAS BEEN GIVEN AND IT IS NOT PAYMENT OF INTEREST WHICH IS PAYABLE UNDER SECTIONS 28 & 34 OF THE SAID ACT. COR RIGENDUM IN THIS REGARD HAS ALSO BEEN PASSED AND THESE FACTS ARE NOT DISPUTED BY THE A.O. IN THE ORDER APPEALED AGAINST OR IN THE COUNTER COMMENTS. THE COPY OF AWARD SHOWS PROVISION FOR PAYMENT OF ADDITIONAL COMPENSATION @ 12% FROM THE DATE OF NOTIFICATION TO THE DATE OF AWARD. THEREFORE, LOOKING INTO THE FACT OF THE CASE, I AM OF THE OPIN ION THAT THE PAYMENT NOT BEING IN THE NATURE OF INTEREST, IS OUTSIDE THE AMBIT AND SCOPE OF SECTION 194A. THUS, THE APPELLANT CANNOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT U/S 201(1) O R 201(1A) OF THE INCOME TAX ACT, 1961. THEREFORE, THE DEMAND OF RS.56,10,163/- RAISED UNDE R SECTION 201 IS HEREBY DELETED. THE GROUNDS OF APPEAL ARE, THEREFORE, ALLOWED. 5. IN THE LIGHT OF THE SUBMISSIONS OF THE PARTIES BEFORE T HE BENCH AND TAKING NOTE OF THE FACT THAT NOTHING HAS BEEN PLACED ON RECORD TO SHOW THAT THE CORRIGENDUM PASSED BY THE COMPETENT AUTHORI TY HAS BEEN WITHDRAWN AND TAKING NOTE OF THE ORDER OF THE CO-ORDINAT E BENCH IN THE CASE OF THE DCIT VS. M/S DEDICATED FREIGHT CORRIDOR COR PORATION LTD. (CITED SUPRA) THE IMPUGNED ORDER IS UPHELD. THE RELEVANT FIN DING OF THE CO-ORDINATE BENCH WHEREIN ALSO ADDITIONAL COMPENSATION WAS WRONGLY SHOWN AS INTEREST INITIALLY BY MISTAKE AND THEREAFTER CORR ECTED, IT IS SEEN IS AVAILABLE ON RECORD. IN THE PECULIAR FACTS AND CIRCUMSTANC ES AS AVAILABLE ON RECORD, WE FIND NO GOOD REASON TO INTERFERE WITH THE ORDER. RELEVA NT ITA 25/CHD/2016 A.Y. 2013-14 PAGE 4 OF 4 FINDING IS REPRODUCED HEREUNDER : 7. WE HAVE CAREFULLY CONSIDERED THE SUB MISSIONS. WE FIND THAT AS PER PROVISIONS OF CLAUSE (B) OF SECTION MSA OF THE INCO ME 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 PA YMENT 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 FAC T 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 REP ORT. IT IS UNDISPUTED THAT THE PAYMENT IN THIS REGARD DOES NOT RELATE TO ANY AWARD BY THE COURT REGARDING PAYMENT OF INTEREST. THE PAYMENT HAS BEEN MADE AS PER SECTION 23 (1A) OF THE LAND ACQUISITION ACT, 1894 WHICH WAS ERRONEO USLY MENTIONED AS INTEREST IN THE AWARD OF COMPETENT AUTHORITY. THE CLARIFICATION IN REGARD HAS BEEN ISSUED BY THE SPECIAL SECRETARY REVENUE, GOVERNMENT OF PUNJAB. LE TTER WAS ALSO ISSUED TO THE CHIEF COMMISSIONER OF INCOME TAX, CHANDIGARH CLARIF YING THE POSITION. IN THESE CIRCUMSTANCES, WE AGREE WITH THE LD. CIT(A) T HAT IMPUGNED AMOUNT WAS ADDITIONAL COMPENSATION PAID 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 SUBSTANCE OF THE TRANSACTION WHICH H AS TO BE TAKEN INTO ACCOUNT IN ASSESSMENT PROCEEDINGS AND NOT THE NOMENCLATURE TO THE SAME. THE REVENUE IN GROUNDS OF APPEAL HAS REFERRED TO THE DECISION OF H ON'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 T HIS DECISION HELPS THE CASE OF REVENUE. ACCORDINGLY, WE DO NOT FIND ANY MERIT IN T HE GROUNDS RAISED BY THE REVENUE. ACCORDINGLY, WE UPHOLD THE ORDER OF LD. CI T(A). 6. ACCORDINGLY IN THE ABSENCE OF ANY CONTRARY DECISION O R DISTINCTION ON FACTS WE FIND NO GOOD REASON TO INTERFERE WITH THE IMPUGNE D ORDER RESPECTFULLY FOLLOWING THE PRECEDENT THE DEPARTMENTAL GRO UNDS ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND FEB., 2018. SD/- SD/- (ANNAPURNA GUPTA) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER POONAM/AG/POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSTT. REGISTRAR ITAT,CHANDIGARH.