Shri Pareshbhai Sudhirbhai Patel, Anand V. The Income tax Officer,Ward-2, Anand

ITA 255/AHD/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9956 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 28-11-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 30-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N P PATEL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENC H (BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER) ITA. NO: 255/AHD/2012 (ASSESSMENT YEAR: 2008-09) MR. PARESHBHAI SUDHIRBHAI PATEL D.M. STREET, POST: ADAS, TA & DIST: ANAND. V/S INCOME TAX OFFICER, WARD- 2, ANAND (APPELLANT) (RESPONDENT) PAN: AVYPP6036G APPELLANT BY : SHRI ASEEMTHAKKAR, AR RESPONDENT BY : SHRI N.P. PATEL, SR. D.R. ( )/ ORDER DATE OF HEARING : 28 -11-201 6 DATE OF PRONOUNCEMENT : 01-12-2016 PER SAMIM YAHYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-IV, AHMEDABAD DATED 28.11.2011 PERTAINING TO A.Y. 2008- 09. 2. THE GROUNDS OF APPEAL READS AS UNDER:- ITA NO. 255/ AHD/2012 . A.Y. 2008-09 2 THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-IV, B ARODA ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE A.O. TO TAX T HE ENTIRE AMOUNT OF INTEREST ON MACT COMPENSATION IN THE YEAR OF RECEIPT AND NOT ON THE BASIS OF YEAR TO WHICH THE INTEREST RELATES. 3. IN THIS CASE, THE ASSESSEE IS IN RECEIPT OF COMPENS ATION CLAIMED UNDER MACT DUE TO ACCIDENTAL DEATH OF HIS FATHER. DUE TO THE D EATH OF HIS FATHER, THE ASSESSEE AND OTHER LEGAL HEIRS RECEIPT THE COMPENSA TION AS PER MACT ORDER. THE APPELLANT FILED HIS RETURN OF INCOME AND CLAIMED THE ENTIRE AMOUNT OF RS. 21,29 ; 449/- (WHICH INCLUDED INTEREST AMOUNT OF RS.10,96,875/-) AS EXEMPT UNDER SECTION 10(10BC) OF THE ACT AND ALSO CLAIMED THE CREDIT OF TDS AMOUNT OF RS. 1,12,978/-. AS PER AO IN VIEW OF PROVISIONS OF SECTION 10(10BC) OF THE ACT EXEMPTION WAS ALLOWABLE TO THE EXTENT OF TOTAL COMPENSATION OF RS. 11,50,000/- AWA RDED BY THE COURT AND THE INTEREST OFRS.10,26,875/- WAS TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. IN VIEW OF THIS, THE AO ASKED THE AP PELLANT TO EXPLAIN AS TO WHY THE INTEREST OF RS. 10,26,875/- RECEIVED DURING THE YEAR SHOULD NOT BE TREATED AS INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. 4. ASSESSEE SUBMITTED AS UNDER:- 'I HAVE FILED MY RETURN OF INCOME VIDE ACKNOWLEDGEM ENT NO.212003882 ON 25.03.2009 AND SHOWN MY FATHER'S INSURANCE AMOUNT O F RS.10,33,575/- THE AMOUNT IS TAX FREE AS PER THE PROVISIONS OF SECTION 10(10BC). THE INTEREST OF RS. 10 R 95,875/- (AS PER FORM NO. L6A) WHICH IS WORKED OUT FROM 1994 TO 2O07. AS PER COURT ORDER MY SHARE IS 10% WHICH WORKED OUT TO RS. 1,09,587/- ONLY. IF I DIVIDE THE TOTAL INTEREST FOR PERIOD FROM 1994 TO 2007 (10 9587 DIVIDED BY SEVEN) WHICH ITA NO. 255/ AHD/2012 . A.Y. 2008-09 3 WILL BE AT RS.9132.25 PER ANNUM AND THE SAME IS NOT TAXABLE. THEREFORE, I HAVE SHOWN THE TOTAL INCOME AT NIL FOR THE A.Y. 2O08-09' . 5. HOWEVER THE A.O. WAS NOT CONVINCED WITH THE ASSESSE ES SUBMISSION HE HELD THAT THE ENTIRE AMOUNT OF INTEREST HAS TO BE T AKEN AS ON DATE OF RECEIPT WHICH WAS FALLING DURING FINANCIAL YEAR 2007-08. A. O. HELD THAT THE ENTIRE INTEREST WAS REQUIRED TO BE TAXED IN THE YEAR IN WH ICH IT WAS RECEIVED. UPON ASSESSEES APPEAL, THE LD. CIT(A) HELD THAT THE OTH ER CO-HEIRS SHARE SHOULD BE TAXED IN THEIR RESPECTIVE HAND. HE FURTHER CONCL UDED AS UNDER:- 14. AS REGARDS THE CASE OF THE APPELLANT, THE A.O. IS DIRECTED TO TAX THE AMOUNT OF INTEREST PERTAINING TO HIM FOR THE YEAR UNDER CONSI DERATION ON ACTUAL RECEIPT BASIS. THE A.O. IS ALSO DIRECTED TO ALLOW THE CLAIM OF DEDUCTION U/S. 10(10BC) IN THE CASE OF APPELLANT FOR THE YEAR UNDER CONSIDERAT ION IN RESPECT OF COMPENSATION AMOUNT PERTAINING TO THE APPELLANT AFTER VERIFYING THIS CLAIM IN VIEW OF PROVISIONS OF SUCH SECTION 10(10BC) . 6. AGAINST THE ABOVE ORDER, ASSESSEE IS IN APPEAL BEFO RE THE ITAT. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORD. LD. COUNSE L OF THE ASSESSEE SUBMITTED THAT ISSUE IS COVERED IN FAVOUR OF THE AS SESSEE BY THE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF S . N. CHAUHAN VS. ITO 232 CTR 268. IN THIS CASE, THE HONBLE HIGH COURT HAS E XPOUNDED AS UNDER:- 18 . INSOFAR AS THE COMPONENT OF INTEREST IS CONCERNED, THE FOLLOWING DECISIONS OF THE APEX COURT AND THIS HIGH COURT MAKE IT CLEAR TH AT THE INTEREST ACCRUES FROM YEAR TO YEAR AND HAS TO BE SPREAD OVER RESPECTIVE Y EARS : (1) CITVS. T.N.K. GOVINDARAJULU CHETTY (1987) 61 CT R (SC) 335 : (1987) 165 ITR 231 (SC); (2) SMT. RAMA BAI ETC. VS. CIT (1990) 84 CTR (SC) 1 64 : (1990) 181 ITR 400 (SC); (3) K.S. KRISHNA RAO VS. CIT (1990) 84 CTR (SC) 144 : (1990) 181 ITR 408 (SC); ITA NO. 255/ AHD/2012 . A.Y. 2008-09 4 (4) BIKRAM SINGH & ORS. VS. LAND ACQUISITION COLLEC TOR & ORS. (1997) 139 CTR (SC) 475 : (1997) 224 ITR 551 (SC); (5) BHANUSHANKAR OGHADBHAI MEHTA VS. STATE OF GUJAR AT & ANR. (2010) 1 GLH 239. 19. THE TRIBUNAL AND THE AUTHORITIES HAVE, THEREFORE, E RRED IN BRINGING TO TAX THE INTEREST AMOUNT OF RS. 6,53,385 IN THE YEAR UNDER C ONSIDERATION, WHEREAS THE AMOUNT IS REQUIRED TO BE SPREAD OVER DURING THE PER IOD 1ST AUG., 1954 TO 31ST JULY, 1974. ACCORDINGLY, THE QUESTION IN RELATION T O THE INTEREST IS ANSWERED IN FAVOUR OF ASSESSEE AND AGAINST REVENUE. 7. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE UPON THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT V S. GOVINDBHAI MAMAIYA 229 TAXMANN.COM 138. IN THIS CASE, IT WAS HELD THAT INTEREST U/S. 28 OF LAND ACQUISITION ACT IS TO BE TREATED AS AN ACCRETION TO VALUE AND, THEREFORE, THE SAME WILL BECOME PART OF ENHANCED COMPENSATION AND THE SAID INTEREST HAS TO BE TAXED IN THE YEAR OF RECEIPT AND IS NOT SPREA D OVER YEARS ON ACCRUAL BASIS. 8. IN REJOINDER, LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THIS CASE LAW IS NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. HE SUBMITTED THAT IN THE ABOVE CASE, THE APEX COURT WAS CONCERNED WITH INTER EST U/S. 28 UNLIKE INTEREST U/S. 34 IS AN ACCRETION TO THE VALUE AND H ENCE IT WAS PART OF ENHANCED COMPENSATION OR CONSIDERATION WHICH IS NOT THE CASE WITH INTEREST U/S. 34. HENCE, LD. COUNSEL SUBMITTED THAT THE ABOVE CASE LAW FROM THE HONBLE APEX COURT WAS NOT APPLICABLE FROM ON T HE FACTS OF THE PRESENT ITA NO. 255/ AHD/2012 . A.Y. 2008-09 5 CASE. IN THE PRESENT CASE HE SUBMITTED THAT THE REC EIPT IS ONLY INTEREST AND CANNOT BE EQUATED TO BE A PART OF COMPENSATION ITSE LF. 9. UPON CARE CONSIDERATION, I AM OF THE CONSIDERED OPI NION THAT THE SUBMISSIONS OF LD. COUNSEL OF THE ASSESSEE HAVE CON SIDERABLE COGENCY. THE CASE LAW FROM THE HONBLE JURISDICTIONAL HIGH COURT IS APPLICABLE ON THE FACTS OF THE PRESENT CASE. IN THE SAID DECISION, TH E HONBLE JURISDICTIONAL HIGH COURT HAS CONSIDERED SEVERAL HONBLE APEX COUR T DECISIONS AND, THEREAFTER HELD THAT THE COMPONENT OF INTEREST ACCR UES FROM YEAR TO YEAR. ACCORDINGLY, RESPECTFULLY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT AS ABOVE I SET ASIDE THE ORDERS OF THE AUTHOR ITIES BELOW AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STA NDS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 01 - 12- 2 016. SD/- (SAMIM YAHYA) ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD