Shri Banesinh Khetsinh Gadhavi, Ahmedabad V. The Income Tax Officer, Ward-13(3), Ahmedabad

ITA 3012/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9199 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 13-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 17-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: JAGAD
• Keywords: Opportunity of being heard; Principle of natural justice; TDS; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER ./ ITA NO. 3012/AHD/2013 / ASSESSMENT YEAR : 2009-10 BANESINH KHETSINH GADHAVI, 3, TATSAT SOCIETY, BHUDARPURA, AMBAWADI, AHMEDABAD-15 PAN : AERPG 2850 D VS INCOME TAX OFFICER, WARD-13(3), AHMEDABAD / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI K.A. JAGAD, AR REVENUE BY : SHRI ASHISH POPHARE, DR DATE OF HEARING : 13 /01/2017 DATE OF PRONOUNCEMENT IN COURT : 23/02/20 17 / O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XXI, A HMEDABAD DATED 23.10.2013 FOR ASSESSMENT YEAR 2009-10. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE TO THE EF FECT THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS :- I) IN CONFIRMING THE ADDITIONS MADE BY THE ASSESSING O FFICER IS WHOLLY, ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLE S OF NATURAL JUSTICE; II) IN UPHOLDING THE ADDITION OF INTEREST OF RS.11,30,7 08/- RECEIVED BY THE ASSESSEE U/S 28 OF LAND ACQUISITION ACT, REJ ECTING THE ASSESSEES CLAIM THAT THE AMOUNT OF INTEREST RECEIV ED BY THE ASSESSEE WAS ACTUALLY NOT INTEREST U/S 34 OF THE AC T, BUT COMPENSATION WITHIN THE PURVIEW OF PROVISIONS OF SE CTION 23 AND 28 OF THE LAND ACQUISITION ACT; III) TO FOLLOW THE DECISION OF HONBLE HIGH COURT OF HIM ACHAL PRADESH IN THE CASE OF CIT VS. KESHWA DEVI AND OTHE RS. 1. SMC-ITA NO. 3012/AHD/2013 BANESINH KHETSINH GADHAVI VS. ITO AY :2009-10 2 3. THE BRIEF FACTS ARE DURING THE YEAR UNDER CONS IDERATION, THE ASSESSEE HAD RECEIVED ADDITIONAL COMPENSATION OF LAND ACQUIR ED UNDER THE LAND ACQUISITION ACT AWARDED BY THE COURT OF JOINT DISTR ICT JUDGE, PATAN WHICH INCLUDED AN AMOUNT OF RS.11,30,708/- AS INTEREST. T DS OF RS.1,16,463/- WAS DEDUCTED THEREON. THE ASSESSEE DID NOT INCLUDE THE SAID INTEREST AS INCOME IN THE RETURN OF INCOME AND CLAIMED THE REFUND OF T DS. THE ASSESSING OFFICER THEREAFTER REOPENED THE ASSESSMENT AND CALL ED ON THE ASSESSEE THAT THE INTEREST WAS TAXABLE. THE ASSESSEE FILED A REP LY DATED 08.10.2012 CONTENDING AS UNDER:- 'YOUR ASSESSEE HAD AGRICULTURAL LAND SURVEY NO. 169 3 AT MODHERA, TALUKA CHANASMA, DIST PATAN. THE SAID LAND WAS ACQUIRED BY THE SPECIAL LAND ACQUISITION OFFICER, SARDAR SAROVAR NARMADA NIGAM L TD. GANDHINAGAR UNDER SECTION 11 OF THE LAND ACQUISITION ACT, 1894. THE AWARD OF COMPENSATION WAS NOT ACCEPTABLE , THEREFORE A PETIT ION WAS FILED IN THE COURT OF JOINT DISTRICT JUDGE, PATAN FOR ENHANCEMENT OF T HE AMOUNT AWARDED. THE COURT WAS PLEASED TO ENHANCE THE COMPENSATION V IDE ORDER DATED 31/12/2004 IN REFERENCE CASE NO. 1032/2002 TO 1046/ 2002. THE COPY OF THE SAID JUDGEMENT IS ENCLOSED HEREWITH FOR YOUR REFERE NCE. THE EFFECTIVE PART OF THE ORDER IS REPRODUCED AS BELOW:- 'THE OPPONENTS ARE HEREBY ORDERED TO PAY INTEREST O N THE ADDITIONAL COMPENSATION ALSO AT THE RATE OF 9% PER ANNUM FROM THE DATE OF TAKING THE POSSESSION OR FROM THE DATE OF ISSUING NOTIFICA TION UNDER SECTION 4 OF THE SAID ACT WHICHEVER IS EARLIER FOR THE FIRST YEAR AND THEREAFTER, AT THE RATE OF 15% PER ANNUM TILL REALIZATION OF THE P AYABLE AGGREGATE AMOUNT ACCORDING TO THE PROVISION OF SECTION 28 OF L.A. ACT'. THE APEX COURT OF INDIA HAS DECIDED THE ISSUE IN TH E CASE OF COMMISSIONER OF INCOME-TAX, FARIDABAD VS. GHANSHYAM (HUF) -315 ITR 1 THAT WHATEVER AMOUNT AWARDED UNDER SECTION 28 OF THE L.A. ACT, 18 94 IS CONSIDERED TO BE COMPENSATION AND THEREFORE, IS NOT TAXABLE IN OTHER SOURCE OF INCOME. THE ABSTRACT OF TAX REPORTER, AUGUST, 2009 IS ENCLOSED HEREWITH. IN OUR CASE THE HON'BLE JOINT DISTRICT JUDGE PATAN HAS GRANTED ADDITIONAL COMPENSATION BY WAY OF INTEREST U/S.28 OF THE L.A. ACT WHICH TREATED TO BE COMPENSATION OF LAND. HENCE IN LIGHT OF ABOVE JUDGE MENT OF HON'BLE APEX COURT OF INDIA IN THE CASE OF CIT V/S. GHANSHYAM HU F-315 ITR 1 THE SMC-ITA NO. 3012/AHD/2013 BANESINH KHETSINH GADHAVI VS. ITO AY :2009-10 3 INTEREST RECEIVED U/S.28 OF THE LAND ACQUISITION AC T IS CONSIDERED TO BE COMPENSATION AND NOT TAXABLE IN OTHER SOURCE OF INC OME. ' 3.1 THE LD. ASSESSING OFFICER, HOWEVER, WAS OF THE VIEW THAT THE HONBLE SUPREME COURT RATHER HELD THAT THE INTEREST PAID U /S 34 OF THE LAND ACQUISITION ACT, 1984, WAS TAXABLE BY FOLLOWING OB SERVATIONS:- THE APEX COURT OF INDIA ON PAGE NO. 10 FURTHER HEL D THAT 'INDEED THE LANGUAGE OF SECTION 28 DOES NOT EVEN REMOTELY REFER TO MARKET VALUE ALONE AND IN TERMS IT TALKS OF COMPENSATION OR THE SUM EQ UIVALENT THERETO. THUS, INTEREST AWARDED UNDER SECTION 28, WOULD INCLUDE WI THIN ITS AMBIT BOTH THE MARKET VALUE AND THE STATUTORY SOLATIUM. IT WOULD B E THUS EVIDENT THAT EVEN THE PROVISIONS OF SECTION 28 AUTHORISE THE GRANT OF INTEREST ON SOLATIUM AS WELL. THUS SOLATIUM MEANS AN INTEGRAL PART OF COMP ENSATION INTEREST WOULD BE PAYABLE ON IT. SECTION 34, POSTULATE AWARD OF IN TEREST AT 9% PER ANNUM FROM THE DATE OF TAKING POSSESSION ONLY UNTIL IT IS PAID OR DEPOSITED. IT IS A MANDATORY PROVISION. BASICALLY SECTION 34 PROVIDES FOR PAYMENT OF INTEREST FOR DELAYED PAYMENT. ON PAGE NO. 12, THE APEX COURT HAS HELD THAT 'SIMIL ARLY, SECTION 28 EMPOWERS THE COURT IN ITS DISCRETION TO AWARD INTER EST ON THE EXCESS AMOUNT OF COMPENSATION OVER AND ABOVE WHAT IS AWARDED BY T HE COLLECTOR. IT INCLUDES ADDITIONAL AMOUNT UNDER SECTION 23(1A) AND SOLATIUM UNDER SECTION 23(2) OF THE ACT. SECTION 28 OF THE 1894 ACT APPL IES ONLY IN RESPECT OF THE EXCESS AMOUNT DETERMINED BY THE COURT AFTER REFEREN CE UNDER SECTION 18 OF THE 1894 ACT. IT DEPENDS UPON THE CLAIM, UNLIKE INTERES T UNDER SECTION 34 WHICH DEPENDS ON UNDUE DELAY IN MAKING THE AWARD. IT IS TRUE THAT & QUOTE; INTEREST ; IS NOT COMPENSATION... ..BUT AS DISCU SSED HEREINABOVE, WE HAVE TO GO BY THE PROVISION OF THE 1894 ACT WHICH AWARDS & QUOTE; INTEREST & QUOTE ; BOTH AS AN ACCRETION IN THE VALUE OF THE LAND ACQUI RED AND INTEREST FOR UNDUE DELAY. INTEREST UNDER SECTION 28 UNLIKE INTEREST UN DER SECTION 34 IS AN ACCRETION TO THE VALUE, HENCE IT IS A PART OF ENHAN CED COMPENSATION OR CONSIDERATION WHICH IS NOT THE CASE WITH INTEREST U NDER SECTION 34 OF THE 1894 ACT.' 3.2 THE LD. ASSESSING OFFICER THEREAFTER HELD THAT THE INTEREST PAID TO ASSESSEE, ON WHICH TDS WAS DEDUCTED, WAS TAXABLE BY FOLLOWING OBSERVATIONS:- 3. IN THIS CASE, THE ASSESSEE HAD RECEIVED RS,7,85 ,214/- AS ENHANCE CONSIDERATION ( COST OF LAND + 12% ADDITIONAL AM OUNT + 30% SOLATIUM). OVER AND ABOVE THE ASSESSEE HAD RECEIVE D INTEREST OF RS.11,30,708/- SMC-ITA NO. 3012/AHD/2013 BANESINH KHETSINH GADHAVI VS. ITO AY :2009-10 4 (RS.70,669 @ 9% AND RS.10,60,039/- @ 15%) FOR 120 M ONTHS I.E FOR A.Y. 1999-2000 TO 2009-10 AND TAX HAD DEDUCTED AT SOURCE AT RS.1,16,463/-. THUS, IT IS CLEAR THAT THE INTEREST GRANTED BY THE CHIEF ENGINEER, KUTCHH BRANCH CANAL, MEHSANA IS FOR THE DELAY PAYMENT OF A WARD AS PER COURT'S ORDER, THE PAYMENT OF INTEREST IS WELL EVIDENCED FR OM THE FORM NO.16A ISSUED. WHEN THE ASSESSEE HAS CLAIMED TDS, IT IS O BLIGATORY ON THE PART OF THE ASSESSEE TO SHOWN THE RELEVANT INCOME FOR TAXAT ION. HOWEVER, THE SAME IS NOT OFFERED BY THE ASSESSEE. THE COMPE NSATION AMOUNT IS DIFFERENT AND IT IS ON THE INTEREST AMOUNT ON WHICH THE TDS W AS MADE. THEREFORE, ABOVE INTEREST IS CLEARLY TAXABLE DURING THE YEAR U NDER CONSIDERATION SINCE THE TDS THEREON HAS BEEN CLAIMED IN THE RETURN OF INCOM E FILED FOR REFUND OF THE TDS AMOUNT BY THE ASSESSEE. (ADDITION RS. 11,30,70 8/-) 3.3 AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL WHERE THE LD. CIT(A) RELIED ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF BIKRAM SINGH & OTHER VS. LAND ACQUISITION COLLECTOR & OTHE RS, 224 ITR 551 (SC) HOLDING AS UNDER:- 'THE INTEREST RECEIVED AS INCOME ON THE DELAYED PAY MENT OF THE COMPENSATION DETERMINED U/S. 28 OR 31 OF THE LAND ACQUISITION AC T IS A TAXABLE EVENT AND THEREFORE IS A REVENUE RECEIPT EXIGIBLE TO TAX UNDE R SECTION 4 OF THE INCOME-TAX ACT.' 3.4 THE LD. CIT(A), THEREAFTER, CONSIDERING THE AFO RESAID JUDGMENT OF HONBLE SUPREME COURT, CONFIRMED THE ADDITION BY FO LLOWING OBSERVATIONS:- 5.2.1 THERE HAS NEVER BEEN A DISPUTE THAT INTEREST RECEIVED BY AN ASSESSEE ON COMPENSATION OR AN ENHANCE COMPENSATION AFTER THE J UDGEMENT OF HON'BLE SUPREME COURT IN THE ABOVE CASE. THERE WAS ONLY DIS PUTE IN THE YEAR OF TAXATION OF THE ACCRUED INTEREST WHICH TOO HAS BEEN SETTLED BY INSERTING SUB- SECTION (B) IN SECTION 145A. IN VIEW OF THIS, THE G ROUNDS ARE DISMISSED AND THE ADDITION MADE BY THE AO OF RS.11,30,708/- ON AC COUNT OF INTEREST GRANTED U/S. 28 OF THE LAND ACQUISITION ACT IS CON FIRMED. 3.5 AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL BEF ORE THE TRIBUNAL. 4 THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE F ACTS AND CIRCUMSTANCES OF THE CASE AND RELIED UPON THE CASE OF GHANSHYAM ( SUPRA) WHICH IN SUM AND SUBSTANCE HELD AS UNDER:- SMC-ITA NO. 3012/AHD/2013 BANESINH KHETSINH GADHAVI VS. ITO AY :2009-10 5 TO SUM UP, INTEREST IS DIFFERENT FROM COMPENSATION . HOWEVER, INTEREST PAID ON THE EXCESS AMOUNT UNDER SECTION 28 OF THE 1894 A CT DEPENDS UPON A CLAIM BY THE PERSON WHOSE LAND IS ACQUIRED WHEREAS INTERE ST UNDER SECTION 34 IS FOR DELAY IN MAKING PAYMENT. THIS VITAL DIFFERENCE NEED S TO BE KEPT IN MIND IN DECIDING THIS MATTER. INTEREST UNDER SECTION 28 IS PART OF THE AMOUNT OF COMPENSATION WHEREAS INTEREST UNDER SECTION 34 IS O NLY FOR DELAY IN MAKING PAYMENT AFTER THE COMPENSATION AMOUNT IS DETERMINED . INTERESTLINDER SECTION 28 IS A PART OF ENHANCED VALUE OF THE LAND WHICH IS NOT THE CASE IN THE MATTER OF PAYMENT OF INTEREST UNDER SECTION 34. 4.1 IT IS CLAIMED THAT THE IMPUGNED PAYMENT OF INTE REST IS U/S 28 OF THE LAND ACQUISITION ACT AND NOT U/S 34 OF THE ACT AS W RONGLY HELD BY THE AUTHORITIES BELOW. THEREFORE, THE IMPUGNED INTEREST CANNOT BE HELD AS THE INTEREST OF THE ASSESSEE. 5. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHE R HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. DURING THE COURSE OF HEARING, IT WAS POINTED OUT BY THE LD. CO UNSEL FOR THE ASSESSEE THAT THE IMPUGNED ORDER OF COURT OF JOINT DISTRICT JUDGE , PATAN, WHICH AWARDED THE ABOVE SUMS TO ASSESSEE, WAS PASSED ALONG WITH 1 5 OTHER PERSONS ON THE SIMILAR FACTS. IT WAS PERTINENTLY ASKED AS TO WHAT HAPPENED IN OTHER CASES ABOUT THE TREATMENT OF INTEREST U/S 28 OR 34 OF THE LAND ACQUISITION ACT. BOTH THE PARTIES COULD NOT THROW ANY LIGHT ON THESE ASPECTS. SINCE THE ORIGINAL COMPENSATION WAS GRANTED BASED ON THE SAME ACQUISITION OF LAND, IT IS IMPERATIVE TO KNOW WHAT HAS HAPPENED IN OTHER CA SES. SINCE EITHER OF THE PARTIES IS ABLE TO THROW ANY LIGHT ON THIS ISSUE, I T IS DIFFICULT TO GIVE A FINDING OF FACTS IN THE PRESENT CASE. THEREFORE, IN THE EN TIRETY OF FACTS AND CIRCUMSTANCES, I AM INCLINED TO SET ASIDE THE MATTE R BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE SAME AFRESH, CONSID ERING WHAT HAS HAPPENED IN OTHER CASES AND THE ACTUAL DIFFERENCE BETWEEN SE CTION 28 AND 34 OF THE SMC-ITA NO. 3012/AHD/2013 BANESINH KHETSINH GADHAVI VS. ITO AY :2009-10 6 LAND ACQUISITION ACT. BESIDES, IN PARAGRAPH 21 OF THE FAST TRACK COURT ORDER, THE INTEREST HAS BEEN GRANTED U/S 23 OF THE LAND ACQUISITION ACT AND NOT U/S 28 OR 34 OF THE ACT. IN MY CONSIDERED VIEW , IT IS DESIRABLE THAT ALL THESE PERTINENT ASPECT ARE LOOKED INTO BY ASSESSING OFFICER AFTER GIVING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. IN TH ESE FACTS AND CIRCUMSTANCES, THE GROUNDS RAISED BY THE ASSESSEE A RE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE SAME AF RESH IN ACCORDANCE WITH LAW. THIS APPEAL IS ACCORDINGLY ALLOWED FOR STATIS TICAL PURPOSES. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. SD/- R.P. TOLANI (JUDICIAL MEMBER) AHMEDABAD; DATED 23/02/2017 *BIJU T., SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD