Appeal details
Counselvise Citation
[2016] 133 COUNSELVISE.COM (IT) 8506 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
10 month(s) 3 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
02-02-2016
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
B
Next Hearing Date
27-01-2016
Assessment Year
2010-2011
Appeal Filed On
30-03-2015
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.313/CHD/2015 (ASSESSMENT YEAR : 2010-11) BALDEV SINGH, VS. THE INCOME TAX OFFICER, H.NO.977/A-1, WARD 4, RATPUR COLONY, PANCHKULA. PINJORE. PAN: CVUPS7731R ITA NO.314/CHD/2015 (ASSESSMENT YEAR : 2010-11) AVTAR SINGH, VS. THE INCOME TAX OFFICER, H.NO.976/B-1, WARD 4, RATPUR COLONY, PANCHKULA. PINJORE. PAN: BIKPS1983B ITA NO.315/CHD/2015 (ASSESSMENT YEAR : 2010-11) SURINDER SINGH, VS. THE INCOME TAX OFFICER, H.NO.992/B-1, WARD 4, RATPUR COLONY, PANCHKULA. PINJORE. PAN: CSRPS1183H ITA NO.316/CHD/2015 (ASSESSMENT YEAR : 2010-11) AMRIK SINGH, VS. THE INCOME TAX OFFICER, H.NO.992/B-1, WARD 4, RATPUR COLONY, PANCHKULA. PINJORE. PAN: AXPPS6540K 2 ITA NO.317/CHD/2015 (ASSESSMENT YEAR : 2010-11) TEJ KAUR, VS. THE INCOME TAX OFFICER, H.NO.992/B-1, WARD 4, RATPUR COLONY, PANCHKULA. PINJORE. PAN: BZVPK5460K AND ITA NO.318/CHD/2015 (ASSESSMENT YEAR : 2010-11) MUKHTIARY DEVI, VS. THE INCOME TAX OFFICER, H.NO.992/B-1, WARD 4, RATPUR COLONY, PANCHKULA. PINJORE. PAN: AYKPD4720G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AJAY JAIN DEPARTMENT BY : SHRI JITENDER KUMAR, DR DATE OF HEARING : 27.01.2016 DATE OF PRONOUNCEMENT : 02.02.2016 O R D E R PER RANO JAIN, A.M . : THESE SIX APPEALS FILED BY THE DIFFERENT ASSESSES A RE DIRECTED AGAINST THE SEPARATE ORDERS OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), PANCHKULA A LL DATED 29.1.2015 FOR ASSESSMENT YEAR 2010-11. THE APPEALS BEFORE THE CIT (APPEALS) WERE AGAINST THE O RDER OF 3 THE ASSESSING OFFICER MADE UNDER SECTION 143(3) R.W .S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT ). 2. SINCE THE FACTS AND CIRCUMSTANCES ARE IDENTICAL IN ALL THE APPEALS, THE SAME WERE HEARD TOGETHER AN D ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR T HE SAKE OF CONVENIENCE. THE DECISION GIVEN IN THE CASE OF B ALDEV SINGH IN ITA NO.313/CHD/2015 SHALL APPLY MUTATIS MUTANDIS TO ALL THE APPEALS. ITA NO.313/CHD/2015 : 2. GROUND NOS.1 AND 7 ARE GENERAL. 3. THE LEARNED COUNSEL FOR THE ASSESSEE PREFERRED NOT TO PRESS GROUND NO.6. THEREFORE, THE SAME IS DISMISSED AS NOT BEING PRESSED. 4. GROUND NOS.3 TO 5 RELATE TO THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST ON ENHANCED COMPENSATION. 5. BRIEFLY, THE FACTS OF THE CASE ARE THAT DURING THE YEAR THE ASSESSEE RECEIVED ENHANCED COMPENSATION OF RS.30,93,458/- AND INTEREST OF RS.79,15,853/- WHICH WAS SHOWN AS NOT TAXABLE. THE ASSESSEES CONTENTION BE FORE THE ASSESSING OFFICER WAS THAT AS PER AMENDED PROVI SIONS OF SECTION 56(2)(VIII) OF THE ACT INSERTED BY FINAN CE ACT, 2009, W.E.F. 1.4.2009 INCOME BY WAY OF INTEREST ON COMPENSATION OR AN ENHANCED COMPENSATION REFERRED T O IN 4 SECTION 145A, CLAUSE (B) UNDER THE HEAD INCOME FRO M OTHER SOURCES IS TAXABLE AFTER GIVING 50% OF DEDUC TION UNDER SECTION 57(IV) OF THE ACT. AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE ASSESSING OFFICER CONCLU DED THAT THE ASSESSEE HAS RECEIVED ENHANCED COMPENSATION INC OME AGGREGATING TO RS.30,93,458/- AS PRINCIPAL AMOUNT A ND RS.79,15,893/- AS INTEREST ON COMPENSATION AND HAS CLAIMED THE SAME AS EXEMPT UNDER SECTION 10(37) OF THE ACT. THE ASSESSING OFFICER ALSO OBSERVED THAT EXEM PTION UNDER SECTION 10(37) IS AVAILABLE ONLY ON COMPENSAT ION ON TRANSFER AND NOT ON INTEREST THEREON. AFTER APPLYI NG THE AMENDED PROVISIONS OF SECTION 56(2), 57(IV) AND 145 A OF THE ACT, APPLICABLE W.E.F. ASSESSMENT YEAR 2010-11, THE ASSESSING OFFICER MADE ADDITION OF AN AMOUNT OF RS.39,96,286/-. 6. BEFORE THE LEARNED CIT (APPEALS), IT WAS SUBMITTED THAT THE COMPENSATION AND INTEREST THEREO N WAS RECEIVED IN VIEW OF ORDER PASSED BY THE LEARNED ADD L. DISTRICT. JUDGE, PANCHKULA. THE ASSESSEE CHALLENGE D THE AWARD BEFORE THE ADDL. DISTRICT JUDGE, PANCHKULA AN D THE LEARNED ADDL. DISTRICT JUDGE, PANCHKULA ENHANCED TH E COMPENSATION, WHICH WAS CHALLENGED BY HUDA BEFORE T HE HON'BLE PUNJAB & HARYANA HIGH COURT AND SINCE THE S AME IS PENDING BEFORE THE HIGH COURT, IT SHOULD NOT BE TAXED IN VIEW OF AMENDED PROVISIONS OF SECTION 45(5)(B) OF T HE ACT, WHEREBY IT HAS BEEN STATED THAT THE COMPENSATION SH ALL BE TAXED ON FINALITY. WITHOUT PREJUDICE, IT WAS SUBMI TTED THAT, WITHOUT APPRECIATING THE SPIRIT OF THE JUDGME NT OF 5 THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. GHANSHYAM (HUF) 315 ITR 1 (SC), THE ASSESSING OFFIC ER HAS GIVEN EXEMPTION UNDER SECTION 10(37) OF THE ACT ON COMPENSATION AND TAXED THE INTEREST THEREON. THE H ON'BLE SUPREME COURT IN THE SAID JUDGMENT HAS HELD THAT TH E INTEREST RECEIVED UNDER SECTION 28 OF THE LAND ACQU ISITION ACT FORMS THE PART OF COMPENSATION UNDER SECTION 45 (5)(B) OF THE ACT AND, THEREFORE, THE INTEREST THEREON IS A PART OF COMPENSATION AND ALSO EXEMPT UNDER SECTION 10(37) O F THE ACT. RELIANCE WAS ALSO PLACED ON THE ORDER OF THE I.T.A.T., CHANDIGARH BENCH IN THE CASE OF ITO VS. PAWAN GIRI , ITA NO.405/CHANDI/2013, DATED 2.8.2013. 7. THE LEARNED CIT (APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DISMISSED THE APPEAL O F THE ASSESSEE. HIS OBSERVATIONS ARE AT PAGE 13, PARA 5. 5, WHICH READ AS UNDER : 5.5 THE CLAUSE (VIII) HAS BEEN INSERTED IN SECTIO N 56(2) BY FINANCE ACT, 2009 TO PROVIDE THAT INCOME BY WAY OF INTEREST RECEIVED ON COMPENSATION OR ON ENHANCED COMPENSATIO N SHALL BE ASSESSED UNDER THE HEAD 'INCOME FROM OTHER SOURCES' IN THE YEAR IN WHICH IT IS RECEIVED APPLICABLE FROM A.Y. 2010-11 ONWARDS. FURTHER, SECTION 145A HAS ALSO BEEN INSERTED BY FIN ANCE ACT, 2009 W.E.F. 01.04.2010. THE SECTION 145 A(B) PROVID ES THAT INTEREST RECEIVED BY AN ASSESSEE ON COMPENSATION OR O N ENHANCED COMPENSATION SHALL BE DEEMED TO BE THE INCOME OF TH E YEAR IN WHICH IT IS RECEIVED. THIS SHOWS THAT LEGISLATIVE I NTENT IS VERY CLEAR TO TAX THE INTEREST COMPONENT ON THE COMPENSA TION OR ON ENHANCED COMPENSATION IN THE YEAR IN WHICH IT HAS BE EN RECEIVED. 6 THE APPELLANT HAS RECEIVED THE INTEREST ON ENHANCED COMPENSATION IN THE YEAR UNDER CONSIDERATION AND TH EREFORE LIABLE TO BE TAXED IN THE A.Y. 2010-11 ONLY. THIS ALSO CLA RIFIES THAT AMENDED SECTION 45(5)(B) WILL NOT BE EFFECTIVE AS T HE INTEREST HAS BEEN RECEIVED IN THE YEAR UNDER CONSIDERATION. FURT HER, THE NEW PROVISION HAS BEEN PROVIDED IN SECTION 57(IV) OF TH E ACT TO PROVIDE FOR STANDARD DEDUCTION IN THE CASE OF INTEREST ON COMPENSATION OR ON ENHANCED COMPENSATION. A DEDUCTION EQUAL TO 50% OF SUCH INCOME SHALL BE ALLOWED W.E.F. A.Y. 2010-11 AND NO OTHER DEDUCTION WILL BE AVAILABLE. FURTHER, SECT ION 56(2)(VIII) PROVIDES FOR TAXABILITY OF INTEREST RECEIVED ON COMP ENSATION OR ON ENHANCED COMPENSATION. THERE IS NO EXCEPTION CLAU SE TO EXCLUDE ANY KIND OF INTEREST WHICH HAS BEEN DEFINED IN ANY OTHER STATUTE. HAD THERE BEEN INTENTION OF LEGISLATU RE TO EXCLUDE THE INTEREST U/S 28 OF L.A. ACT, THE SAME WOULD HAV E BEEN INCORPORATED UNDER THE ACT AS A PROVISO OR EXPLANATION. B UT THIS IS NOT THE CASE. THEREFORE, IN VIEW OF THE SPECIFIC PROVISIONS BROUGHT IN THE ACT REGARDING THE TAXABILITY OF INTE REST RECEIVED ON COMPENSATION OR ON ENHANCED COMPENSATION AND GRA NT OF STANDARD DEDUCTION OF 50% OF SUCH AMOUNT, THE AO WA S JUSTIFIED IN MAKING THE ADDITION OF THE INCOME RECE IVED BY THE APPELLANT BY WAY OF INTEREST ON ENHANCED COMPENSATI ON UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. THEREFORE, TH E ADDITION OF RS.39,57,946/- IS SUSTAINED. THESE GROUNDS OF APPEA L ARE DISMISSED. 8. AGGRIEVED BY THIS, THE ASSESSEE HAS COME IN APPEAL. THE LEARNED COUNSEL FOR THE ASSESSEE REITE RATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. HIS MAIN LIMB OF ARGUMENT WAS THAT IT IS NOT IN DISP UTE THAT 7 THE ASSESSEE HAS RECEIVED INTEREST ON COMPENSATION UNDER SECTION 28 OF THE LAND ACQUISITION ACT AND AS PER T HE JUDGMENT IN THE CASE OF GHANSHYAM (HUF) (SUPRA), T HE HON'BLE SUPREME COURT HAS VERY CLEARLY HELD THAT TH E INTEREST RECEIVED UNDER SECTION 28 OF THE LAND ACQU ISITION ACT IS A PART AND PARCEL OF COMPENSATION ITSELF. S INCE THE INTEREST IS PART OF COMPENSATION THIS IS ALSO EXEMP T UNDER SECTION 10(37) OF THE ACT. 9. THE LEARNED D.R. RELIED ON THE ORDER OF THE LOW ER AUTHORITIES, ESPECIALLY PARA 4.2 ONWARDS OF THE ORD ER OF THE LEARNED CIT (APPEALS). 10. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE HAS RECE IVED DURING THE YEAR ENHANCED COMPENSATION ON COMPULSORY ACQUISITION OF LAND AND INTEREST ON SUCH ENHANCED COMPENSATION. THIS IS ALSO UNDISPUTED THAT THE INT EREST IS RECEIVED BY THE ASSESSEE UNDER SECTION 28 OF THE LA ND ACQUISITION ACT. THE ASSESSING OFFICER ALSO DOES N OT HAVE ANY QUARREL TO EXEMPT THE PRINCIPAL AMOUNT OF ENHAN CED COMPENSATION UNDER SECTION 10(37) OF THE ACT. THE ONLY ISSUE REMAINING IS THE TAXABILITY OF INTEREST ON EN HANCED COMPENSATION RECEIVED BY THE ASSESSEE UNDER SECTION 28 OF THE LAND ACQUISITION ACT. FOR THIS, WE REFER TO PA RAS 32 8 AND 33 OF THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF GHANSHYAM (HUF) (SUPRA), WHEREBY THE HON'BL E COURT AFTER ANALYZING VARIOUS PROVISIONS OF THE LAN D ACQUISITION ACT AS WELL AS THAT OF THE INCOME TAX A CT, OBSERVES AS UNDER : 32. THE ISSUE TO BE DECIDED BEFORE US - WHAT IS THE MEANING OF THE WORDS 'ENHANCED COMPENSATION/CONSIDERATION' IN SECTION 45(5)(B) OF THE 1961 ACT? WILL IT COVER 'INTEREST'? THESE QUESTIONS ALSO BRING IN THE CONCEPT OF THE YEAR OF TAXABILIT Y. 33. IT IS TO ANSWER THE ABOVE QUESTIONS THAT WE HAVE ANALYSED THE PROVISIONS OF SECTIONS 23 , 23(1A) , 23(2) , 28 AND 34 OF THE 1894 ACT. AS DISCUSSED HEREINABOVE, 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 WHIC H ALSO REPRESENTS PART OF ENHANCED COMPENSATION. SIMILARLY, SECTION 28 EMPOWERS THE COURT IN ITS DISCRETION TO AWARD INTER EST ON THE EXCESS AMOUNT OF COMPENSATION OVER AND ABOVE WH AT IS AWARDED BY THE COLLECTOR. IT INCLUDES ADDITIONAL AMOUNT U NDER SECTION 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 COURT AFTER REFEREN CE UNDER SECTION 18 OF THE 1894 ACT. IT DEPENDS UPON THE CLAIM, UNLIKE INTEREST UNDER SECTION 34 WHICH DEPENDS ON UNDUE DELAY IN MAKING THE AWARD. IT IS TRUE THAT 'INTEREST' IS NOT COMPENSATION. IT IS EQUALLY TRUE THAT SECTION 45(5) OF THE 1961 ACT REFERS TO COMPENSATION. BUT AS DISCUSSED HEREINA BOVE, 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 INTEREST FOR UNDUE DELAY. INTEREST UNDER SECTION 28 UNLIKE INTEREST UNDER SECTION 34 IS AN ACCRETION TO THE VALUE, HENCE IT IS A PART OF ENHANCED COMPENSATION OR CONSIDERATION WHICH IS NOT THE CASE WITH INTEREST UNDER SECTION 34 OF THE 1894 ACT. SO ALSO ADDITIONAL AMOUNT UNDER SECTION 9 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. IN FACT, WHAT WE HAVE STATED HEREINABOVE I S REINFORCED BY THE NEWLY INSERTED CLAUSE (C) IN SECTION 45(5) BY THE FINANCE ACT , 2003 W.E.F.1.4.2004. THIS NEWLY ADDED CLAUSE ENVISAGES A SITUATION WHERE IN THE ASSESSMENT FOR ANY YEAR,- -THE CAPITAL GAIN ARISING FROM THE TRANSFER OF A CAP ITAL ASSET IS COMPUTED BY TAKING THE- -COMPENSATION OR CONSIDERATION REFERRED TO IN CLAUSE (A) OF SECTION 45(5) OR, AS THE CASE MAY BE, -ENHANCED COMPENSATION OR CONSIDERATION REFERRED TO IN CLAUSE (B) OF SECTION 45(5) , AND SUBSEQUENTLY SUCH COMPENSATION OR CONSIDERATION IS REDUCED BY ANY COURT, TRIBUNAL OR OT HER AUTHORITY. 11. THE WORDING OF THE HON'BLE APEX COURT IS TOTAL LY DEVOID OF ANY AMBIGUITY. IT HAS BEEN HELD IN VERY CLEAR TERM THAT INTEREST RECEIVED UNDER SECTION 28 OF THE LAND ACQUISITION ACT IS A PART OF THE COMPENSATION ITSEL F. THE COMPENSATION BEING EXEMPT UNDER SECTION 10(37) OF T HE ACT IS NOT DISPUTED BY ANY OF THE LOWER AUTHORITIES IN THE PRESENT CASE. 12. IN VIEW OF THE ABOVE, WE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION MADE ON ACCOUNT OF I NTEREST ON ENHANCED COMPENSATION. 13. THE GROUND NO.2 CHALLENGES THE VALIDITY OF REOPENING BY ISSUE OF NOTICE UNDER SECTION 148 OF T HE ACT. SINCE WE HAVE ALLOWED RELIEF TO THE ASSESSEE ON MER ITS WHILE ADJUDICATING OTHER GROUNDS, THIS GROUND BEING A 10 LEGAL GROUND BECOMES ACADEMIC AND WE DO NOT FIND AN Y NEED TO ADJUDICATE THE SAME. 14. IN THE RESULT, ALL THE APPEALS OF THE ASSESSES ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 ND DAY OF FEBRUARY, 2016. SD/- SD/- (H.L. KARWA) (RANO JAIN) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 2 ND FEBRUARY, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 11
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