Brahampal Singh, Gurgaon V. ITO WARD 1(3), Gurgaon

ITA 3460/DEL/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4282 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 22-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRINCY CHATURVEDI
• Keywords: Capital receipt
• Section: 271(1)(c); 56; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, SMC-2: NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.3460/DEL/2019 [ASSESSMENT YEAR: 2013-14] MR. BRAHAMPAL SINGH, 438/34 VILLAGE & P.O. KASAN NEAR GRAMIN BANK GURGAON, HARYANA-1220512 ITO, WARD-3, GURGAON, HARYANA PAN-BFRPS2932E APPELLANT RESPONDENT APPELLANT BY SH. PRINCY CHATURVEDI, CA RESPONDENT BY SH. R.K. GUPTA, SR. DR DATE OF HEARING 18.05.2021 DATE OF PRONOUNCEMENT 18.05.2021 ORDER PER R.K. PANDA, AM, THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 17.05.2017 OF THE LEARNED CIT(A)-1, GUR GAON, RELATING TO AY-2013-14. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SEE IS AN INDIVIDUAL AND FILED HIS RETURN OF INCOME ON 19.10. 2013 DECLARING TOTAL INCOME OF RS.2,62,880/-. DURING THE COURSE O F ASSESSMENT PROCEEDINGS VIDE ORDER SHEET ENTRY DATED 01.03.2016 , THE 2 ITA NO.2389/DEL/2019 ASSESSEE WAS REQUIRED TO EXPLAIN WHY AN AMOUNT OF RS.42,18,086/- BEING 50% OF INTEREST INCOME OF RS.8 4,36,173/- RECEIVED FROM DRO CUM LAC, GURGAON, MAY NOT BE BROU GHT INTO TAX, KEEPING IN VIEW THE AMENDED PROVISIONS OF INCO ME TAX ACT AS CLAUSE (VIII) IN SUB-SECTION 2 OF SECTION 56 INTROD UCED BY FINANCE ACT, 2009 EFFECTIVE FROM THE ASSESSMENT YEAR 2010-1 1, AFTER ALLOWING DEDUCTION AS PER PROVISIONS OF SECTION 57( IV) OF THE I.T. ACT, 1961/-. IN RESPONSE TO ABOVE SHOW CAUSE NOTICE THE ASSESSEE APPEARED BEFORE THE AO BUT DID NOT MAKE ANY SUBMISS ION. THE AO REFERRING TO THE PROVISIONS OF SECTION 56(2)(VII ), 57(IV) AND SECTION 145A(B) OF THE ACT BY THE FINANCE ACT (NO.2 ) 2009, WHICH WAS INTRODUCED W.E.F. 01.04.2010, HELD THAT FROM AY 2010-11, THE INTEREST RECEIVED ON DELAYED COMPENSATION OR EN HANCED COMPENSATION WOULD BE LIABLE TO TAX AS INCOME FROM OTHER SOURCES U/S 56(2)(VIII) OF THE ACT. HE WAS OF THE O PINION THAT NO DISTINCTION HAS BEEN MADE IN CLAUSE (VIII) OF SUBSE CTION (2) OF SECTION 56 OF THE I.T. ACT IN RESPECT OF INTEREST O N DELAYED COMPENSATION I.E. INTEREST U/S 34 OF LAND ACQUISITI ON ACT 1894 OR INTEREST RECEIVED ON ENHANCED COMPENSATION I.E. INT EREST U/S 28 OF LAND ACQUISITION ACT, 1894. ACCORDING TO HIM, T HE ISSUE HAS BEEN SET AT REST WITH THE INTRODUCTION OF SECTION 5 6(2)(VIII) AND 3 ITA NO.2389/DEL/2019 145A(B) TO THE I.T. ACT, 1961 WITH EFFECT FROM 01.0 4.2010. THE INTEREST RECEIVED WOULD BE LIABLE TO TAX IN THE YEA R OF RECEIPT IN VIEW OF PROVISIONS OF SECTION 145A(B) OF THE I.T. A CT. HOWEVER, DEDUCTION TO THE EXTENT OF 50% WOULD BE AVAILABLE T O THE ASSESSEE U/S 57(IV) OF THE I.T. ACT. IN VIEW OF THE ABOVE, H E HELD THAT INTEREST RECEIVED ON ENHANCED COMPENSATION TO THE E XTENT OF RS.84,36,173/- HAS TO BE BROUGHT TO TAX AS INCOME O F THE ASSESSEE FROM OTHER SOURCES AND DEDUCTION U/S 57(IV ) OF THE ACT IS TO BE ALLOWED TO THE EXTENT OF 50% OF SUCH INTER EST RECEIVED WHICH COMES TO RS.42,18,086/-. ACCORDINGLY, THE AO MADE AN ADDITION OF RS.42,18,086/- TO THE TOTAL INCOME OF T HE ASSESSEE AND DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.44,80,970/- AS AGAINST THE RETURNED INCOME OF RS .2,62,880/-. 3. IN APPEAL, THE LEARNED CIT(A) UPHELD THE ADDITI ON SO MADE BY THE AO. WHILE DOING SO HE HELD THAT AFTER T HE AMENDMENT OF THE INCOME TAX ACT BY WAY OF INSERTION OF SECTION 56(2)(VIII) AND SECTION 57(1)(V) BY THE FINANCE AC T, 2009 W.E.F. 01.04.2010, THE ISSUE WHETHER THE INTEREST RECEIVED ON ENHANCED COMPENSATION WAS TAXABLE AS INCOME FROM OTHER SOURC ES HAS BEEN FINALLY SETTLED. IN THESE CIRCUMSTANCES THE D ECISIONS OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS GHANSHY AM (HUF) 4 ITA NO.2389/DEL/2019 (SUPRA) AND CIT RAJKOT VS GOVINDBHAI MAMAIYA ARE NO T APPLICABLE IN THE APPELLANTS CASE. 4. AGGRIEVED WITH SUCH ORDER OF THE LEARNED CIT(A) , THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISIN G THE FOLLOWING GROUNDS:- I. LD. CIT (A) HAS ERRED IN LAW AND FACTS BOTH IN MAKI NG THE ADDITION OF RS.42,18,086/- BY TREATING THE INTEREST AWARDED ON THE ENHANCED COMPENSATION ON ACQUISITION OF AGRICULTURA L LAND U/S 28 OF THE LAND ACT AS TAXABLE UNDER SECTION 56(1)(VIII ) OF THE I.T. ACT. II. LD. CIT (A) HAS NOT FOLLOWED THE PRINCIPLES OF NATU RAL JUSTICE AND PASSED ORDER IN HASTE MANNER WITHOUT TAKING IN TO C ONSIDERATION THE MATERIAL AVAILABLE ON THE RECORD. III. LD. CIT(A) HAS ERRED IN IMPOSING INTEREST UNDER SEC TION 234A, B, C AND ALSO INITIATING PENALTY PROCEEDINGS UNDER SECTI ON 271(1)(C) OF THE IT ACT. 5. THE LEARNED COUNSEL FOR THE ASSESSEE, AT THE OU TSET, DREW THE ATTENTION OF THE BENCH TO THE ORDER OF THE TRIBUNAL IN THE CASE OF NARIENDER KUMAR, VIDE ORDER DATED 12 TH APRIL, 2021 FOR AY 2014-15 AND SUBMITTED THAT IDENTICAL ISSUE HAD C OME UP BEFORE THE TRIBUNAL. RELYING ON THE DECISION OF TH E HONBLE SUPREME COURT IN THE CASE OF UOI VS HARI SINGH IN C IVIL APPEAL NO.1504/2017, ORDER DATED 15 TH SEPTEMBER, 2017, THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. T HEREFORE, THIS BEING A COVERED MATTER, THE APPEAL OF THE ASSESSEE SHOULD BE ALLOWED. 5 ITA NO.2389/DEL/2019 6. THE LEARNED SR. DR, ON THE OTHER HAND, HEAVILY RELIED ON THE ORDER OF THE LEARNED CIT(A). 7. I HAVE HEARD THE RIVAL ARGUMENTS MADE BY BOTH T HE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE LEARNED CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE AS SESSEE. I HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE ME. I FIND AN IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN THE CASE OF SHRI NARIENDER KUMAR (SUPRA). I FIND THE TRIBUNAL, FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F UOI VS HARI SINGH IN CIVIL APPEAL NO.1504/2017, ORDER DATED 15 TH SEPTEMBER, 2017 HAS HELD THAT ON AGRICULTURAL LAND NO TAX IS P AYABLE WHEN THE COMPENSATION/ENHANCED COMPENSATION IS RECEIVED BY THE ASSESSEE AS THEIR LAND WERE AGRICULTURAL LAND. THE RELEVANT OBSERVATION OF THE TRIBUNAL AT PARA-7, WHICH READS AS UNDER:- 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT T HE ASSESSEE HAD RECEIVED RS. 1.42 CRORE ON ACCOUNT OF ENHANCED COMP ENSATION OF LAND ACQUISITION, WHICH INCLUDED COMPENSATION OF RS . 56.90 LAKHS AND INTEREST OF RS. 85.32 LAKHS. THE ASSESSIN G OFFICE HAD MADE ADDITION OF RS. 42.66 LAKHS BEING 50% OF I NTEREST OF RS. 85.32 LAKHS U/S 56(2)(VIII) R.W. SECTION 57(IV) OF THE INCOME TAX ACT, 1961. THE CAPITAL RECEIPT UNLESS SPECIFICA LLY TAXABLE U/S 45 UNDER THE HEAD CAPITAL GAIN, IN PRINCIPLE, I S OUTSIDE THE SCOPE OF INCOME CHARGEABLE TO TAX AND CANNOT BE TAX ED AS INCOME UNLESS IT IS IN THE NATURE OF REVENUE RECEIP T OR SPECIFICALLY BROUGHT WITHIN THE AMBIT OF INCOME BY WAY OF SPECIFIC PROVISION OF THE INCOME TAX ACT. THUS, THE INTEREST RECEIVED ON COMPENSATION TO THE ASSESSEE IS NOTHING BUT A CAPITAL RECEIPT AND THE ADDITION IS AGAINST THE LAW . FROM THE 6 ITA NO.2389/DEL/2019 PERUSAL OF THE ORDER OF THE CIT(A), IT CAN BE SEEN THAT THE CIT(A) HAS NOT GIVEN A SEPARATE FINDING AS TO WHY THE ASSE SSING OFFICER IS JUSTIFIED IN MAKING THE ADDITION. THIS I SSUE HAS BEEN DECIDED BY THE HONBLE APEX COURT IN CASE OF UNION OF INDIA VS. HARI SINGH (CIVIL APPEAL NO. 15041/2017 ORDER DATED 15TH SEPTEMBER 2017) WHEREIN IT IS HELD THAT ON AGRICULT URAL LAND NO TAX IS PAYABLE WHEN THE COMPENSATION/ENHANCED COMPE NSATION IS RECEIVED BY THE ASSESSEE AS THEIR LAND WERE AGRI CULTURAL LAND. THE COMPENSATION WAS RECEIVED IN RESPECT OF AGRICUL TURAL LAND BELONGING TO THE ASSESSEE WHICH HAD BEEN ACQUIRED B Y THE STATE GOVERNMENT. THE CIT(A) HAS NOT TAKEN COGNIZANCE OF THE DECISION OF THE APEX COURT IN CASE OF HARI SINGH (S UPRA). THE RATIO OF THE SAID DECISION IS APPLICABLE IN THE PRE SENT CASE. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. SINCE, THE FACTS OF THE INSTANCE CASE ARE IDENT ICAL TO THE FACTS ALREADY DECIDED BY THE TRIBUNAL IN THE CASE O F SHRI NARIENDER KUMAR (SUPRA) TO WHICH I AM A PARTY, THER EFORE, FOLLOWING THE ORDER OF THE TRIBUNAL I HOLD THAT THE ASSESSEE IS NOT LIABLE TO TAX ON THE INTEREST RECEIVED ON ENHANCED COMPENSATION. ACCORDINGLY, THE ORDER OF THE CIT(A) IN SUSTAINING THE ADDITION OF RS.42,18,086/- IS DELETED AND THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. THE ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE T IME OF HEARING ITSELF I.E. ON 18.05.2021. SD/- [AMIT SHUKLA] [R.K.PANDA] JUDICIAL MEMBER ACCOUNTANT MEMBER DELHI; DATED: 18/05/2021. 7 ITA NO.2389/DEL/2019 F{X~{T? F{X~{T? F{X~{T? F{X~{T? FA FA FA FA P.S P.SP.S P.S COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI