Smt Pushpa Wife & L/hr of Late A.J.Beneventure, Trivandrum V. ITO, Ernakulam

ITA 41/COCH/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52256 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 23-08-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 20-01-2010
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: S RAJEEV ADV
• Keywords: Capital asset; Rectification of order; Reasonable cause; Wrong claim; Assessment record; Revised return
• Section: 143(3); 54F; 45(5); 139(5); 148

Judgement Text

IN THE INCOME TAX APPELLAT E TRIBUNAL COCHIN BEN CH, COCHIN BEFORE S/SHRI N.VIJAYAKUMARAN, JM AND SANJAY AR ORA, AM I.T.A. NOS. 41, 42 & 248/COCH/2010 ASSESSMENT YEARS:2001-02 & 2002-03 SMT. PUSHPA, WIFE & LEGAL HEIR OF LATE A.J. BENEVENTURE, TC-27/1421, OLD MINT ROAD, RISHIMANGALAM, VANCHIYOOR P.O., TRIVANDRUM-695 501. [PAN:ACFPJ 1246C] VS. THE INCOME TAX OFFICER, WARD- 2(2), TRIVANDRUM. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI S.RAJEEV, ADV.-AR REVENUE BY MS. S. VIJAYAPRABHA, JR.DR DATE OF HEARING 23/08/2011 DATE OF PRONOUNCEMENT 31/10/2011 O R D E R PER SANJAY ARORA, AM: THESE ARE A SET OF THREE APPEALS BY THE ASSESSEE F OR TWO CONSECUTIVE YEARS, BEING A.Y. 2001-02 AND 2002-03, WITH THE THIRD APPEAL BEI NG IN RELATION TO THE RECTIFICATION ORDER PASSED FOR THE LATTER YEAR (A.Y. 2002-03), AR ISING OUT OF SEPARATE ORDERS BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, TRIVANDRUM (`CIT(A) FOR SHORT). THE BACKGROUND FACTS AS WELL AS THE ISSUES ARISING IN T HE SAID APPEALS BEING COMMON, THE SAME WERE HEARD TOGETHER, AND ARE BEING DISPOSED OF VIDE THIS COMMON, CONSOLIDATED ORDER. I.T.A. NOS.41, 42 & 248 /COCH/2010 (ASST. YEARS: 2001-02 & 2002-03) 2 2. THE QUESTION INVOLVED IN THE PRESENT APPEALS, IN THE MAIN, IS THE TAXABILITY, INCLUDING DETERMINATION OF QUANTUM, OF THE CAPITAL GAINS ARSING ON ACCOUNT OF THE ENHANCED COMPENSATION AWARDED TO THE ASSESSEE. WHIL E THE ASSESSEE CLAIMS THAT THE SAME IS TO BE WITH REFERENCE TO THE DATE OF THE ORIGINAL AWARD BY THE LAND ACQUISITION OFFICER, WHICH WAS ON 21.8.1992; THE PROPERTY BEING TAKEN PO SSESSION OF ON 03.10.1992, THE REVENUE CLAIMS IT TO BE IN THE YEAR OF THE RECEIPT OF THE ADDITIONAL COMPENSATION, I.E., WITH REFERENCE TO S. 45(5) OF THE INCOME-TAX ACT, 1961 ( `THE ACT HEREINAFTER). 3.1 THERE BEING NO DISPUTE WITH REGARD TO THESE PRIMARY FACTS; I.E., THE RECEIPT OF THE ADDITIONAL COMPENSATION AWARDED AMOUNT DURING THE R ELEVANT PREVIOUS YEAR, WE FIND NO LEGAL BASIS FOR THE DISPUTE. THIS IS AS, WITHOUT DO UBT, CAPITAL GAIN WOULD BE SUBJECT TO TAX ONLY IN THE YEAR OF TRANSFER OF THE RELEVANT CAPITA L ASSET, WHICH, IN THE INSTANT CASE; THE CAPITAL ASSET BEING 4.05 ARES OF LAND AT VANCHIYOOR , TRIVANDRUM OWNED BY THE ASSESSEE, IS THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 1993- 94. SO, HOWEVER, WHERE THE TRANSFER IS BY WAY OF COMPULSORY ACQUISITION UNDER ANY LAW, THE CONSIDERATION FOR WHICH IS DISPUTED, THE ENHANCED COMPENSATION AWARDED BY ANY COURT/TRIBUNAL OR ANY OTHER AUTHORITY, WOULD BE SUBJECT TO TAX IN THE YEAR OF T HE RECEIPT OF SUCH COMPENSATION, PER S. 45(5) OF THE ACT, WHICH IS NOTWITHSTANDING ANYTHING CONTAINED IN S. 45(1), AND ALSO PRESCRIBES THE MANNER IN WHICH THE CAPITAL GAINS SO ARISING IS TO BE COMPUTED, AND WITH REGARD TO THE APPLICABILITY OF WHICH, AGAIN, THERE IS NO QUARREL. THE ISSUE RAISED BY THE ASSESSEE IS WITH REGARD TO THE CLAIM FOR DEDUCTION IN THE COMPUTATION OF CAPITAL GAINS U/S. 54D OF THE ACT. THE SECTION PROVIDES FOR DEDUCTION FROM THE CAPITAL GAINS CHARGEABLE U/S. 45 ON TRANSFER BY WAY OF COMPULSORY ACQUISITION ON RE-INVESTMENT OF THE SALE PROCEEDS. THE ASSESSEE FAILED TO RESPOND TO THE SHOW CAUSE NO TICE IN RESPECT OF ITS SAID CLAIM, LEADING TO THE ASSESSMENT FOR A.Y. 2001-02 BEING FR AMED U/S. 144 OF THE ACT (WHICH, AGAIN, IS NOT UNDER CHALLENGE), SO THAT THE ASSESSI NG OFFICER (AO) MADE ENQUIRIES THROUGH HIS INSPECTOR. ON THE BASIS OF THE INSPECTORS REPO RT, HE FOUND THAT THE LAND UNDER REFERENCE DID NOT FORM PART OF ANY INDUSTRIAL UNDER TAKING, SO THAT THE PRIMARY CONDITION OF SECTION 54D WAS NOT SATISFIED. THE SAID FINDINGS H AVE NOT BEEN CHALLENGED OR REBUTTED BY THE ASSESSEE AT ANY STAGE. WE, THEREFORE, HAVE NO H ESITATION IN REJECTING THE ASSESSEES I.T.A. NOS.41, 42 & 248 /COCH/2010 (ASST. YEARS: 2001-02 & 2002-03) 3 CLAIM FOR DEDUCTION U/S. 54D, TOWARD WHICH EVEN NO SPECIFIC GROUND HAS BEEN RAISED BEFORE US. IN FACT, FOR BOTH THE YEARS THE ASSESSE E RAISED AN ADDITIONAL GROUND BEFORE THE LD. CIT(A), CLAIMING DEDUCTION U/S. 54F. THE LD. CI T(A) FOUND NO MERIT IN THE ASSESSEES CLAIM IN-AS-MUCH AS THERE WAS NOTHING TO SUPPORT TH E ASSESSEES CLAIM EITHER AT THE TIME OF FILING OF THE RETURN OR BEFORE THE ASSESSING OFF ICER. AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 3.2 THE FACTS IN RELATION TO THE RECTIFICATION PROC EEDINGS, WHICH ARE THE SUBJECT MATTER OF THE THIRD APPEAL, ARE THAT SUBSEQUENT TO THE ASS ESSMENT U/S. 143(3) R.W.S. 147 OF THE ACT ON 28.3.2005, IT WAS OBSERVED BY THE AO THAT INTERE ST ON COMPENSATION AMOUNTING TO ` 546647/- RECEIVED BY THE ASSESSEE DURING THE RELEVA NT PREVIOUS YEAR HAD NOT BEEN SUBJECT TO TAX WHILE FRAMING THE SAID ASSESSMENT. THE ASSE SSEE OBJECTED THERETO ON THE BASIS THAT THE SAME COULD BE ONLY IN THE YEAR/S OF ACCRUAL OF INTEREST. THE SAME DID NOT FIND FAVOUR WITH THE AO, WHO WAS OF THE VIEW THAT THE ACCRUAL P RINCIPLE IS THE ONLY PERMISSIBLE MANNER WHERE THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, NOT OTHERWISE. HE, ACCORDINGLY, BROUGHT THE SAME TO TAX . IN APPEAL, THE ASSESSEE REITERATED ITS STAND, ALSO CLAIMING THAT THE ISSUE WAS DEBATABLE, RELYING ON THE DECISION BY THE APEX COURT IN THE CASE OF ITO V. VOLKART BROS . (1971) 82 ITR 50 (SC). THE LD. CIT(A) WAS OF THE VIEW THAT WHILE COMPLETING THE ASSESSMENT U/S. 143(3), THE ASSESSING OFFICER HAD SPECIFICALLY EXCLUDED THE IMPUGNED INTEREST AMOUNT ON THE BASIS THAT THE SAME HAD ALREADY BEEN TAXED IN EARLIER YEARS ON DUE BASIS. A S SUCH, THAT BEING ADMITTEDLY NOT THE CASE, NOT TAXING THE SAME FOR THE CURRENT YEAR WAS ADMITTEDLY A MISTAKE, WHICH STOOD, ACCORDINGLY, RECTIFIED. THAT THE SAID FACT STOOD BR OUGHT TO THE NOTICE OF THE AO BY THE AUDIT CELL WOULD BE OF NO CONSEQUENCE; THE PRIMARY FACTS BEING NOT IN DISPUTE, SO THAT THE ASSESSEES OBJECTION WITH REGARD THERE-TO WAS ALSO NOT VALID. AGGRIEVED, THE ASSESSEE IS IN APPEAL. 4.1 BEFORE US, THE LD. AR WOULD SUBMIT THAT TH E ASSESSEE COULD NOT BE PREJUDICED FOR HAVING PURSUED A WRONG CLAIM, I.E., U/S. 54D, AS AG AINST U/S. 54F, AND TOWARD WHICH HE ADVERTED TO THE COPY OF THE APPROVED PLAN OF THE CO NSTRUCTION FILED ALONG WITH THE MEMO I.T.A. NOS.41, 42 & 248 /COCH/2010 (ASST. YEARS: 2001-02 & 2002-03) 4 OF APPEAL. THE LD. DR, ON THE OTHER HAND, VEHEMENTL Y OBJECTED TO THE ASSESSEES CLAIM IN VIEW OF THE DECISION BY THE APEX COURT IN THE CASE OF GOETZE (INDIA) LTD . V. CIT (2006) 284 ITR 323 (SC). THE ASSESSEE, IT IS APPARENT, IS CHANGING ITS STAND FROM TIME TO TIME, RAISING CLAIMS WITH NO FACTUAL BASIS. IT WAS FURTHE R URGED BY HER THAT EVEN IF THERE WAS AN OMISSION TO MAKE A CLAIM, OR IT HAD PRESSED FOR A W RONG CLAIM VIDE ITS RETURN, IT COULD HAVE MADE OUT A CASE FOR THE SAME BEFORE THE FIRST APPELLATE AUTHORITY. THE ASSESSEE HAS NOT EVEN MADE OUT A PRIMA FACIE CASE FOR DEDUCTION U/S. 54F, AND ITS CLAIM IS COMP LETELY WITHOUT MERIT. ON AN INQUIRY BY THE BENCH TO THE LD . AR IF THE ASSESSEE HAD CONSTRUCTED THE NEW RESIDENTIAL HOUSE, HE CONCEDED TO IT BEING THE FIRST FLOOR OF THE SAME HOUSE. 4.2 WITH REGARD TO THE ASSESSMENT OF INTEREST , WHICH IS ADMITTEDLY INTEREST U/S. 28 OF THE LAND ACQUISITION ACT, ASSESSABLE AS INCOME FROM OTHER SOURCES, UNDER WHICH HEAD OF INCOME IT STANDS ASSESSED FOR AY 2001-02 VIDE ASSES SMENT U/S. 143(3) R/W S. 147 DATED 30/3/2004, SINCE ACCEPTED BY THE ASSESSEE, THE LD. AR RELIED ON THE DECISIONS IN THE CASE OF RAMABAI VS. CIT (1990) 181 ITR 400 AS WELL AS K. S. KRISHNA RAO VS. CIT (1990) 181 ITR 408 (SC), RENDERED FOLLOWING THE FORMER, TO THE EFFECT THAT INTEREST ACCRUED FROM YEAR TO YEAR, SO THAT, IT WAS URGED, IT WOULD BE SUBJECT TO TAX ONLY IN THE YEAR OF ITS ACCRUAL. THE LD. DR, ON THE OTHER HAND, WOULD SUBMIT THAT THE QU ESTION IS NOT LONGER DEBATABLE IN VIEW OF THE DECISIONS BY THE APEX COURT IN THE CASE OF CIT V. P.V.S. BEEDIES (P.) LTD . (1999) 237 ITR 13 (SC); GANESHILAL & SONS V. CIT , 15 ITR 1 (ALL); CIT V. MURARKA (B.L.) , 217 ITR 165 (RAJ); AND ITO V . VOLKART BROS . (SUPRA). THE QUESTION OF ACCRUAL, OR OF IT (ACCRUAL) BEING THE ONLY BASIS FOR ASSESSMENT, WOUL D ARISE ONLY WHERE THE ASSESSEE IS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING, WHIC H IS NOT THE CASE; THE ASSESSEE ADMITTEDLY NOT MAINTAINING ANY BOOKS OF ACCOUNT. 5. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD, AS WELL AS THE CASE LAW CITED. 5.1 THE FIRST QUESTION IS WHETHER THERE IS ANY B ASIS TO HOLD THAT THE CLAIM OF DEDUCTION U/S. 54D AND, CORRESPONDINGLY, NON-CLAIM OF DEDUCTI ON U/S. 54F, WAS A MISTAKE, I.E., AS I.T.A. NOS.41, 42 & 248 /COCH/2010 (ASST. YEARS: 2001-02 & 2002-03) 5 CONTENDED BY THE ASSESSEE BEFORE US, SO THAT ITS `G ROUND FOR THE STATUTORY DEDUCTION IN ITS RESPECT OUGHT TO HAVE BEEN ALLOWED BY THE FIRST APP ELLATE AUTHORITY. WE OBSERVE THAT THE RETURN OF INCOME (ROI) FOR A.Y. 2001-02 WAS ORIGINA LLY FILED ON 10.4.2001; CLAIMING DEDUCTION U/S. 54D ON THE CAPITAL GAINS. NOTICE U/ S. 148 WAS ISSUED ON 21.2.2003 TO VERIFY THE SAID CLAIM AS WELL AS TO ASCERTAIN THE E XACT AMOUNT RECEIVED AS ADDITIONAL COMPENSATION AS PER THE COURT ORDER. ASSESSMENT U/ S. 143(3) R.W.S. 147 WAS MADE VIDE ORDER DATED 30.3.2004 AT THE INCOME RETURNED U/S. 1 48, I.E., AS ORIGINALLY ASSESSED ( ` 44,471/-, BEING PENSION), PLUS THE INTEREST ON ADDI TIONAL COMPENSATION ATTRIBUTABLE TO THE CURRENT YEAR ( ` 92357/-). THAT IS, THE ASSESSEES CLAIM FOR DEDUCTI ON U/S. 54D ( ` 307543/-) STOOD ALLOWED AS SUCH. LIKEWISE, DEDUCTIO N U/S. 54D WAS CLAIMED IN THE SUM OF ` 1029644/- VIDE ROI FOR A.Y. 2002-03 FILED ON 05.9.2 002, WHICH SUM REPRESENTS THE TOTAL AMOUNT RECEIVED DURING THE RELEVANT PREVIOUS YEAR, INCLUDING INTEREST AT ` 546647/-. HOWEVER, BEING UNABLE TO SUPPORT ITS CLAIM FOR DEDU CTION U/S. 54D, THE ASSESSEE CLAIMED EXCLUSION OF THE CAPITAL GAINS ON THE GROUND OF IT BEING ASSESSABLE FOR A.Y. 1993-94, THE YEAR IN WHICH THE TRANSFER TOOK PLACE. THE ASSESSME NT WAS FRAMED ON THE AMOUNT OF CAPITAL GAINS ASSESSABLE FOR THE YEAR ( ` 402997/-) ON RECEIPT BASIS U/S. 45(5)(B), DISTINGUISHING THE DECISION IN THE CASE OF CIT VS. C.P. LONAPPAN AND SONS , 265 ITR 101 (KER.) RELIED UPON BY THE ASSESSEE, VIDE ORDER U/S. 143(3) R.W.S. 147 DATED 28.3.2005. THE SCRUTINY OF ITS ASSESSMENT RECORD FOR A.Y. 2001-02 BY THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM (CIT FOR SHORT) UNDER REVISIONARY JURI SDICTION U/S. 263 OF THE ACT, REVEALED THE ASSESSEES CLAIM FOR DEDUCTION U/S. 54D AS HAVI NG NOT BEEN SUBJECT TO VERIFICATION DURING ASSESSMENT, WHICH EVEN DID NOT BEAR ANY MENT ION THEREOF. ACCORDINGLY, THE ASSESSMENT FOR A.Y. 2001-02 WAS HELD AS ERRONEOUS A ND PREJUDICIAL TO THE INTEREST OF THE REVENUE TO THAT EXTENT, AND THE ASSESSMENT SET ASID E TO CONSIDER THE ISSUE OF CAPITAL GAINS ASSESSABLE U/S. 45(5)(B) AS WELL AS DEDUCTION EXIGI BLE U/S. 54D VIDE ORDER U/S. 263 DATED 30.11.2005. ACCORDINGLY, THE ASSESSMENT PROCEEDING S WERE TAKEN UP WITH THE ISSUE OF NOTICE U/S. 143(2) ON 29.11.2006. AS AFORE-NOTED, T HERE WAS NO PROPER RESPONSE TO THE QUERIES RAISED AND/OR THE REQUISITIONS MADE BY THE AO, EVEN AS THE ASSESSEE WAS BEING REPRESENTED, AS DURING THE EARLIER PROCEEDINGS, BY AN ADVOCATE, SHRI K.C.GOPALAN. ON THE BASIS OF THE ENQUIRIES MADE BY THE DEPARTMENT, THE ASSESSEES CLAIM WAS FOUND TO BE I.T.A. NOS.41, 42 & 248 /COCH/2010 (ASST. YEARS: 2001-02 & 2002-03) 6 WITHOUT BASIS, AND THE AMOUNT OF COMPENSATION RECEI VED DURING THE RELEVANT YEAR ( ` 307543/-) BROUGHT TO TAX U/S. 45(5)(B), I.E., OVER AND ABOVE THE ASSESSMENT AS ALREADY FRAMED ON 30.3.2004, VIDE ORDER U/S. 144 R.W.S. 263 DATED 27.12.2006 (ALSO REFER PARA 3.1 OF THIS ORDER). 5.2 WITH REGARD TO THE ASSESSEES CASE FOR A NON-CO NSIDERATION OF ITS CLAIM U/S. 54F, WE FIND IT TO HAVE NO CASE AT ALL. HIS CONSISTENT STAN D RIGHT FROM APRIL, 2001, WHEREAT HE FILED THE RETURN OF INCOME FOR A.Y. 2001-02, TO DECEMBER, 2006, I.E., IN THE RESTITUTED PROCEEDINGS FOR THE YEAR, AS WELL AS THE GROUNDS RA ISED IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY FOR THAT YEAR (INSTITUTED ON 27.12.2006), WAS OF ITS ENTIRE CAPITAL GAIN BEING ASSESSABLE ONLY FOR A.Y. 1993-94 AND, IN ANY CASE, SUBJECT TO DEDUCTION U/S. 54D, CLAIMING DEDUCTION THERE-UNDER AT AN AGGREGATE OF ` 13.37 LAKHS FOR BOTH THE YEARS UNDER REFERENCE, INCLUDING THE AMOUNT WHICH WAS ADMITTEDL Y INTEREST ON THE COMPENSATION AWARDED. IT IS ONLY WHEN IT WAS FOUND TO HAVE NO CL AIM THERE-UNDER AT ALL, THAT THE ALTERNATIVE CLAIM BY WAY OF ADDITIONAL GROUND/S WAS TAKEN UP BEFORE THE LD. CIT(A). THAT IS, THERE IS NO QUESTION OF THE ASSESSEE BEING PREV ENTED BY A REASONABLE CAUSE IN PRESSING THE CLAIM BEFORE THE AO, BEFORE WHOM, AS WOULD BE A PPARENT FROM THE FOREGOING, THE PROCEEDINGS CONTINUED AT VARIOUS TIMES DURING THE S AID PERIOD OF ALMOST FIVE YEARS. THE TWO CLAIMS, I.E., U/SS. 54D AND 54F, HAVE NOT SIMIL ARITY AT ALL. FURTHER STILL, THERE IS NOTHING ON RECORD TO SHOW THAT THE CAPITAL GAINS WAS ACTUAL LY UTILIZED FOR THE CONSTRUCTION OF A NEW HOUSE, I.E., THAT A CLAIM U/S. 54F IS EXIGIBLE, GIV EN THE VARIOUS CONDITIONS OF THAT SECTION. IN FACT, DURING THE HEARING THE LD. COUNSEL CONCEDE D TO THE ASSESSEE HAVING NOT CONSTRUCTED A NEW RESIDENTIAL HOUSE, WHICH FORMS THE BASIS OF D EDUCTION U/S. 54F. THIS IS ALSO BORNE OUT BY THE COPY OF THE APPROVED PLAN (DATED 28.6.20 00) FROM THE TRIVANDRUM CORPORATION PLACED ON FILE BY THE ASSESSEE. THE SAME PERTAINS T O ROOF CHANGING (SUNSHADE PROJECTION), AND FOR CONSTRUCTION/EXTENSION OF/TO THE FIRST FLOO R. THE SANCTION BEARS A CONDITION TO THE EFFECT THAT THE HOUSE CONSISTS OF A SINGLE RESIDENT IAL UNIT. THE LD. CIT(A) HAS THUS ONLY RIGHTLY NOT ADMITTED THE ASSESSEES ADDITIONAL GROU ND/S IN RESPECT OF THIS CLAIM, NON- RAISING OF WHICH IS CERTAINLY NOT A BONA FIDE MISTAKE, AS SOUGHT TO BE PROJECTED BEFORE US. I.T.A. NOS.41, 42 & 248 /COCH/2010 (ASST. YEARS: 2001-02 & 2002-03) 7 THE ASSESSE FAILS ON ITS RELEVANT GROUNDS, TOWARD W HICH IT HAS ALSO RAISED ADDITIONAL GROUND/S BEFORE US. WE DECIDE ACCORDINGLY. 6.1 WITH REGARD TO THE RECTIFICATION PROCEEDING S, WHICH IS THE SUBJECT MATTER OF THE THIRD APPEAL; FIRSTLY, THE RELEVANT FACTS ARE NOT IN DISP UTE, I.E., THAT THE IMPUGNED INTEREST STANDS RECEIVED BY THE ASSESSEE DURING THE RELEVANT PREVIO US YEAR, AND THE ONLY ISSUE, AS WE DISCERN, IS OF THE YEAR/S OF ITS TAXABILITY, AS ALS O IF THE SAME IS A DEBATABLE ISSUE; THE IMPUGNED AMOUNT HAVING BEEN BROUGHT TO TAX BY RECOU RSE TO SEC. 154 OF THE ACT (KINDLY REFER PARA 4.2 OF THIS ORDER). WE FIND NO AMBIGUITY IN THE LEGAL POSITION. SECTION 5 DEFINES THE TOTAL INCOME TO INCLUDE BOTH THE INCOME RECEIVE D (OR DEEMED TO BE RECEIVED) (S. 5(1)(A)) AND ACCRUED (OR DEEMED TO BE ACCRUED) (S. 5(1)(B)), IN INDIA, BY (OR ON BEHALF OF) THE ASSESSEE, AS THE CASE MAY BE, DURING THE RELEVA NT PREVIOUS YEAR. EXPLANATION 2 TO THE SECTION FURTHER CLARIFIES THAT INCOME SO RECEIVED S HALL NOT BE INCLUDED WHERE THE SAME STANDS INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE ON THE BASIS THAT IT HAD (ALREADY) ACCRUED OR ARISEN (OR DEEMED TO BE SO). IN OTHER WO RDS, THERE IS NO QUESTION OF ANY DOUBLE ADDITION OF THE SAME INCOME. WHERE, THEN, IS THERE ANY AMBIGUITY OR SCOPE FOR DE BATE ? INCOME, WHETHER RECEIVED OR ACCRUED, HAS TO BE INCL UDED IN THE TOTAL INCOME FOR ANY YEAR, EXCLUDING THAT WHICH STANDS ALREADY INCLUDED THEREI N ON ACCRUAL BASIS (FOR THE SAME OR ANY OTHER YEAR). OF COURSE, SUCH AN EXERCISE IS NORMALL Y NOT REQUIRED OR NECESSARY AS THE ASSESSEE WOULD BE FOLLOWING EITHER MERCANTILE OR CA SH SYSTEM OF ACCOUNTING, RETURNING HIS INCOME FROM YEAR TO YEAR ON THAT BASIS, PER EITHER OF WHICH ONLY ITS INCOME (ASSESSABLE UNDER CHAPTER IV-D OR IV-F) IS TO BE ARRIVED AT FOR ANY YEAR; THE LAW, PER SECTION 145, PROVIDING SANCTITY OR VALIDITY TO BOTH. THAT IS, FO LLOWING EITHER METHOD, IN TERMS OF SEC. 145, WOULD PROVIDE A CONSISTENT BASIS FOR ASSESSING INCOME, MEETING THE OBJECT OF SECTION 5 THAT INCOME, WHETHER ACCRUED OR RECEIVED, WOULD F ORM A VALID BASIS FOR ITS ASSESSMENT. IN THE INSTANT CASE, THE ASSESSEE IS ADMITTEDLY NOT MAINTAINING ANY BOOKS OF ACCOUNT. THE QUESTION OF FOLLOWING A PARTICULAR METHOD OF ACCOUN TING AND, THEREFORE, OF APPLICATION OF SEC. 145, THUS, DOES NOT ARISE. SO, HOWEVER, THE SAME WOULD NOT OPERATE TO ITS DISADVANTAGE OR DETRIMENT AS, WITHOUT DOUBT, EVEN W HERE NO METHOD OF ACCOUNTING IS BEING FOLLOWED, AS IN THE INSTANT CASE, THE OPTION TO CHOOSE THE BASIS OF RETURNING INCOME I.T.A. NOS.41, 42 & 248 /COCH/2010 (ASST. YEARS: 2001-02 & 2002-03) 8 IS ONLY WITH THE ASSESSEE, AND THE REVENUE CANNOT I NSIST ON ASSESSING THE SAME ON CASH BASIS . THAT WE FIND TO BE THE SUM AND SUBSTANCE OF THE DECISION BY THE HONBLE GAUHATI HIGH COURT IN THE CASE OF CIT V. U.M. KIDWAI , 219 ITR 130 (GAU.) RELIED UPON BY THE ASSESSEE. AS SUCH, IT IS ONLY WHERE THE INTEREST H AS NOT BEEN, OR CANNOT IN LAW BE, ASSESSED TO TAX ON ACCRUAL BASIS, SO THAT THE OPTION WITH TH E ASSESSEE UNDER LAW CANNOT BE EXERCISED AND BECOMES OF NO AVAIL, THAT THE REVENUE WOULD BE JUSTIFIED IN ASSESSING THE SAME ON RECEIPT BASIS; THE SAME FALLING WITHIN THE SCOPE OF TOTAL INCOME U/S. 5(1)(A) R.W.S. 56 OF THE ACT. 6.2 THE DECISION BY THE APEX COURT IN THE CASE OF RAMABAI VS. CIT (SUPRA), AS WELL AS THAT IN THE CASE OF K. S. KRISHNA RAO VS. CIT (SUPRA), FOLLOWING IT, IS, IN OUR VIEW, NOT ON THE ISSUE. THE SAME RESOLVE THE ISSUE AS REGARDS TH E TIME OF ACCRUAL OF INTEREST, I.E., WHETHER THE YEAR IN WHICH THE ORDER AWARDING ADDITI ONAL COMPENSATION IS PASSED OR THE YEAR/S TO WHICH THE INTEREST RELATES, WITH THE APEX COURT CLARIFYING IT TO BE THE LATTER. THAT IS, IT STANDS CONFIRMED AND SETTLED BY IT THAT INTE REST, WHENEVER DETERMINED, BEING COMPENSATORY, I.E., FOR THE TIME LAG IN THE RECEIPT OF THE PRINCIPAL AMOUNT ON WHICH THE SAME IS GRANTED, ACCRUES FROM YEAR TO YEAR. THE REA DING OF THE TEXT OF THE ORDERS AS WELL AS THE QUESTIONS REFERRED TO HONBLE COURT WOULD CLARI FY THIS BEYOND DOUBT. THE RIGHT TO RECEIVE THE PRINCIPAL AMOUNT, IT STANDS EXPLAINED B Y THE HONBLE COURT, VESTS IN THE ASSESSEE ON THE ACQUISITION OF HIS LAND. THE SAME, OR THE ADDITIONAL COMPENSATION AWARDED IN CASE OF DISPUTE, ONLY QUANTIFIES THE SAI D, ALREADY VESTED RIGHT. THE INTEREST, WHENEVER AWARDED, THUS, SEEKS TO COMPENSATE THE ASS ESSEE FOR THE DELAY IN THE RECEIPT OF THE ASSESSEES RIGHT TO THE PRINCIPAL SUM AND, AS S UCH, IS A FUNCTION OF TIME. THAT THE IMPUGNED INTEREST, RECEIVED DURING THE YEAR, STANDS ALREADY ACCRUED TO THE ASSESSEE, IS NOT, AND POSSIBLY CANNOT BE, IN DISPUTE. THE ONLY QUESTI ON, THEREFORE, THAT SURVIVES IS WHETHER THE SAME, TO THE EXTENT IT IS NOT ASSESSED OR ASSES SABLE AS PART OF THE INCOME OF THE YEAR/S TO WHICH THE SAME RELATES, WOULD STAND TO FORM PART OF THE TOTAL INCOME OF THE CURRENT YEAR, I.E., ON RECEIPT BASIS, OR NOT. AND WHICH WE STANDS ANSWERED BY US IN THE PRECEDING SUB-PARA IN THE AFFIRMATIVE. I.T.A. NOS.41, 42 & 248 /COCH/2010 (ASST. YEARS: 2001-02 & 2002-03) 9 6.3 COMING TO THE FACTS OF THE PRESENT CASE, WE FIN D THAT THE ASSESSEE CLAIMS TO HAVE `REVISED THE RETURNS FOR AYS 1997-98 TO A.Y. 2001- 02, ACCOUNTING FOR INTEREST TO THE EXTENT OF ` 382276/-, I.E., OF THE TOTAL INTEREST OF ` 546647/-. THERE IS NO FINDING BY THE AUTHORITIES BELOW ON THIS CLAIM, AND NEITHER ARE TH E DATES OF THE FILING OF THESE RETURNS CLEAR FROM THE RECORD, AS ONLY THOSE FILED WITHIN T HE TIME LIMIT U/S. 139(5) COULD BE CONSIDERED AS REVISED RETURNS, WITH THOSE BEYOND TH E PRESCRIBED TIME PERIOD BEING NON EST IN THE EYES OF LAW. EVEN SO, SUCH RETURNS COULD BE REGULARIZED BY THE REVENUE BY THE ISSUE OF NOTICE U/S. 148, I.E., TO BRING THE INTEREST AS ACCRUED FOR THOSE YEARS TO TAX, BY TAKING THE SAID RETURN/S AS AN `INFORMATION. IN FACT, THE ASS ESSMENT FOR A.Y. 2001-02 ALREADY INCLUDES INTEREST AT ` 92357/-, WHICH AGREES WITH THE INCOME STATED TO BE RETURNED SUBSEQUENTLY (REFER ASSESSMENT ORDERS DATED 30.3.20 04 AND 27.12.2006), SO THAT TO THAT EXTENT THERE IS AN OVER-ASSESSMENT AND THE REVENUE S ACTION U/S. 154 (FOR THE CURRENT YEAR) CANNOT HOLD QUA THE SAME. FOR THE REMAINING YEARS, I.E., AYS 1997- 98 TO 2000-01, IN OUR VIEW, WHERE ACTION U/S. 148 WAS PERMISSIBLE IN LAW AS ON THE DATE OF FILING OF THE RETURN FOR THE SAID YEAR/S BY THE ASSESSEE, TREATING THE S AME AS INFORMATION (I.E., FOR WHICH A PERIOD OF SIX YEARS FROM THE END OF THE RELEVANT AS SESSMENT YEAR HAD NOT EXPIRED AS THE DATE OF FILING OF THE RETURN), THE REVENUE IS PRECL UDED FROM ASSESSING THE SAME AS INCOME FOR THE CURRENT YEAR ON RECEIPT BASIS. THIS IS AS T HE ASSESSEE HAS THEREBY EXERCISED AND CONVEYED HIS OPTION FOR CHOOSING ACCRUAL BASIS, AND WHICH COULD UNDER LAW BE SUBJECT TO ASSESSMENT, SO THAT THE ASSESSEE CANNOT BE PREJUDIC ED FOR WANT OF ACTION ON THE PART OF THE REVENUE. THIS IS MORE SO AS THESE ARE RECTIFICATION PROCEEDINGS, SO THAT ANY SCOPE FOR DEBATE HAS NECESSARILY TO BE EXCLUDED. THE AO SHALL , ACCORDINGLY, CAUSE TO UNDERTAKE THE NECESSARY VERIFICATION, AND DECIDE PER A SPEAKING O RDER, OF COURSE, AFTER ALLOWING THE ASSESSEE A REASONABLE OPPORTUNITY TO REPRESENT ITSE LF IN THE MATTER. THE BALANCE INTEREST OF ` 164371/- (I.E., ` 546647 - ` 382276), WHICH IT APPEARS PERTAINS TO YEARS PRIOR T O AY 1997- 98, HAS NECESSARILY TO BE BROUGHT TO TAX AS INCOME FOR THE CURRENT YEAR, I.E., THE YEAR OF RECEIPT. WE DECIDE ACCORDINGLY. 7. THE ASSESSEE DID NOT PRESS ITS GROUND # 2 FOR AY 2001-02, AGITATING NON-GRANT OF SUFFICIENT OPPORTUNITY TO PRESENT ITS CASE IN ASSES SMENT PROCEEDINGS. I.T.A. NOS.41, 42 & 248 /COCH/2010 (ASST. YEARS: 2001-02 & 2002-03) 10 8. IN THE RESULT, THE ASSESSEES APPEALS FOR BOTH T HE YEARS (IN ITA NOS. 41 & 42/COCH/2010) ARE DISMISSED, WHICH THAT FOR AY 2002 -03 (IN ITA 248/COCH/2010) IS PARTLY ALLOWED AND PARTLY ALLOWED FOR STATISTICAL P URPOSES. SD/- SD/- (N.VIJAYAKUMARAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 31 OCTOBER, 2011 GJ COPY TO: 1. SMT. PUSHPA, WIFE & LEGAL HEIR OF LATE A.J. BENE VENTURE, TC-27/1421, OLD MINT ROAD, RISHIMANGALAM, VANCHIYOOR P.O., TRIVANDRUM-69 5 501. 2. THE INCOME TAX OFFICER, WARD-2(2), TRIVANDRUM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, TRIV ANDRUM. 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE .