Shri Rajender Singh, Faridabad V. ITO, Faridabad

ITA 473/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6898 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 22-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Section: 143(3); 45(5); 28

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 473/DEL/2015 (ASSESSMENT YEAR: 2009 - 10 ) RAJENDER SINGH, SANMARKS & ASSOCIATES - B - 504, 1 ST FLOOR, NEHRU GROUND, NIT, FARIDABAD PAN: CAEPS1217D VS. ITO, WARD - 1(5), FARIDABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIJAY KUMAR GUPTA, ADV REVENUE BY: SHRI S.L. ANURAGI, SR. DR DATE OF HEARING 24/04/ 2018 DATE OF PRONOUNCEMENT 2 0 / 07 / 2018 O R D E R PER AMIT SHUKLA , J . M. 1 . THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) - 2, FARIDABAD DATED 10.11.2014 FOR ASSESSMENT YEAR 2009 - 10, WHEREIN, THE LAND COMPENSATION RECEIVED BY THE ASSESSEE AS WELL AS INTEREST THEREON AMOUNTING IN ALL TO RS. 1886157/ - WAS HELD TO BE TAXABLE. THE SUBSTANTIVE GROUND OF APPEAL IS ONLY GROUND NO. 2 WHICH IS AS UNDER: - 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD FIRST APPELLATE AUTHORITY (CIT(A) - 2), FARIDABAD IS ERRED IN: - I. SUSTAINING THE ADDITION MADE OF RS. 146155 ON ACCOUNT OF ENHANCED LAND COMPENSATION RECEIVED BY THE ASSESSEE BY NOT ALLOWING DEDUCTION UNDER SECTION 10(37) OF THE INCOME TAX ACT, 1961. II. SUSTAINING THE ADDITIONS OF RS. 1740002/ - ON ACCOUNT OF INTEREST RECEIVED ON ENHANCED COMPENSATION. 2 . THE BRIEF F ACTS OF THE CASE IS THAT THE ASSESSEE IS AN INDIVIDUAL WHO FILED HIS RETURN OF INCOME ON 11.09.2009 DECLARING AGRICULTURAL INCOME OF RS. 2071828/ - . THE LD AO NOTED THAT THE AGRICULTURAL LAND OF THE ASSESSEE WAS RAJENDER SINGH VS ITO, ITA NO. 473/DEL/2015 (ASSESSMENT YEAR: 2009 - 10) PAGE | 2 ACQUIRED BY HUDA AND THE ASSESSEE HAS RECEIVE D COMPENSATION AS WELL AS INTEREST THEREON BUT SAME WAS NOT SHOWN AS INCOME. THE ASSESSEE DOES NOT MAINTAIN ANY BOOKS OF ACCOUNT. THE ASSESSEE SUBMITTED THAT ASSESSEE HAS RECEIVED RS. 2071828/ - FROM HUDA ON ACCOUNT OF ENHANCED COMPENSATION AND INTEREST TH EREON WHICH IS ALREADY SHOWN BY THE ASSESSEE AS AGRICULTURAL INCOME. THE ASSESSEE FURTHER SUBMITTED THAT IT DOES NOT HAVE THE DETAILS AND THEREFORE, HAS APPLIED FOR THE SAME UNDER THE RTI ACT. THE ASSESSEE FURTHER SUBMITTED THAT ENHANCED COMPENSATION IS TA XABLE IN THE YEAR OF RECEIPT U/S 45(5) OF THE ACT AND FURTHER SAME IS EXEMPT U/S 10(37) OF THE ACT. 3 . THE LD AO REJECTED THE CONTENTION OF THE ASSESSEE AND HELD THAT THE COMPENSATION RECEIVED BY THE ASSESSEE OF RS . 1913321/ - IS U/S 28 OF THE LAND ACQUIS ITION ACT AND AS THE ASSESSEE IS FOLLOWING CASH SYSTEM OF ACCOUNTING SAME IS TAXABLE ON RECEIPT BASIS. THEREFORE, THE ADDITION OF THIS SUM WAS MADE. WITH REGARD TO THE SUM OF RS. 158507/ - IS COMPENSATION SO HE HELD THAT ABOVE SUM IS EXEMPT U/S 10(37) OF THE ACT. CONSEQUENTLY, THE ORDER U/S 143(3) OF THE ACT WAS PASSED ON 20.12.2011. 4 . AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD CIT(A), WHO HELD THAT OUT OF ADDITION OF RS. 1913321/ - A SUM OF RS. 21763/ - IS ON ACCOUNT OF INTEREST ON ENHANCED COMPENSATION AND THEREFORE, NOT CHARGEABLE TO TAX IN THIS YEAR. HOWEVER, RS. 1886158/ - AS INTEREST RECEIVED U/S 34 OF THE LAND ACQUISITION ACT AND THEREFORE, IT IS CORRECTLY CHARGED TO TAX. HE FURTHER HELD THAT EXEMPTION U/S 10(37) OF THE ACT IS NOT ALLOWABLE TO THE RAJENDER SINGH VS ITO, ITA NO. 473/DEL/2015 (ASSESSMENT YEAR: 2009 - 10) PAGE | 3 ASSESSEE AS CONDITIONS ARE NOT FULFILLED. THEREFORE, THE ASSESSEE AGGRIEVED HAS PREFERRED THIS APPEAL BEFORE US. 5 . THE LD AR SUBMITTED THAT ASSESSEE HAS RECEIVED COMPENSATION U/S 28 OF THE LAND ACQUISITION ACT, THEREFORE, SAME IS PART OF COMPENSATION FOR LAND ACQUISITION . THE INTEREST RECEIVED IS NOT INTEREST U/S 34 OF THE LAND A CQUISITION ACT. HE THEREFORE, SUBMITTED THAT IF THE INTEREST IS U/S 28 OF THE LAND ACQUISITION ACT THEN ASSESSEE IS ENTITLED TO DEDUCTION U/S 10(37) OF THE ACT. TO SUPPORT HIS CONTENTION HE REFERRED TO THE LETTER DATED 26.07.2011 BY THE LD AO AS WELL AS CERTIFICATE OF GOVT OF HARYANA. HE THEREFORE, SUBMITTED THAT THE ORDER OF THE LD CIT(A) IS ERRONEOUS. 6 . THE LD DR RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. 7 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE LOWER AUTHO RITIES. THE HON'BLE SUPREME COURT IN CIT VS. GHANSHYAM DASS (HUF) 224 CTR 522 (SC) HAS HELD THAT INTEREST RECEIVED BY THE ASSESSEE U/S 28 OF THE LAND ACQUISITION ACT IS A PART OF ENHANCED VALUE OF LAND AND THEREFORE, IS PART OF LAND COMPENSATION ONLY. THER FORE IT EMERGES THAT INTEREST RECEIVED BY THE ASSESSEE U/S 28 OF THE LAND ACQUISITION ACT IS PART OF THE COMPENSATION AND IS NOT IN THE NATURE OF THE INTEREST. THEREFORE IT IS CHARGEABLE TO TAX UNDER THE HEAD CAPITAL GAIN U/S 45 (4) OF THE ACT. FURTHER INT EREST RECEIVED U/S 34 OF THE LAND ACQUISITION ACT IS IN THE NATURE OF THE INTEREST AND IS CHARGEABLE TO TAX AS INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES IN ACCORDANCE WITH THE METHOD OF ACCOUNTING REGULARLY FOLLOWED BY THE ASSESSEE. THE LD A O IN THE IMPUGNED CASE HAS CATEGORICALLY HELD THAT COMPENSATION RECEIVED BY RAJENDER SINGH VS ITO, ITA NO. 473/DEL/2015 (ASSESSMENT YEAR: 2009 - 10) PAGE | 4 THE ASSESSEE IS U/S 28 OF THE LAND ACQUISITION ACT. SUCH FACT IS ALSO REITERATED AND COMMUNICATED TO THE ASSESSEE VIDE LETTER DATED 26.07.2011 OF THE LD AO. THIS FACT HAS ALSO B EEN FURTHER PROVED BY THE ASSESSEE BY THE LETTER DATED 22.03.2018 OF THE LAND ACQUISITION OFFICER, FARIDABAD OBTAINED UNDER RIGHT TO INFORMATION ACT, 2005. THEREFORE, THERE IS NO DISPUTE THAT INTEREST RECEIVED BY THE ASSESSEE IS U/S 28 OF THE LAND ACQUISIT ION ACT. THE LD CIT(A) HAS PROCEEDED ON THE BASIS THAT INTEREST RECEIVED BY THE ASSESSEE IS U/S 34 OF THE LAND ACQUISITION ACT. SUCH FINDING IS DEVOID OF ANY EVIDENCE. THEREFORE, THE ORDER OF THE LD CIT(A) CANNOT BE UPHELD. 8 . AS THE ASSESSEE HAS RECEIVED TH E COMPENSATION U/S 28 OF THE LAND ACQUISITION ACT SAME IS PART OF THE COMPENSATION RECEIVED BY THE ASSESSEE WHICH IS CHARGEABLE TO TAX UNDER THE HEAD CAPITAL GAIN U/S 45(5) OF THE ACT. 9 . FURTHER, SECTION 10(37) OF THE ACT PROVID ES THAT IF ANY SUM IS CHAR GEABLE TO TAX UNDER THE HEAD CAPITAL GAIN ARISING FROM THE TRANSFER OF AGRICULTURAL LAND IN CASE OF ASSESSEE IN PURSUANCE OF COMPULSORY ACQUISITION , THEN SAME IS EXEMPT SUBJECT TO CERTAIN CONDITIONS. IN THE CASE OF THE ASSESSEE THE LD AO HIMSELF HAS STAT ED THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 10(37) OF THE ACT AND SUM OF THE COMPENSATION RECEIVED BY IT AS THE LAND ACQUIRED IS AN AGRICULTURAL LAND ON PRODUCTION OF COPY OF GIRDAWARI OF THE LAND. THEREFORE, IT IS APPARENT THAT THERE IS NO DISPUTE B Y THE LD AO HIMSELF ABOUT THE NATURE OF THE LAND. IN VIEW OF THIS WE ARE OF THE OPINION THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S RAJENDER SINGH VS ITO, ITA NO. 473/DEL/2015 (ASSESSMENT YEAR: 2009 - 10) PAGE | 5 10(37) OF THE ACT. FURTHER, THE CERTIFICATE OF PATWARI DATED 19.12.2011 ALSO SHOWS THAT THE LAND OF THE ASSESSEE IS AN A GRICULTURAL LAND AND THE ASSESSEE HAS PRODUCED WHEAT, JWAR ETC ON THAT LAND. IN VIEW OF THIS THE GROUND NO. 2 OF THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE LD AO IS DIRECTED TO TREAT THE INTEREST OF COMPENSATION RECEIVED BY THE ASSESSEE AS COMPENSATION OF LAND AS SUM WAS AWARDED U/S 28 OF THE LAND ACQUISITION ACT AND FURTHER TO GRANT EXEMPTION U/S 10(37) OF THE ACT. ACCORDINGLY, ORDERS OF THE LOWER AUTHORITIES WERE REVERSED AND APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 0 / 07 / 2018 . - S D / - - S D / - (PRASHANT MAHARISHI) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 0 / 07 / 2018 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI