Brahma Nand & Sons (HUF), Ghaziabad V. ITO, Ghaziabad

ITA 4846/DEL/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69685 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-12-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 03-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: ASHISH SINGHAL
• Keywords: Capital asset; Deemed to accrue or arise in india
• Section: 45(5); 28; 139

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI BEFORE SHRI S. V MEHROTRA, ACCOUNTANT MEMBER AND SHRI A. T. VARKEY , JUDICIAL MEMBER ITA NO. 4844/DEL/2011(ASSESSMENT YEAR: 2006 - 07) BRIJ MOHAN & SONS (HUF), C/O. V KUMAR & CO., CA, 1, NAVYUG MARKET, GHAZIABAD AABH1796H VS. THE INCOME TAX OFFICER, WARD - 1(2), CGO COMPLEX, HAPUR ROAD, GHAZIABAD (APPELLANT) (RESPONDENT) ITA NO. 4845/DEL/2011(ASSESSMENT YEAR: 2006 - 07) DAYA NAND TYAGI & SONS (HUF), C/O V KUMAR &CO., CA,1, NAVYUG MARKET, G H AZIABAD AAAHD9924N VS. ITO, WARD - 1(2), CGO COMPLEX, HAPUR ROAD, G H AZIABAD (APPELLANT) (RESPONDENT) ITA NO. 4846/DEL/2011(ASSESSMENT YEAR: 2006 - 07) BRAHMA NAND & SONS ( HUF ), C/O. V KUMAR & CO., C A ,1, NAVYG MARKET, GHAZIABAD AABHB1795E VS. ITO, WARD - 1(2), CGO COMPLEX, HAPUR ROAD, GHAZIABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI . ASHISH SINGHAL, CA RESPONDENT BY : SMT Y. KAKKAR , DR O R D E R PER S. V MEHROTRA , AM FIRST WE TAKE UP ITA NO. 4844/DEL/2011 FOR THE ASSESSMENT YEAR 2006 - 07 . THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT (A), GHAZIABAD, DATED 16.08.2011 . PAGE NO. 2 2. BRIEF FACTS OF THE CASE ARE THAT , IN THE RELEVANT ASSESSMENT YEAR , THE ASSESSEE DERIVE D INCOME FROM PLYING OF B US AND ALSO ENJOY ED INCOME FROM OTHER SOURCES. IT HA D FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 46,390/ - PLUS AGRICULTURAL INCOME OF RS. 40,000/ - . 3. IN THE COURSE OF ASSESSMENT PROCEEDING THE ASSESSING OFFICER NOTICED THAT THE AGRICULTURAL LAND OF THE ASSESSEE SITUATED AT VILLAGE & POST OFFICE PRAHLAD, GHAZIABAD WAS ACQUIRED BY THE LAND ACQUISITION OFFICER (IN SHORT LAO ) IN 1987 AND THE COMPENSATION WAS GRANTED VIDE ORDER DATED 27.02.1989. THE ASSESSEE FILED AN APPEAL AGAINST THE ORDER OF LAO FOR ENHANCING THE COMPENSATION. THE ADDL . DISTRICT JUDGE - II, GHAZIABAD VIDE DATED 29.03.2001 ENHANCED THE COMPENSATION. THE ORDER OF THE ADJ WAS CHALLENGED BY TH E UP GOVERNMENT IN THE HONBLE ALLAHABAD HIGH COURT BY WAY OF APPEAL WHICH ACCORDING TO THE ASSESSEE IS PENDING FOR DISPOSAL. THE ASSESSEE FURTHER POINTED OUT THAT HONBLE ALLAHABAD HIGH COURT GRANTED STAY ON THE JUDGEMENT OF THE ADJ , GHAZIABAD SUBJECT TO THE CONDITION THAT 50% OF THE ENHANCED COMPENSATION MAY BE DEPOSITED IN THE DISTRICT COURT AND THE ASSESSEE MAY BE ALLOWED TO WITHDRAW THE AMOUNT AFTER FURNISHING THE RELEVANT SECURITY FOR THE AMOUNT WITHDRAWN TILL THE PENDENCY OF THE MATTER. IN PURSUANCE TO THIS ORDER THE ASSESSEE FIRST RECEIVED RS. 30,22,906/ - IN THE FINANCIAL YEAR 2002 - 03 AS 50% OF THE ENHANCED COMPENSATION AND INTEREST. FURTHER, THE ENHANCED COMPENSATION AND INTEREST AMOUNT WAS RE - CALCULATED IN THE FY 2005 - 06 AND THE ASSESSEE RECEIVED A SUM OF RS. 15 , 12 , 039/ - AS ENHANCED INTEREST ON THE ADDITIONAL COMPENSATION. 4 . BEFORE THE ASSESSING OFFICER , THE ASSESSEE PLACING RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT , WEST BENGAL VS. M/S HINDUSTAN HOUSING AND LAND DEVELOPMENT TRUST LTD. (1986) REPORTED IN 161 ITR 524 , CONTENDED THAT ADDITIONAL COMPENSATION OR INTEREST CAN NOT BE ASSESSED TO TAX UNLESS DISPUTE IS FINALLY SETTLED. THUS , IN THE LIGHT OF ABOVE DECISION OF THE HONBLE SUPREME COURT , THE ASSESSEE CLAIMED THAT THE ADDITIONAL AMOUNT OF INTEREST AMOUNTING TO RS. 15,12,039 / - RECEIVED IN THE FY 2005 - 06 WAS NOT TAXABLE IN THE RELEVANT ASSESSMENT YEAR. THE ASSESSING OFFICER , HOWEVER DID NOT ACCEPT THE ASSESSEES CON TENTION IN VIEW OF THE PROVISIONS OF SECTION 45(5)(B) AND INCLUDED THE SAME IN TOTAL INCOME . PAGE NO. 3 5 . BEFORE LD CIT(A) , THE ASSESSEE REITERATED ITS SUBMISSION THAT SINCE THE DISPUTE WAS PENDING BEFORE HONBLE ALLAHABAD HIGH COURT , NO INCOME COULD ACCRUE TO ASSE SSEE. THE ASSESSEE FURTHER POINTED OUT THAT THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. GHANSHYAM (HUF) (2009) 224 CTR (SC) 522 WAS NOT APPLICABLE IN ASSESSEES CASE BECAUSE IN THE SAID JUDGMENT HONBLE SUPREME COURT WHILE DEALING WITH THE TAXABILITY OF ENHANCED COMPENSATION , OBSERVED AS UNDER: - THE CAPITAL GAIN ON THE ADDITIONAL COMPENSATION WOULD BE TAXABLE IN THE YEAR OF RECEIPT IT HAS ALSO BEEN HELD THAT INTEREST U/S 28 OF THE LAND ACQUISITION ACT, 1894 UNLIKE INTEREST U/S 34 IS A N ACCRETION TO THE VALUE, HENCE IT IS PART OF THE COMPENSATION OR CONSIDERATION WHICH IS NOT THE CASE WITH INTEREST U/S 34, OF THE LAND ACQUISITION ACT, 1984. 6 . THE ASSESSEE CLARIFIED THAT TH IS JUDGMENT WAS RENDERED WITH REFERENCE TO THE TAXABILITY OF ADD ITIONAL COMPENSATION AND INTEREST UNDER SECTION 28 OF THE LAND ACQUISITION ACT AND NOT WITH REFERENCE TO THE INTEREST RECEIVED UNDER SECTION 34 OF THE LA ACT . THE ASSESSEE SUBMITTED THAT IN THE PRESENT CASE THE MATTER IN DISPUT E WAS ABOUT THE TAXABILITY OF INTEREST U / S 34 OF THE LAND ACQUISITION ACT AND NOT UNDER SECTION 28 . FURTHER , ASSESSEE SUBMITTED THAT EVEN IF IT WAS DECIDED THAT THE INTEREST RECEIVED U/S 34 WAS TAXABLE IN THE YEAR OF RECEIPT , THEN THE S A ME SHOULD BE SPREAD OVER THE PERIOD FOR WHICH IT HAD BEEN CALCULATED AND MUST BE ASSESSED IN THE RELEVANT ASSESSMENT YEAR. IN THIS REGARD ASSESSEE RELIED ON FOLLOWING DECISIONS: - I) RAMA BAI VS. CIT (1990) 84 CTD SC 164 II) BIKKAM SINGH AND OTHERS VS. LAND ACQUISITION COLLE CTOR & ORS. (1997) 139 CTR SC 475 7 . THE LD CIT(A) DID NOT ACCEPT THE ASSESSEES CLAIM OF INTEREST BEING RECEIVED U/S 34 OF THE LAND ACQUISITION ACT OBSERVING THAT EARLIER, BEFORE ASSESSING OFFICER, ASSESSEE WAS CLAIMING THAT THIS INTEREST WAS PART OF ADDI TIONAL COMPENSATION, AND HENCE, AS PER THE CASE LAW OF HINDUSTAN HOUSING LAND DEV TRUST 161 ITR 524 (SC), IT WAS NOT TAXABLE TILL THE DISPUTE WAS FINALLY SETTLED. HOWEVER, NO W ASSESSEE WAS CLAIMING INTEREST U/S 34. AFTER CONSIDERING THE FACT S AND MATERIAL ON RECORD , THE LD CIT(A) HELD THAT IMPUGNED INTEREST WAS PART OF THE ADDITIONAL COMPENSATION , AND , HENCE , RECEIPT U/S 28 OF THE LAND ACQUISITION ACT AND , THUS, TAXABLE IN THE YEAR OF RECEIPT. LD CIT(A) RELIED ON THE DECISION OF HONBLE SC IN THE CASE OF GHANSHYAM PAGE NO. 4 (HUF) 224 CTR 522 WHEREIN IT WAS, INTER - ALIA, HELD THAT INTEREST U/S 28 OF LAND ACQUISITION ACT, 1894, UNLIKE INTEREST U/S 34, IS AN ACCRETION TO THE VALUE AND HENCE, IT IS PART OF ENHANCED COMPENSATION. LD CIT(A) , WITHOUT PREJUDICE TO HIS FINDING THAT THE IMPUGNED AMOUNT WAS RECEIPT U/S 28 OF THE LAND ACQUISITION ACT, FURTHER POINTED OUT THAT ASSESSEE DID NOT GIVE ANY BIFURCATION OF TOTAL AMOUNT OF INTEREST RELATING TO VARIOUS RELEVANT YEARS. HE , ACCORDINGLY , DISMISS ED THE ASSESSEE S APPEAL. 8 . BEING AGGRIEVED WITH THE ORDER OF LD CIT(A) , THE ASSESSEE IS IN APPEAL BEFORE US AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL: - 1. THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN TAXING THE INTEREST ON ENHANCED COMPENSATION AMOUNTING TO RS. 15 ,12,039/ - WHICH WAS GRANTED TO THE ASSESSEE U/S 28 OF THE LAND ACQUISITION ACT, HENCE A PART OF THE COMPENSATION . AS THE LAND ACQUIRED WAS AGRICULTURAL LAND SITUATED OUTSIDE THE SPECIFIED MUNICIPAL LIMITS, HENCE WAS NOT A CAPITAL ASSETS. THE LEARNED CIT(A ) WAS NOT JUSTIFIED IN TAXING THE INCOME AS CAPITAL GAIN. 2. THAT THE APPELLANT CRAVES THE LEAVE TO ADD/ OR TO AMEND ANY GROUNDS APPEAL AT THE TIME OF HEARING. 9 . LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT LD CIT HAS HELD THAT THE ADDITIONAL AMOUNT WAS RECEIPT U/S 28 OF THE LAND ACQUISITION ACT . THEREFORE , IT FORM S PART OF THE ADDITIONAL COMPENSATION LIKE ORIGINAL COMPENSATION . LD COUNSEL SUBMITTED THAT SINCE THE ORIGINAL COMPENSATION WAS EXEMPT FROM TAX BEING RECEIPT FOR AGRICULTURAL LAND, THEREFORE, TH E ADDITIONAL COMPENSATION SHOULD BE HELD TO BE EXEMPT FROM TAX. 10 . LD DR SUBMITTED THAT ENHANCED COMPENSATION IS A DEEMED INCOME U/S 45(5) , AND, THEREFORE, SHOULD BE TAXED ACCORDINGLY. 11 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE PERUSED THE RECORD OF THE CASE . THE DEPARTMENT HAS NOT DISPUTED THE FINDING S OF LD CIT(A) IN HOLDING THAT THE IMPUGNED AMOUNT WAS RECEIVED BY THE ASSESSEE U/S 28 OF THE LAND ACQUISITION ACT. THE ASSESSEE IS ALSO NOT AGGRIEVED BY THE FINDING S OF LD CIT(A) THAT THE IMPUGNED AMOUNT WAS RECEIVED U/S 28 OF THE LAND ACQUISITION ACT. NOW THE NARROW COMPASS IN WHICH DISPUTE HAS BEEN RAISED BEFORE US IS REGARDING TAXABILITY OF THE ADDITIONAL COMPENSATION. WE FIND THAT LD CIT(A) HAS NOT GIVE ANY FINDIN G TO PAGE NO. 5 THIS EFFECT PARTICULARLY WHEN HE WAS HOLDING THAT THE IMPUGNED AMOUNT WAS A RECEIPT U/S 28 OF LAND ACQUISITION ACT AND, THUS, FORMED PART OF ADDITIONAL COMPENSATION. LD CIT(A) WAS REQUIRED TO FURTHER EXAMINE THE ISSUE WITH REFERENCE TO SECTION 45(5) V IS - - VIS THE TAXABILITY OF THE ORIGINAL COMPENSATION RECEIVED IN 1989 , WE , ACCORDINGLY, FOR RECORDING REQUISITE FINDING ON THE TAXABILITY OF IMPUGNED AMOUNT IN THE RELEVANT ASSESSMENT YEAR. 12 . IN THE RESULT THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSE S. ITA NO. 4845/DEL/2011(ASSESSMENT YEAR: 2006 - 07) ITA NO. 4846/DEL/2011(ASSESSMENT YEAR: 2006 - 07) 13 . THE FACT S IN THESE TWO APPEALS ARE IDENTICAL AND, THEREFORE, FOR THE REASONS GIVEN IN ITA NO. 4844/DEL/2011 (SUPRA), WE RESTORE THE MATTER BACK TO THE F ILE OF LD CIT(A) FOR THE LIMITED PURPOSE OF DECIDING THE ISSUE OF TAXABILITY OF IMPUGNED AMOUNT RECEIVED BY THE ASSESSEE U/S 28 OF THE LAND ACQUISITION ACT. 1 4 . I N T H E R E S U L T ASSESSEE S A P P E A L S A R E A L L O W E D F O R S T A T I S T I C A L P U R P O S E S I N C A S E O F A L L T H E T H R E E ASSESSEE S . ORDER PRONOUNCED IN THE OPEN COURT ON 2 0 . 1 2 .2013 . - S D / - - S D / - ( A. T. VARKEY ) (S. V MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED 2 0 / 12 /2013 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI