Sh. Jaswant Singh, Sirsa V. Pr. CIT, Hisar

ITA 567/CHANDI/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6408 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-11-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 27-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHISH GUPTA
• Keywords: Assessment record
• Section: 56; 263; 28

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A CHANDIGARH , !' # $ % &' , '( BEFORE: SH. SANJAY GARG, JUDICIAL MEMBER & SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO. 567/CHD/2018 / ASSESSMENT YEAR : 2013-14 SHRI JASWANT SINGH, S/O SHRI THAKAR SINGH, DHANI AMAR SINGH, VILLAGE - KHAIRPUR, DISTT. SIRSA. THE PR. CIT, AAYAKAR BHAWAN, SECTOR 14, HISAR. ./ PAN NO: CZOPS8371P / APPELLANT / RESPONDENT ! ' / ASSESSEE BY : SHRI TEJ MOHAN SINGH # ! ' / REVENUE BY : SHRI ASHISH GUPTA, CIT-DR $ % ! &/ DATE OF HEARING : 13.11.2018 '()* ! &/ DATE OF PRONOUNCEMENT : 18.01.2019 ')/ ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE PRINCIPAL COMMISSIONER OF INCOM E TAX, HISAR [IN SHORT REFERRED TO AS PR.CIT] DATED 21.02.2018 U/S 263 OF THE INCOME TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS 'THE ACT ') RELATING TO ASSESSMENT YEAR 2013-14 . 2. BRIEFLY STATED THE FACTS RELATING TO THE CASE AR E THAT THE LD. PR. CIT NOTED FROM THE ASSESSMENT RECORD OF THE ASSESSE E THAT DURING THE IMPUGNED YEAR, CERTAIN LAND BELONGING TO IT WAS ACQUIRED BY THE LAND ACQUISITION OFFICER, HUDA AND COMPENSATION, EN HANCED COMPENSATION AND INTEREST THEREON WERE AWARDED IN L IEU THEREOF BY HUDA/VARIOUS COURTS. AS A RESULT, THE ASSESSEE REC EIVED INTEREST ITA NO. 567 /CHD/2018 PAGE 2 OF 7 ON ENHANCED COMPENSATION AMOUNTING TO RS. 27,94,637 /- U/S 28 OF THE LAND ACQUISITION ACT DURING THE YEAR UNDER CONS IDERATION AND CLAIMED WHOLE OF THE INTEREST EXEMPT AS CAPITAL GAI NS EARNED FROM SALE OF RURAL AGRICULTURAL LAND, IN VIEW OF THE JUD GEMENT OF THE HON'BLE APEX COURT DELIVERED IN THE CASE OF GHANSHY AM, HUF REPORTED AT 315 ITR 1 (2009). THE PR. CIT NOTED TH AT THE HON'BLE PUNJAB & HARYANA HIGH COURT IN ITS JUDGEMENT IN THE CASE OF MANJIT SINGH VS UNION OF INDIA & OTHERS IN CWP NO. 15006 O F 2013 HAD OBSERVED THAT THE BENEFIT OF TWO JUDGES BENCH DECIS ION OF THE APEX COURT IN THE CASE OF GHANSHYAM, HUF COULD NOT BE DE RIVED BY THE ASSESSEE AND HELD THAT THE SAID INTEREST AWARDED BY THE COURT ON ENHANCED COMPENSATION U/S 28 OF THE LAND ACQUISITIO N ACT FELL FOR TAXATION U/S 56 OF THE INCOME TAX ACT,1961 AS 'INCO ME FROM OTHER SOURCES' IN THE YEAR OF RECEIPT. THE LD. PR. CIT F URTHER NOTED THAT SLP AGAINST THE ABOVE ORDER HAD BEEN DISMISSED BY T HE HON'BLE SUPREME COURT VIDE THEIR ORDER DATED 18.12.2014. T HE LD. PR. CIT, THEREFORE, NOTED THAT THE ISSUE OF TAXABILITY OF IN TEREST AWARDED U/S 28 OF THE L.A. ACT, 1894 HAD BECOME FINAL. HE, THE REFORE, CONFRONTED THE ASSESSEE AS TO WHY THE ASSESSMENT ORDER PASSED IN THE PRESENT CASE WAS NOT ERRONEOUS SINCE THE AO HAD NOT SUBJECT ED THE SAME TO TAX. DETAILED REPLY WAS FILED BY THE ASSESSEE, RE PRODUCED AT PARA 3 OF THE ORDER AFTER CONSIDERING WHICH THE LD. PR. CI T HELD THAT THE INTEREST RECEIVED U/S 28 OF THE L.A. ACT, 1894 WAS TAXABLE AS IN VIEW OF THE AMENDED PROVISIONS OF SECTION 56 SUB-SECTION (2) SUB-CLAUSE (VIII), 57(IV)AND SECTION 145A(B) OF THE ACT AND IN VIEW OF THE LARGER BENCH DECISION OF THE APEX COURT IN THE CASE OF DR. SHAMLAL NARULA VS CIT (1964) 53 ITR 151, BIKRAM SINGH VS LAND ACQU ISITION COLLECTOR (1997) 224 ITR 551 AND SUNDER VS UNION OF INDIA JT 2001 ITA NO. 567 /CHD/2018 PAGE 3 OF 7 (8) SC 130 (CONSTITUTION BENCH) WHICH HAD HELD THAT INTEREST U/S 28 WAS AKIN TO INTEREST U/S 34 AND DID NOT FORM PART O F THE COMPENSATION BUT WAS TAXABLE AS REVENUE RECEIPT. TH E LD. PR. CIT HELD THAT THESE DECISIONS HAD BEEN FOLLOWED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF MANJIT SINGH (SUPRA) WHIL E HOLDING THAT THE DECISION OF THE APEX COURT IN THE CASE OF GHANSHYAM , HUF WAS NOT GOOD LAW AND HENCE WOULD NOT APPLY. THE LD. PR. CI T FURTHER HELD THAT THE HON'BLE JURISDICTIONAL HIGH COURT IN ANOTH ER CASE I.E. NARESH KUMAR JAIN & ORS. VS STATE OF HARYANA & ORS. IN CWP 14728 OF 2017 DATED 12.07.2017 HAD AGAIN HELD THAT NO BENEFIT CAN BE DERIVED BY ASSESSEES FROM THE DECISION OF THE AP EX COURT IN THE CASE OF GHANSHYAM, HUF. CONSIDERING THE SAME, THE L D. PR. CIT HELD THAT THE ASSESSMENT ORDER PASSED BY THE AO U/S 143( 3) OF THE ACT, HAVING FAILED TO ADD 50% OF THE INTEREST INCOME AS PER THE PROVISIONS OF SECTION 56(2)(VIII), 57(IV) AND 145A(B) OF THE A CT UNDER THE HEAD 'INCOME FROM OTHER SOURCES' ,AND HAVING NOT PROPERL Y EXAMINED THE FACTS OF THE CASE AND ACCEPTED THE VERSION OF THE ASSESSEE WITHOUT DUE EXAMINATION OF THE ISSUE OF INTEREST ON ENHANCE D COMPENSATION, WAS ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO TH E INTERESTS OF THE REVENUE. HE, THEREFORE, SET ASIDE THE ORDER PASSED BY THE AO RESTORING IT TO THE AO FOR MAKING FRESH ASSESSMENT WITH THE DIRECTION TO ADD 50% OF INTEREST INCOME TO THE ASSESSED INCOM E OF THE ASSESSEE. 3. DURING THE COURSE OF HEARING BEFORE US, LD. COUN SEL FOR THE ASSESSEE POINTED OUT THAT SUBSEQUENT TO THE DECISIO N PASSED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF NA RESH JAIN (SUPRA),WHICH WAS HEAVILY RELIED UPON BY THE LD. PR . CIT IN HIS ORDER FOR STATING THAT THE PROPOSITION LAID DOWN BY THE A PEX COURT IN THE ITA NO. 567 /CHD/2018 PAGE 4 OF 7 CASE OF GHANSHYAM, HUF STOOD OVERRULED, AND THAT IN TEREST U/S 28 WAS LIABLE TO TAX AS 'INCOME FROM OTHER SOURCES', T HE HON'BLE APEX COURT HAD CATEGORICALLY REITERATED ITS DECISION REN DERED IN THE CASE OF GHANSHYAM, HUF IN THE CASE OF UNION OF INDIA & O RS. VS HARI SINGH & ORS. IN CA NO. 15041/2017 DATED 15.09.2017. IT WAS POINTED OUT THAT THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF NARESH JAIN WAS DATED 12.07.2017, WHILE THE APEX COURT HAD REITERATED THE DECISION RENDERED IN THE CASE OF GHANSHYAM, HUF SUBSEQUENTLY IN SEPTEMBER,2017 AND THEREFORE, THE P ROPOSITION LAID DOWN BY THE APEX COURT WAS THE LAW OF THE LAND FOLL OWING WHICH INTEREST U/S 28 OF THE LAA,1894,WAS IN THE NATURE OF ENHANCED COMPENSATION AND NOT IN THE NATURE OF INTEREST AND THEREFORE, HAD BEEN RIGHTLY NOT RETURNED TO TAX BY ASSESSEES. IT WAS POINTED OUT THAT IN VIEW OF THE SAME, THERE WAS NO ERROR IN THE ORDER OF THE AO AND THE JURISDICTION ASSUMED BY LD. PR. CIT, THEREF ORE, WAS ERRONEOUS. FURTHER, LD. COUNSEL FOR THE ASSESSEE C ONTENDED THAT IDENTICAL ISSUE HAD BEEN HEARD BY THE CO-ORDINATE B ENCH OF THE ITAT CHANDIGARH BENCHES IN THE GROUP OF CASES IN ITA 597 TO 600 & 602/CHD/2018 ON 15.10.2018. THE LD. DR ON THE OTHE R HAND, RELIED ON THE ORDER OF THE LD. PR. CIT. AND CONCEDE D THAT THE ISSUE WAS IDENTICAL TO THAT HEARD BY THE CO-ORDINATE BENC H ON 15.10.2018 IN THE GROUP OF CASES AS POINTED OUT BY THE LD. COU NSEL FOR THE ASSESSEE. 4. WE HAVE HEARD THE RIVAL CONTENTIONS. WE HAVE NO TED THAT THE ITAT CHANDIGARH BENCHES HAS PASSED THE ORDER IN THE GROUP OF CASES IN ITA 597 TO 600 AND 602/CHD/2018 DATED 11.0 1.2019 ALLOWING THE APPEAL OF THE ASSESSEE ON FINDING THAT THE APEX COURT ITA NO. 567 /CHD/2018 PAGE 5 OF 7 HAD REITERATED THE PROPOSITION LAID DOWN BY IT IN T HE CASE OF GHANSHYAM, HUF THAT INTEREST RECEIVED U/S 28 OF THE LAND ACQUISITION ACT, 1894 WAS IN THE NATURE OF COMPENSA TION IN ITS LATEST DECISION IN THE CASE OF HARI SINGH (SUPRA). THE RE LEVANT FINDINGS OF THE ITAT AT PARA 8 TO 10 OF THE ORDER ARE AS UNDER : 8. HAVING HEARD THE RIVAL CONTENTIONS. WE FIND MER IT IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. UNDOUBTEDLY THE LD. PR. CIT HAD HEAVILY RELIED ON TH E DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF MANJIT SINGH (SUPRA) AND MORE SPECIFICALLY IN THE C ASE OF NARESH JAIN TO HOLD THAT THE PROPOSITION LAID DOWN BY THE APEX COURT IN THE CASE OF GHANSHYAM, HUF THAT INTER EST RECEIVED U/S 28 OF THE LAND ACQUISITION ACT, 1894 W AS PART OF THE ENHANCED COMPENSATION, WAS NOT GOOD LAW. AS RIGHTLY POINTED OUT BY THE LD. COUNSEL FOR THE ASSE SSEE THE HON'BLE APEX COURT HAS REITERATED THE AFORESAID PRO POSITION IN THE CASE OF HARI SINGH (SUPRA).WE HAVE GONE THRO UGH THE ORDER OF THE APEX COURT IN THE CASE OF HARI SINGH A ND FIND THAT THE UNION OF INDIA HAD COME BEFORE THE SUPREME COURT AGAINST THE DECISION OF THE HIGH COURT IN WRIT PETI TION FILED BY THE ASSESEEES BEFORE THE HIGH COURT. THE ISSUE B EFORE THE HIGH COURT WAS THAT THE ASSESSEES HAD RECEIVED ENHANCED COMPENSATION ON WHICH TAX HAD BEEN DEDUCTE D AT SOURCE AS PER THE PROVISION OF SECTION 194LA OF THE ACT. THE ASSESSEE HAD CONTENDED THAT NO TAX WAS DEDUCTIBLE O N THE SAME AS LAND WAS AGRICULTURAL LAND AND WITHOUT EXAM INING THESE FACTS, TAXES HAD BEEN DEDUCTED AT SOURCE. TH E HON'BLE HIGH COURT HAD DIRECTED REFUND OF THE TAXES TO THE ASSESSEES AND HAD DIRECTED THE LAND ACQUISITION OFFICER/COLLECTOR TO EXAMINE WHETHER THEIR LANDS WER E AGRICULTURAL OR NOT AND DECIDE WHETHER TAXES WERE L IABLE TO BE DEDUCTED THEREFROM AS PER THE PROVISIONS OF THE ACT. THE UNION OF INDIA HAD COME IN APPEAL BEFORE THE HON'BL E SUPREME COURT AGAINST THIS ORDER OF THE HIGH COURT STATING THAT IT WAS THE ASSESSING OFFICER WHO WAS CAPABLE O F DETERMINING THE NATURE OF LAND AS BEING AGRICULTURA L OR NOT FOR THE PURPOSES OF TAXABILITY UNDER THE INCOME TAX ACT, 1961. THE SAME WAS AGREED TO BY THE HON'BLE APEX C OURT AND THEY HAD, THEREFORE, DIRECTED THE AO TO EXAMINE THIS ASPECT AND FURTHER CATEGORICALLY STATED THAT THE PR OPOSITION LAID DOWN BY IT IN GHANSHYAM, HUF(SUPRA) VIS A VIS INTEREST RECEIVED U/S 28 OF THE LAA,1894 BE KEPT I N MIND TO ASCERTAIN WHETHER THE INTEREST RECEIVED AMOUNTS TO COMPENSATION OR NOT. THE RELEVANT FINDINGS OF THE HON'BLE SUPREME COURT IN THIS REGARD ARE AS UNDER : WE FIND FORCE IN THE SUBMISSION OF THE LEARNED ADDI TIONAL SOLICITOR GENERAL INSOFAR AS THE CHALLENGE TO THE DIRECTION G IVEN TO THE LAND ACQUISITION COLLECTOR TO DETERMINE AS TO WHETH ER THE LAND IN ITA NO. 567 /CHD/2018 PAGE 6 OF 7 QUESTION IS AGRICULTURAL LAND OR NOT. SINCE THE LAN D ACQUISITION COLLECTOR HAD . ALREADY DEDUCTED TAX AT SOURCE AND DEPOSITED WITH THE INCOME TAX DEPARTMENT, IN SUCH CIRCUMSTANCES, B ETTER COURSE OF ACTION, WHICH IS IN CONSONANCE WITH THE PROVISIO NS OF INCOME TAX ACT , IS FOR THE RESPONDENTS TO APPROACH THE CONCERNED ASSESSING OFFICER(S) AND TO RAISE THE ISSUE THAT NO TAX IS PAYABLE ON THE COMPENSATION/ENHANCED COMPENSATION WHICH IS RECEIVED BY THEM AS THEIR LAND WAS AGRICULTURAL LAND. ONCE SUCH AN ISSUE IS RAISED BEFORE THE ASSESSING OFFICER(S), IT IS FOR T HE ASSESSING OFFICER(S) TO EXAMINE THE FACTS OF EACH CASE AND TH EN APPLY THE LAW AS CONTAINED IN THE INCOME TAX ACT TO DETERMINE THE AFORESAID QUESTION. INSOFAR AS THESE CASES ARE CONCERNED, WE ALLOW THESE APPEALS BY SETTING ASIDE THE DIRECTIONS CONTAINED I N PARAGRAPH 7 AND SUBSTITUTE THE SAME WITH THE FOLLOWING DIRECTIO NS: (1) THE RESPONDENTS SHALL FILE APPROPRIATE RETURNS BEFORE T HE ASSESSING OFFICER(S) IN RESPECT OF ASSESSMENT YEARS IN QUESTI ON WITHIN A PERIOD OF TWO MONTHS FROM TODAY IN CASE THEY FEEL T HAT THE COMPENSATION IN RESPECT OF LAND BELONGING TO THEM W HICH HAD BEEN ACQUIRED WAS AGRICULTURAL LAND, AND CLAIM REFU ND OF THE TAX WHICH WAS DEDUCTED AT SOURCE AND DEPOSITED WITH THE INCOME TAX DEPARTMENT. ON THE FILING OF THESE RETURNS, THE ASS ESSING OFFICER(S) SHALL GO INTO THE AFORESAID QUESTION AND WHEREVER IT IS FOUND THAT THE COMPENSATION WAS RECEIVED IN RESPECT OF AGRICULTURAL LAND, THE TAX DEPOSITED WITH THE INCOM E TAX DEPARTMENT SHALL BE REFUNDED TO THESE RESPONDENTS. (2) WHILE DETERMINING AS TO WHETHER THE COMPENSATION PAID WAS FOR AGRICULTURAL LAND OR NOT, THE ASSESSING OFFICER(S) WILL KEEP IN MIND THE PROVISIONS OF SECTION 28 OF THE LAND ACQUISITION ACT AND THE LAW LAID DOWN BY THIS COURT IN ' COMMISSIONER OF INCOME TAX, FARIDABAD V. GHANSHYAM (HUF )' [2009 (8) SCC 412] IN ORDER TO ASCERTAIN WHETHER THE INTEREST GIVEN UNDER THE SAID PROVISION AMOUNTS TO COMPENSATION OR NOT. (3) THE DIRECTION T O REFUND THE AMOUNT OF TAX DEDUCTED AT SOURCE (TDS) TO THE LAND ACQUISITION COLLECTOR IS, ACCORDINGLY, SET ASIDE. HOWEVER, IN T HOSE CASES WHERE THE AMOUNT HAS ALREADY BEEN REFUNDED, NO INTE RFERENCE IS CALLED FOR AND IT WILL BE FOR THE INCOME TAX DEPART MENT TO PROCEED IN ACCORDANCE WITH THE PROVISIONS OF INCOME TAX ACT . (4) WHERE SUCH NOTICES HAVE NOT ALREADY BEEN ISSUED OR ASSESSMENTS HAVE NOT ALREADY BEEN MADE, IF SUCH AN ACTION IS TAKEN WITHIN A PERIOD OF TWO MONTHS FROM TODAY, ISS UE OF LIMITATION WOULD NOT COME IN THE WAY OF THE INCOME TAX DEPARTMENT. THIS ORDER IS PASSED HAVING REGARD TO T HE FACT THAT THE PRESENT PROCEEDINGS WERE PENDING IN THIS COURT BECAUSE OF WHICH IT WAS NOT POSSIBLE FOR THE INCOME TAX DEPART MENT TO ISSUE THESE NOTICES EARLIER. 9. IN VIEW OF THE CATEGORICAL AFFIRMATION OF THE PR OPOSITION LAID DOWN BY THE APEX COURT IN THE CASE OF GHANSHYA M HUF(SUPRA) ,IN ITS LATEST DECISION IN THE CASE OF H ARI SINGH (SUPRA), WE HOLD THAT THERE IS NO ERROR IN THE ORDE R OF THE AO TREATING THE INTEREST RECEIVED BY THEM U/S 28 OF TH E LAA,1894,AS COMPENSATION FOLLOWING THE PROPOSITION LAID DOWN BY THE APEX COURT IN GHANSHYAM HUF(SUPRA).THE ORDER PASSED BY THE LD.PR.CIT U/S 263 IS THEREFORE SET ASI DE. 10. THE APPEAL OF THE ASSESSEE THEREFORE STANDS ALL OWED . ITA NO. 567 /CHD/2018 PAGE 7 OF 7 5. SINCE ADMITTEDLY THE ISSUE INVOLVED IN THE PRESE NT CASE AND THE FACTS ARE IDENTICAL TO THAT IN THE GROUP OF CAS ES AS ABOVE, THE DECISION RENDERED THEREIN WILL APPLY SQUARELY TO TH E PRESENT CASE ALSO FOLLOWING WHICH WE SET ASIDE THE ORDER PASSED BY THE LD. PR. CIT U/S 263 OF THE ACT. THE APPEAL OF THE ASSESSEE IS, THEREFORE, ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.01.2019. SD/- SD/- ( ) ( # $ % &' ) (SANJAY GARG) (ANNAPURNA GUP TA) / JUDICIAL MEMBER '( / ACCOUNTANT MEMBER (+ ! ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. $ / / CIT 4. $ / ( )/ THE CIT(A) 5. -01 2 , & 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7% / GUARD FILE (+ $ / BY ORDER, 8 # / ASSISTANT REGISTRAR