Shri Harish Gupta Legal Heir of Late Smt. Leela Gupta, Indore V. The ITO Wd-1(3), Indore

ITA 6/IND/2014

• Counselvise Citation: 622714 RSA 2014
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 03-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: P M CHOUDHARI
• Keywords: Capital receipt
• Section: 6; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI MUKU L KR. SHRAWAT, JUDICIAL MEMBER PAN NO. ABOPG0319K ITA NO. 06/IND/2014 A.Y. : 2005-06 SHRI HARISH GUPTA, L/H OF LATE SMT. LEELA GUPTA, 23, GODBOLE COLONY, INDORE. VS. ITO, WARD 1(3), INDORE (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.M.CH OUDHARI , ADV. REVENUE BY : SHRI R.A.VERMA, SR. DR . / // / DATE OF HEARING : 08.09.2014 /DATE OF PRONOUNCEMENT: 19.09.2014 / O R D E R PER P.K.BANSAL, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE CIT(A)-I, INDORE, DATED 25.10.2013, F OR THE ASSESSMENT YEAR 2005-06. 2. THE FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESS EE :- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW IN CONFI RMING THE LEVY OF TAX ON RS. 71,68,678/- ON THE INTEREST RECEIVED BY APPELLANT ON THE DELAYED PAYMENT OF COMPENSATION UNDER THE DIRECTIONS OF THE HON'BLE HI GH SHRI HARISH GUPTA, L/H OF LATE SMT. LEELA GUPTA, IN DORE. I.T.A.NO. 06/IND/2014- A.Y. 2005-06 2 COURT OF ALLAHABAD ISSUED IN EXERCISE OF EXTRAORDIN ARY JURISDICTION UNDER ARTICLE 226 OF CONSTITUTION OF I NDIA. HE FAILED TO APPRECIATE THAT THE INTEREST PAYABLE U NDER THE DIRECTIONS OF HON'BLE HIGH COURT NOT BEING IN T HE NATURE OF INTEREST PAYABLE UNDER THE PROVISIONS OF LAND ACQUISITION ACT CONSTITUTES A CAPITAL RECEIPT AS TH E SAME HAS BEEN AWARDED BY HIGH COURT BECAUSE THE ASSESSEE WAS DEPRIVED OF HER RIGHT TO THE COMPENSAT ION UNDER THE PROVISIONS OF LAND ACQUISITION ACT FOR UNDULY LONG PERIOD DESPITE THE ACQUISITION OF HER L AND BY MURADABAD DEVELOPMENT AUTHORITY. 2) WITHOUT PREJUDICE TO THE ABOVE GROUND, THE LD. CIT(A) HAS ALSO ERRED IN LAW IN CONFIRMING THE LEVY OF TAX ON THE SAID AMOUNT OF RS. 71,68,678/- IN ONE SINGLE YEAR I.E. THE YEAR OF RECEIPT EVEN AFTER CATEGORICALLY ADMITTING THE LEGAL ENTITLEMENT OF TH E APPELLANT FOR SPREADING OVER OF THE INTEREST FROM Y EAR TO YEAR FROM THE DATE OF POSSESSION (28.10.1994) TILL THE DATE OF PAYMENT OF INTEREST ON THE ALLEGED GROUND O F PRACTICAL DIFFICULTY THAT WOULD BE FACED BY THE SHRI HARISH GUPTA, L/H OF LATE SMT. LEELA GUPTA, IN DORE. I.T.A.NO. 06/IND/2014- A.Y. 2005-06 3 DEPARTMENT IN SPREADING OVER OF INTEREST OVER THE PERIOD OF 10 YEARS. 3. THAT THE LD. CIT(A) HAS ALSO ERRED IN COMING TO THE CONCLUSION THAT A RIGHT TO RECEIVE INTEREST IN QUES TION IS A CONTINGENT RIGHT WHICH HAS CRYSTALLIZED IN ASSESS MENT YEAR 2005-06. THE LD. CIT(A) FAILED TO APPRECIATE T HE SCHEME OF THE LAND ACQUISITION ACT ACCORDING TO THE PROVISIONS OF WHICH THE DETERMINATION AND PAYMENT O F COMPENSATION PRIOR TO TAKING OF POSSESSION OF THE L AND IN QUESTION BEING MANDATORY, THE APPELLANTS RIGHT TO COMPENSATION AND INTEREST HAD ACCRUED ON THE DATE O F ACQUISITION OF LAND ITSELF. SUCH RIGHT COULD NOT BE TREATED AS CONTINGENT RIGHT BY ANY STRETCH OF IMAGINATION. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE S UBMITTED THE RETURN DECLARING AN INCOME OF RS. 2,68,016/- SH OWING RECEIPT OF COMPENSATION OF ACQUISITION OF PROPERTY AT MORAD ABAD, AS A LONG TERM CAPITAL. AFTER DEDUCTING THE INDEX COST O F ACQUISITION, THE ASSESSEE RECEIVED RS. 1,40,19,643/-, WHICH INCL UDES AS PER FORM 11 ISSUED BY THE SPECIAL LAND ACQUISITION OFFI CER, MORADABAD, TOTAL COMPENSATION AT RS. 1,40,19,643/-, WHICH SHRI HARISH GUPTA, L/H OF LATE SMT. LEELA GUPTA, IN DORE. I.T.A.NO. 06/IND/2014- A.Y. 2005-06 4 INCLUDES INTEREST OF RS. 71,68,678/-. THIS INTEREST CONSISTS OF TWO COMPONENTS RS. 51,06,058/- AS PER THE ORDER OF TH E HON'BLE ALLAHABAD HIGH COURT TOWARDS THE COMPENSATION IN RE SPECT OF DELAYED PAYMENT OF SOLATIUM PAYABLE TO THE ASSESSEE U/S 17(3A), WHILE THE BALANCE AMOUNT RELATES TO THE INT EREST PAYABLE TO THE ASSESSEE UNDER THE LAND ACQUISITION ACT. THE ASSESSING OFFICER TREATED THE SUM OF RS. 71,68,678/- AS INCOM E FROM OTHER SOURCES AND RECOMPUTED THE CAPITAL GAIN WHILE TAKIN G THE BALANCE AMOUNT AS PART OF THE COMPENSATION ON ACQUISITION O F LAND. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING A S UNDER :- 4. I HAVE SEEN THE ASSESSMENT ORDER, THE GROUNDS OF APPEAL AND THE SUBMISSIONS OF APPELLANT. 5. THE FACTS OF THE CASE ARE THAT APPELLANT WAS OWNER OF PLOT NO. 7, 8 AND 55 IN VILLAGE HARTHANA DISTRICT MORADABAD. THIS LAND WAS ACQUIRED UNDER THE LAND ACQUISITION ACT THROUGH NOTIFICATION UNDER SECTION 4 OF THE AC~ DATED 13.09.1991 AND NOTIFICATION UNDER SECTION 6 DATED 10.09. 1992. POSSESSION OF SHRI HARISH GUPTA, L/H OF LATE SMT. LEELA GUPTA, IN DORE. I.T.A.NO. 06/IND/2014- A.Y. 2005-06 5 PLOT WAS TAKEN BY MORADABAD DEVELOPMENT AUTHORITY ON 28.10.1994. ON THE BASIS OF THESE FACTS THE HON'BLE HIGH COURT OF ALLAHABAD THROUGH AN ORDER DATED 13.11.2003 DIRECTED AS UNDER :- 'THE RESPONDENTS ARE DIRECTED TO PAY THE COMPENSATION MENTIONED IN SECTION 17(3A) TO THE PETITIONER ALONGWITH THE INTEREST AT 10% PER ANNUM FROM 28.10.1994 WITHIN 2 MONTHS FROM TODAY ............................................ AWARD IS GIVEN TO PETITIONER ALONGWITH SOLATIUM AND INTEREST AS PRESCRIBED UNDER THE ACT. ' 6. FOLLOWING SUCH DIRECTION OF THE HON'BLE COURT, THE MORADABAD DEVELOPMENT AUTHORITY PAID AN AMOUNT OF RS. 68,50,9651 - TOWARDS COMPENSATION FOR LAND AND RS. 71,68,6781 - TOWARDS INTEREST, BOTH BEING PAID AS PRESCRIBED UNDER THE LAND ACQUISITION ACT, AS DULY MENTIONED IN THE ORDER OF HON'BLE HIGH SHRI HARISH GUPTA, L/H OF LATE SMT. LEELA GUPTA, IN DORE. I.T.A.NO. 06/IND/2014- A.Y. 2005-06 6 COURT OF ALLAHABAD, IN THE PORTION REPRODUCED ABOVE (HIGHLIGHTED PORTION). 7. IN VIEW OF FACTS NARRATED ABOVE, THE RECEIPT OF INTEREST OF RS.71,68,678/- ON DELAYED COMPENSATION UNDER THE LAND ACQUISITION ACT, IS A REVENUE RECEIPT EXIGIBLE TO TAX UNDER SECTION 4 OF THE INCOME TAX ACT, AS HELD BY APEX COURT IN CASE OF BIKRAM SINGH AND OTHERS [1997] 224 ITR 551 (SC). RESPECTFULLY FOLLOWING AFORESAID DECISION, THE INTEREST OF RS.71,68,678/- HELD BY AO AS REVENUE RECEIPT IS HEREBY CONFIRMED. ACCORDING TO THE DECISION OF APEX COURT REFERRED HERE THE APPELLANT IS ENTITLED TO SPREAD OVER THE INCOME FOR THE PERIOD FOR WHICH PAYMENT CAME TO BE MADE. IN PRESENT CASE SUCH PERIOD IS FROM AY 1995-96 TO AY 2005-06. BUT APPELLANT IS NOT IN A POSITION TO SPREAD THAT INCOME IN THOSE YEARS, BECAUSE WE ARE PRESENTLY IN THE YEAR 2013 AND IT IS NOT POSSIBLE FOR APPELLANT TO REVISE THOSE RETURNS NOW. THERE IS PRACTICAL SHRI HARISH GUPTA, L/H OF LATE SMT. LEELA GUPTA, IN DORE. I.T.A.NO. 06/IND/2014- A.Y. 2005-06 7 DIFFICULTY IN SPREADING IT IN THOSE 10 YEARS, AS NEITHER APPELLANT NOR AO WOULD BE IN POSSESSION OF DETAILS OF THAT PERIOD. BESIDES THIS SUCH INTEREST INCOME WAS NOT A REGULAR INTEREST INCOME BUT WAS INTEREST ON COMPENSATION OF LAND, THE ACCRUAL OF WHICH WAS NOT CERTAIN EITHER TO APPELLANT OR TO AO, UNTIL THE SAME CRYSTALLIZED AS A RESULT OF COURT ORDER AND WAS PAID TO APPELLANT ON 22.05.2004, I.E., AY 2005-06. HENCE TAXING SUCH INTEREST INCOME IN THE '. YEAR IN WHICH SUCH INCOME CRYSTALLIZED AND WAS RECEIVED BY APPELLANT WAS CORRECT ON THE PART OF AO AND THE SAME IS HEREBY CONFIRMED. FOR THIS PURPOSE RELIANCE IS PLACED ON CASE LAWS RELATED TO CONTINGENT LIABILITY WHICH IS ALLOWABLE IN THE YEAR IN WHICH IT CRYSTALLIZED, AS HELD IN CASE OF TAMIL NADU SMALL IND. CORP. LTD. (MAD) 242 ITR 122 AND ALEMBIC CHEMICAL WORK LTD. (GUJ) 266 ITR 47. SHRI HARISH GUPTA, L/H OF LATE SMT. LEELA GUPTA, IN DORE. I.T.A.NO. 06/IND/2014- A.Y. 2005-06 8 4. BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE CONTE NDED THAT THE LAND OF THE ASSESSEE, WHICH WAS SITUATED I N DISTRICT MORADABAD WAS ACQUIRED UNDER THE LAND ACQUISITION A CT BY THE GOVERNMENT OF INDIA VIDE NOTIFICATION ISSUED U/S 6 ON 10.09.1992, POSSESSION OF THE LAND WAS TAKEN ON 28. 10.1994 BY THE SPECIAL LAND ACQUISITION OFFICER. THE AWARD WAS GIVEN ON 6.8.1997. AS PER SECTION 17(3A) OF THE LAND ACQUISI TION ACT, 80% OF THE ESTIMATED COMPENSATION SHOULD HAVE BEEN PAID TO THE ASSESSEE BY THE COLLECTOR BEFORE TAKING THE POSSESS ION, BUT NO SUCH COMPENSATION WAS PAID TO THE ASSESSEE EVEN THO UGH THE POSSESSION OF THE LAND WAS TAKEN BY THE COLLECTOR O N 28.10.1994. THEREFORE, THE ASSESSEE, SINCE REMAINED DISPOSSESSI ON FROM THE LAND, ULTIMATELY FILED WRIT OF MANDAMUS BEFORE THE HON'BLE HIGH COURT OF ALLAHABAD AND ULTIMATELY HON'BLE HIGH COUR T VIDE ITS ORDER DATED 13.11.2003 ALLOWED THE COMPENSATION TO THE ASSESSEE BY WAY OF INTEREST TO BE CALCULATED @ 10% PER ANNUM FROM 28.10.1994 TILL THE ASSESSEE WAS DEPRIVED OF THE CO MPENSATION ON THE AMOUNT OF SOLATIUM. ACCORDING TO HIM, THE ASSES SEE RECEIVED IN THIS MANNER THE INTEREST OF RS. 51,06,058/- AS P ER THE ORDER OF THE HON'BLE HIGH COURT WHILE AS PER THE PROVISIONS OF LAND ACQUISITION ACT, THE ASSESSEE WAS ALLOWED INTEREST AMOUNTING TO SHRI HARISH GUPTA, L/H OF LATE SMT. LEELA GUPTA, IN DORE. I.T.A.NO. 06/IND/2014- A.Y. 2005-06 9 RS. 20,62,620/-. HE CONTENDED THAT THE AMOUNT WHICH WAS DIRECTED BY THE HON'BLE HIGH COURT TO BE PAID TO TH E ASSESSEE BY WAY OF INTEREST, IN FACT, IS NOT A STATUTORY INTERE ST, BUT HAS BEEN PAID TO THE ASSESSEE BY THE ORDER OF THE HIGH COURT FOR COMPENSATING THE ASSESSEE FOR THE DELAY IN PAYMENT OF SOLATIUM BY THE COLLECTOR. OUR ATTENTION WAS DRAWN TOWARDS T HE ORDER OF THE HON'BLE HIGH COURT AS WELL AS RELEVANT PROVISIO NS OF THE LAND ACQUISITION ACT. SO FAR AS THE PART OF INTEREST AMO UNTING TO RS. 20,62,620/- IS CONCERNED, THE SAME HAS BEEN CALCULA TED IN ACCORDANCE WITH THE PROVISIONS OF THE LAND ACQUISIT ION ACT ON BALANCED 20 % OF THE AMOUNT OF COMPENSATION DETERMI NED ON THE AWARD. THIS INTEREST RELATES TO EARLIER YEAR AND IN TEREST RELATING TO IMPUGNED YEAR IS ONLY RS. 91,565/-. HE CONTENDED TH AT THE COMPENSATION GRANTED BY THE HIGH COURT BY WAY OF IN TEREST ONLY A METHOD OF COMPUTATION OF THE COMPENSATION, SINCE TH E GOVERNMENT FAILED TO MAKE THE PAYMENT TO THE ASSESS EE U/S 17(3A), 80 % OF THE COMPENSATION BEFORE TAKING THE POSSESSION, THEREFORE, THE HON'BLE HIGH COURT DIRECTED THE GOVE RNMENT TO COMPENSATE TO THE ASSESSEE IN RESPECT OF AGONY SUFF ERED BY THE ASSESSEE. THE AMOUNT SO RECEIVED IS A CAPITAL RECEI PT AND AT THE MOST CAN BE REGARDED TO THE PART OF THE COMPENSATIO N ITSELF. SHRI HARISH GUPTA, L/H OF LATE SMT. LEELA GUPTA, IN DORE. I.T.A.NO. 06/IND/2014- A.Y. 2005-06 10 THEREFORE, THE ASSESSEE HAS TAKEN IT WHILE COMPUTIN G THE CAPITAL GAINS TO THE PART OF THE COMPENSATION. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS :- (I) CIT VS. CHIRANJILAL MULTANIMAL RAIBAHADUR PVT . LTD., 179 ITR 157. (II) CIT VS. B.RAI, 264 ITR 614 ( P & H ). (III) CIT VS. CHARANAJEET JAVA, 270 ITR 173. (IV) SUSHIL KUMAR DAS VS. ITO, (2011) 11 ITR (TRIB) 17 (KOL). 5. THE LD. SENIOR DR, ON THE OTHER HAND, CONTENDED THAT THE AMOUNT RECEIVED BY THE ASSESSEE EVEN AS PER THE ORDER OF THE HIGH COURT IS AN INTEREST U/S 4 READ WITH SECTION 2 (28A) OF THE INCOME-TAX ACT, 1961, AND THE ASSESSEES INCOME WIL L BE TAXED AS A REVENUE INCOME IN THE YEAR IN WHICH THE HIGH COUR T HAS PASSED THE ORDER. IN THIS REGARD, RELIANCE WAS PLACED ON T HE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF BIKRAM SINGH & OTHERS VS. LAND ACQUISITION COLLECTOR & OTHERS, (1997) 224 ITR 551 ( S.C.). 6. WE HAVE THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDE RED THE SAME ALONGWITH THE ORDERS OF THE TAX AUTHORITIE S BELOW. IT IS UNDISPUTED FACT THAT THE ASSESSEE HAS RECEIVED FROM THE LAND ACQUISITION OFFICER ALONGWITH COMPENSATION OF THE L AND, A SUM OF RS. 71,68,678/- BY WAY OF INTEREST A SUM OF RS. 20 ,62,620/- SHRI HARISH GUPTA, L/H OF LATE SMT. LEELA GUPTA, IN DORE. I.T.A.NO. 06/IND/2014- A.Y. 2005-06 11 REPRESENTING THE INTEREST PAID TO THE ASSESSEE AS P ER THE PROVISIONS OF THE LAND ACQUISITION ACT FOR THE PERI OD 28.10.1994 TO 14.5.2004. THE DETAILS OF INTEREST ARE AVAILABLE AT PAGE 119 OF THE PAPER BOOK. IN ADDITION TO THIS, THE ASSESSEE H AS ALSO RECEIVED A SUM OF RS. 51,06,058/-. IN OUR OPINION, THERE IS NO DISPUTE SO FAR AS THE NATURE OF SUM OF RS. 20,62,620/- IS CONC ERNED. THIS AMOUNT IS A REVENUE RECEIPT AND HAS BEEN GIVEN TO T HE ASSESSEE AS PER THE PROVISIONS OF THE LAND ACQUISITION ACT A ND IS CHARGEABLE TO TAX AS A REVENUE RECEIPT BEING THE IN TEREST. 7. NOW COMING TO THE SUM OF RS. 51,06,058/-, WE NOTED THAT THE ASSESSEE HAS TO BE PAID 80% OF THE ESTIMATED CO MPENSATION AS PER THE PROVISIONS OF SECTION 17(3A) OF THE LAND ACQUISITION ACT BY THE COLLECTOR BEFORE TAKING THE POSSESSION O F THE LAND. IN THE CASE OF THE ASSESSEE, THE COLLECTOR HAS TAKEN P OSSESSION OF THE LAND ON 28.10.1994, BUT THE SOLATIUM HAS NOT BE EN PAID TO THE ASSESSEE. EVEN THE AWARD WAS ALSO DECLARED ON 6 .8.1997 AND THE ASSESSEE WAS DEPRIVED OF THE COMPENSATION. THE ASSESSEE ULTIMATELY FILED WRIT OF MANDAMUS BEFORE THE HON'BL E HIGH COURT BY WAY OF WRIT PETITION NO. 32715 OF 2000, AND THE HON'BLE HIGH COURT VIDE ITS ORDER DATED 13.11.2003 DIRECTED THE COLLECTOR TO SHRI HARISH GUPTA, L/H OF LATE SMT. LEELA GUPTA, IN DORE. I.T.A.NO. 06/IND/2014- A.Y. 2005-06 12 PAY COMPENSATION TO THE ASSESSEE WITHIN TWO MONTHS IN THE FOLLOWING MANNER :- FOR THE REASONS GIVEN ABOVE, THE PETITION IS ALLOWED. THE RESPONDENTS ARE DIRECTED TO PAY THE COMPENSATION, MENTIONED IN SECTION 17(3-A) TO THE PETITIONER ALONG WITH INTEREST AT 10 % PER ANNUM FROM 28.10.1994 WITHIN TWO MONTHS FROM TODAY AND ALSO TO GIVE AWARD IN RESPECT OF PLOTS IN QUESTION WITHIN TWO MONTHS OF PRODUCTION OF A CERTIFIED COPY OF THE ORDER BEFORE THE SPECIAL LAND ACQUISITION OFFICER. PAYMENT IN ACCORDANCE WITH THE AWARD MUST BE MADE WITHIN A MONTH AFTER THE AWARD IS GIVEN TO THE PETITIONER ALONGWITH SOLATIUM AND INTEREST AS PRESCRIBED UNDER THE ACT. 8. THUS, THE ASSESSEE WAS ALLOWED COMPENSATION A S MENTIONED U/S 17(3-A) OF THE LAND ACQUISITION ACT I.E. 80% OF THE ESTIMATED COMPENSATION INTEREST THEREON CALCULATED @ 10% PER ANNUM BY HIGH COURT BY EXERCISING ITS EXTRA ORDINARY JURISDI CTION WHICH IS NOT PROVIDED UNDER THE LAND ACQUISITION ACT FOR SUC H AS SECTIONS 28 TO 31 OR 34 OF LAND ACQUISITION ACT. THE CONTE NTION OF THE LD. AUTHORIZED REPRESENTATIVE BEFORE US IS THAT THE IN TEREST IS MERELY A METHOD OF COMPUTATION OF THE COMPENSATION. THIS A MOUNT HAS SHRI HARISH GUPTA, L/H OF LATE SMT. LEELA GUPTA, IN DORE. I.T.A.NO. 06/IND/2014- A.Y. 2005-06 13 BEEN AWARDED TO THE ASSESSEE AS THE ASSESSEE HAS BE EN DEPRIVED OF SOLATIUM FOR THE ACQUISITION OF HIS LAND FOR A L ONG PERIOD OF OVER 10 YEARS. THIS IS NOT A STATUTORY INTEREST. WE HAVE GONE THROUGH THE PROVISIONS OF THE LAND ACQUISITION ACT AND WE D O NOT FIND THAT THERE IS ANY PROVISION FOR PAYMENT OF INTEREST ON S OLATIUM. THIS INTEREST, IN OUR OPINION, HAS NOT BE PAID AS PER TH E PROVISIONS OF THE LAND ACQUISITION ACT. THERE ARE VARIOUS PROVISI ONS UNDER THE LAND ACQUISITION ACT FOR PAYMENT OF INTEREST ON DEL AYED PAYMENT OF COMPENSATION AS STIPULATED U/S 28 & 34 OF THE LA ND ACQUISITION ACT. THIS INTEREST, IN OUR OPINION, REP RESENT THE COMPENSATION AWARDED BY THE COURT TO COMPENSATE THE ASSESSEE FOR DEPRIVING OF HIS RIGHT OVER THE COMPENSATION, W HICH HE WOULD HAVE RECEIVED EARLIER AND ALSO FOR THE AGONY AND TH E MENTAL TENSION, WHICH HE FACED BY NOT RECEIVING THE SOLATI UM FOR WHICH HE WAS ENTITLED UNDER THE LAW. THEREFORE, THE INTER EST CAN ONLY BE A METHOD OF COMPUTATION OF THE COMPENSATION PAID TO THE ASSESSEE IN THIS REGARD. 8. WE HAVE GONE THROUGH THE VARIOUS DECISIONS AS HAS B EEN RELIED ON BEFORE US. WE NOTED IN THE CASE OF CIT VS . CHARANJIT JAWA, 270 ITR 173, THE ASSESSEE WAS NOT ALLOWED PAY SCALE AT THE APPROPRIATE TIME TO WHICH HE WAS ENTITLED. HIGH COU RT ORDERED PAY SCALE AND CONSEQUENTLY FOR THE PAYMENT OF THE A RREARS. HIGH COURT ALSO DIRECTED THAT THE INTEREST @ 12 % ON THE ARREARS FROM THE DATE OF ACCRUAL TILL THE DATE OF PAYMENT BE ALS O PAID. THAT THE ISSUE WHETHER THIS INTEREST REPRESENTS THE INCOME, THE HON'BLE SHRI HARISH GUPTA, L/H OF LATE SMT. LEELA GUPTA, IN DORE. I.T.A.NO. 06/IND/2014- A.Y. 2005-06 14 HIGH COURT CONFIRMED THE ORDER OF THE TRIBUNAL THAT THE INTEREST ALLOWED BY THE HIGH COURT ON THE ARREARS OF THE SAL ARY DOES NOT CONSTITUTE INCOME AND IS NOT LIABLE TO TAX. IN THE CASE OF CIT VS. B. RAI, 264 ITR 617 ( P & H) ALSO WE NOTED THAT WHE N THE INTEREST WAS GRANTED, THE GRANT OF ARREARS OF SALARY ON ACCO UNT OF HIGHER PAY SCALE IT WAS HELD THAT THE INTEREST SO PAID ON THE ARREARS OF THE SALARY IS NOT A REVENUE RECEIPT AND, THEREFORE, NOT CHARGEABLE TO INCOME TAX. IN THE CASE OF CIT VS. CHIRANJI LAL MULTANI MAL RAI BAHADUR (P) LIMITED, (1989) 179 ITR 157 ( P & H), W E NOTED THAT HON'BLE HIGH COURT CLEARLY LAID DOWN UNDER PARA 6 T HAT IF THE INTEREST IS RECEIVED ON THE BASIS OF A CONTRACT OR UNDER A STATUTE, THE SAME IS TAXABLE, BUT IF INTEREST IS AWARDED BY THE COURT FOR LOSS SUFFERED ON ACCOUNT OF DEPRIVATION OF PROPERTY , IT AMOUNTS TO COMPENSATION, THOUGH CALLED INTEREST AND WOULD NOT BE TAXABLE. IN THE CASE OF SUSHIL KUMAR DAS VS. ITO, (2011) 11 ITR (TRIB) 17 (KOL), WE NOTED THAT HON'BLE TRIBUNAL TOOK THE VIEW THAT IT IS A WELL SETTLED THAT THE PRINCIPLE OF DETERMINING TAXA BLE INCOME OF THE ASSESSEE UNDER THE INCOME-TAX ACT, 1961, SHOULD BE WITHIN PURVIEW OF THE LAW IN FORCE. IF THE TAXABLE INCOME DETERMINED BY THE ASSESSING OFFICER IS NOT IN ACCORDANCE WITH SUC H PRINCIPLE IT IS OPEN TO THE ASSESSEE TO CONTEND THE SAME BEFORE THE HIGHER SHRI HARISH GUPTA, L/H OF LATE SMT. LEELA GUPTA, IN DORE. I.T.A.NO. 06/IND/2014- A.Y. 2005-06 15 AUTHORITIES TO FOLLOW THE CORRECT APPLICATION OF LA W TO DETERMINE THE ACTUAL TAXABLE INCOME OF THE ASSESSEE. THE INTE REST RECEIVED AS A RESULT OF THE ORDER OF THE HIGH COURT WAS NOT A STATUTORY INTEREST AND WAS IN THE FORM OF DAMAGE/COMPENSATION AND, THEREFORE, WAS NOT LIABLE TO TAX. IN OUR OPINION, A LL THESE CASES SUPPORT THE CASE OF THE ASSESSEE. 9. WE HAVE ALSO GONE THROUGH THE DECISION OF THE HON'B LE SUPREME COURT IN THE CASE OF BIKRAM SINGH & OTHERS VS. LAND ACQUISITION COLLECTOR & OTHERS, (1997) 224 ITR 551 ( S.C.) , RELIED UPON BY THE LD. SENIOR DR. WE NOTED THAT THE QUESTI ON INVOLVED IN THAT CASE RELATES TO WHETHER INTEREST RECEIVED O N DELAYED PAYMENT OF COMPENSATION FOR ACQUISITION DETERMINED U/S 28 AND 31 OF THE LAND ACQUISITION ACT IS A REVENUE RECEIPT . HON'BLE SUPREME COURT TOOK THE VIEW THAT THIS IS AN INTERES T WITHIN THE DEFINITION OF SECTION 2(28A) AND IS A REVENUE RECEI PT. IN THIS CASE, THE INTEREST WAS PAID TO THE ASSESSEE U/S 28 OF THE LAND ACQUISITION ACT AND HON'BLE SUPREME COURT WHILE DEC IDING THIS CASE RELIED ON THE DECISION OF HON'BLE SUPREME COUR T IN THE CASE OF DR. SHAMLAL NARULA VS. CIT, (1964) 53 ITR 151 ( S.C.) IN WHICH THE HON'BLE SUPREME COURT TOOK THE VIEW THAT THE ST ATUTORY INTEREST RATE U/S 34 OF THE LAND ACQUISITION ACT, I F INTEREST PAID SHRI HARISH GUPTA, L/H OF LATE SMT. LEELA GUPTA, IN DORE. I.T.A.NO. 06/IND/2014- A.Y. 2005-06 16 FOR DELAYED PAYMENT OF COMPENSATION AMOUNT AND, THE REFORE, IS A REVENUE RECEIPT LIABLE TO TAX UNDER THE INCOME-TAX ACT, 1961. THIS DECISION, THEREFORE, IN OUR OPINION, WILL NOT ASSIS T THE REVENUE AS IT RELATES TO THE INTEREST PAID AS PER THE PROVISIO NS OF THE LAND ACQUISITION ACT. IN THE CASE OF THE ASSESSEE, WE NO TED THAT THE INTEREST PAID TO THE ASSESSEE AS PER THE ORDER OF T HE HON'BLE HIGH COURT JUST TO COMPENSATE THE ASSESSEE, NOT AS PER T HE PROVISIONS OF THE LAND ACQUISITION ACT, THEREFORE, IN OUR OPIN ION, THE INTEREST OF A SUM OF RS. 51,06,058/- WILL BE A CAPITAL RECE IPT AND WILL FORM PART OF THE COMPENSATION/CONSIDERATION RECEIVE D FOR THE ACQUISITION OF THE LAND WHILE COMPUTING THE CAPITAL GAIN. TO THAT EXTENT, THE GROUND TAKEN BY THE ASSESSEE IS ALLOWED . 10. THE OTHER ISSUE WHICH ARISES IN THE GROUND TAKEN IN THIS APPEAL IS WHETHER THE INTEREST ACCRUED IN THE IMPUG NED ASSESSMENT YEAR OR GOT ACCRUED FROM YEAR TO YEAR. 11. WE HAVE HEARD RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONGWITH ORDERS OF THE AUTHORI TIES BELOW. SO FAR AS THE SUM OF RS. 51,06,058/- IS CONCERNED, TH IS AMOUNT HAS BEEN AWARDED BY THE ORDER OF THE HON'BLE HIGH COURT DATED 31.3.2003 AND, THEREFORE, A RIGHT HAS VESTED IN THE ASSESSEE ONLY DURING THE ASSESSMENT YEAR 2004-05. AS PER THE DIRE CTION OF THE SHRI HARISH GUPTA, L/H OF LATE SMT. LEELA GUPTA, IN DORE. I.T.A.NO. 06/IND/2014- A.Y. 2005-06 17 HON'BLE HIGH COURT, THIS INTEREST HAS TO BE PAID WI THIN 2 MONTHS FROM THE DATE OF THE ORDER OF THE HIGH COURT. IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE WAS FOLLOWING THE CAS H SYSTEM OF ACCOUNTING AND THE ASSESSEE WAS MAINTAINING THE BOO KS OF ACCOUNTS. WE, THEREFORE, HOLD ACCORDINGLY. 12. SO FAR AS BALANCE INTEREST OF RS. 20,62,620/- IS CONCERNED, WE NOTED THAT THIS ISSUE IS NO MORE RES INTEGRA IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF K.S.KRISHNA RAO VS. CIT, (1990) 181 ITR 408, IN WHI CH FOLLOWING LAW WAS PRONOUNCED. WHERE COMPENSATION AWARDED UNDER THE LAND ACQUISITION ACT IS ENHANCED BY THE ORDER OF THE COU RT ON A REFERENCE UNDER SECTION 18 OF THAT ACT OR ON FURT HER APPEALS, INTEREST ON ENHANCED COMPENSATION CANNOT B E TAXED ALL IN A LUMP SUM AS HAVING ACCRUED ON THE DA TE ON WHICH THE COURT PASSES THE ORDER FOR ENHANCED COMPENSATION : THE INTEREST HAS TO BE SPREAD OVER O N AN ANNUAL BASIS RIGHT FROM THE DATE OF DELIVERY OF POSSESSION TILL THE DATE OF THE ORDER OF THE COURT ON A TIME BASS. SHRI HARISH GUPTA, L/H OF LATE SMT. LEELA GUPTA, IN DORE. I.T.A.NO. 06/IND/2014- A.Y. 2005-06 18 13. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF HON'BLE SUPREME COURT, WE DIRECT THE ASSESSING OFFI CER TO SPREAD OVER THE INTEREST OF RS. 20,62,620/- OVER THE PERI OD RELATING TO RESPECTIVE ASSESSMENT YEARS IN WHICH THE INTEREST H AS ACCRUED TO THE ASSESSEE. THE ASSESSEE AGREED THAT DURING THE Y EAR INTEREST IS OF A SUM OF RS. 91,565/-. WE, ACCORDINGLY, SUSTAIN THE ADDITION DURING THE IMPUGNED ASSESSMENT YEAR IN RESPECT OF I NTEREST AMOUNTING TO RS. 91,565/. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. SD/- SD/- (MUKUL KR. SHRAWAT) (P. K. BANSAL) JUDICIAL MEMBER ACCOUNTANT M EMBER INDORE; DATED : 19/09/2014 CPU* SPS / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '# ! / THE RESPONDENT. SHRI HARISH GUPTA, L/H OF LATE SMT. LEELA GUPTA, IN DORE. I.T.A.NO. 06/IND/2014- A.Y. 2005-06 19 3. $%$&' # # ( / CONCERNED CIT 4. # # ( ( ) / THE CIT(A), INDORE 5. +,# &' , # # &' , -.% / DR, ITAT, INDORE 6. ,/0 1 / GUARD FILE. / BY ORDER, -# $2 -# $2 -# $2 -# $2 (ASSTT.REGISTRAR) ITAT, INDORE 1. DATE OF DICTATION- 10.09.2014 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 11.09.2014 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S. .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT .. 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 8. DATE OF DESPATCH OF THE ORDER