Om Pal Singh, New Delhi V. ITO, New Delhi

ITA 6055/DEL/2014

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5428 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 07-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Section: 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 6055/DEL/2014 AY: 2011-12 OM PAL SINGH, HOUSE NO. 04, NANGLI RAZAPUR, NIZAMUDDIN EAST, NEW DELHI-110013 (PAN: CQZPS3218M) VS ITO, WARD 32(1) NEW DELHI. (APPELLANT) (RESPONDEN T) APPELLANT BY : SHRI G.N. GUPTA, AR RESPONDENT BY : SHRI S.R. SENAPATI, SR. DR DATE OF HEARING: 30.01.2018 DATE OF PRONOUNCEMENT: 26.04.2018 ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER OF THE LD. CIT (APPEALS)-XXVI, NEW DELHI DATE D 16.10.2014 PERTAINING TO ASSESSMENT YEAR 2011-12 WHEREIN, VIDE THE IMPUGNED ORDER, THE LD. CIT (APPEALS) HAS DISMISSED THE ASSESSEES APPEAL BY HOLDING THAT INTEREST AGGREGAT ING TO RS. 64,39,705/- RECEIVED FROM THE LAND ACQUISITION OFF ICER U/S 28 OF THE LAND ACQUISITION ACT ON ENHANCED COMPENSATION W AS TAXABLE IN THE HANDS OF THE ASSESSEE. ITA NO. 6055/DEL/2014 ASSESSMENT YEAR 2011-12 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVING INTEREST INCOME FROM BANK. THE ASSESSEES LAND IN VILLAGE NANGALI, RAJAPUR, SITUATED IN THE TERRITORY OF MUNICIPAL CORPORATION OF DELHI WAS ACQUIRED BY THE LAND ACQUI SITION OFFICER, NEW DELHI VIDE AWARD DATED 19.06.1992 GRAN TING COMPENSATION @RS.27,344/- PER BIGHA . ON A REFERENCE BEING MADE BY THE ASSESSEE, THE HONBLE ADDITIONAL DISTRI CT JUDGE, TIS HAZARI COURTS, NEW DELHI ENHANCED THE COMPENSATION VIDE ORDER DATED 1.5.2008. CONSEQUENTIALLY, THE ASSESSEE RECE IVED ENHANCED COMPENSATION OF RS. 1,26,01,892/-. THE AS SESSEE DID NOT OFFER ENHANCED COMPENSATION TO TAX IN HIS RETUR N OF INCOME AND THE SAME WAS CLAIMED AS EXEMPTION U/S 10(37) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT' ). HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE SA ME WAS OFFERED TO TAX SUBJECT TO DEDUCTION U/S 57(IV) OF T HE ACT. THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 57(IV) R/W SECTIONS 56(VIII) AND 145A(B) AND ASSESSED 50% OF R S. 1,26,01,892/- AS BEING TAXABLE INCOME AND MADE THE ADDITION OF RS. 64,39,705/-. THIS ADDITION, ON APPEAL, WAS UPH ELD BY THE LD. CIT (APPEALS). ITA NO. 6055/DEL/2014 ASSESSMENT YEAR 2011-12 3 2.1 NOW THE ASSESSEE HAS APPROACHED THE ITAT AND HA S CHALLENGED THE IMPUGNED ORDER BY RAISING THE FOLLOW ING GROUNDS OF APPEAL:- 1. THAT ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LEARNED COMMISSIONER OF INCOME TAX (A) -26, NEW DELHI (HEREINAFTER CALLED CIT (A) FOR THE SAKE OF BREVIT Y) ERRED IN HOLDING THAT THE ACQUIRED LAND OF THE ASSESSEE WAS NOT AN AGRICULTURAL LAND. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, CIT (A) ERRED IN CONFIRMING THE ACTION OF THE ITO, WARD 32(1), NEW DELHI (HEREINAFTER CALLED AO FOR SHORT) IN HOLDING THAT THE INTEREST AGGREGATING TO RS. 64,39,705/- RE CEIVED FROM THE LAND ACQUISITION OFFICER U/S 28 OF THE LAN D ACQUISITION ACT ON THE ENHANCEMENT OF COMPENSATION IS TAXABLE IN THE HANDS OF THE ASSESSEE. 3. THAT WITHOUT PREJUDICE TO THE GROUNDS OF APPEAL NO.1 & 2 ABOVE, THE ALLEGED INTEREST NEVER ACCRUED TO THE APPELLANT IN HIS INDIVIDUAL CAPACITY AS IT ACCRUED TO THE HUF CONSTITUTED BY SHRI OM PAL SINGH, THE APPELLANT HER EIN, HIS WIFE AND HIS FOUR SONS VIZ SHRI THAN SINGH, SHRI DI WAN SINGH, SHRI MAN SINGH AND SHRI RAM SINGH. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, A MEND OR VARY ANY OF THE AFORESAID GROUNDS OF APPEAL. 3. THE LD. AR SUBMITTED THAT THE PROVISIONS OF SECT ION 56(2)(VIII) WERE INTRODUCED BY FINANCE (NO. 2) ACT, 2009 W.E.F. 01.04.2010 AND THAT THESE PROVISIONS WERE INSERTED ONLY TO GET OVER THE DECISION OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF RAMA BAI V. CIT REPORTED IN 181 ITR 400 (SC). THE L D. AR ITA NO. 6055/DEL/2014 ASSESSMENT YEAR 2011-12 4 FURTHER SUBMITTED THAT A PERUSAL OF THE DECISION OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF RAMA BAI V. C IT (SUPRA) WOULD SHOW THAT IT WAS HELD IN THAT CASE THAT BOTH THE INTEREST U/S 28 AS WELL AS U/S SECTION 34 OF THE LAND ACQUIS ITION ACT WERE TAXABLE BUT SUCH INTEREST CANNOT BE ASSESSED TO INC OME TAX IN ONE LUMP SUM IN A YEAR AND AS SUCH INTEREST ACCRUED FROM YEAR TO YEAR. IT WAS SUBMITTED THAT THE PURPOSE OF INSER TION OF SECTION 56(2)(VIII) READ WITH SECTION 145A (B) WAS TO PROVI DE THAT INTEREST WILL BE DEEMED TO BE INCOME OF THE YEAR IN WHICH IT IS RECEIVED. 3.1 THE LD. AR FURTHER SUBMITTED THAT IN TWO SUBSEQ UENT DECISIONS NAMELY CIT V. GHANSHVAM (HUF) REPORTED IN 315 ITR 1 (SC) AND CIT V. GOVINDBHAI MAMAIYA REPORTED IN 367 ITR 498 (SC), THE HON'BLE SUPREME COURT HAS HELD THAT INTER EST U/S 28 OF THE LAND ACQUISITION ACT IS NOT INTEREST PER-SE BUT IS PART OF THE AMOUNT OF ENHANCED COMPENSATION. THE LD. AR SUBMITT ED THAT, ACCORDINGLY, THE INTEREST ON ENHANCED COMPENSATION NOT BEING INTEREST IN VIEW OF THE SUPREME COURT DECISIONS BEI NG PART OF ENHANCED COMPENSATION CANNOT BE SAID TO BE COVERED BY THE MISCHIEF OF SECTION 56(2)(VIII) IN VIEW OF THE DOCT RINE OF C ONTEMPORANEA EXPOSITIO . RELIANCE IN THIS REGARD WAS PLACED ON THE DECISION OF HON'BLE SUPREME COURT OF INDIA IN S TATE OF ITA NO. 6055/DEL/2014 ASSESSMENT YEAR 2011-12 5 MADHYA PRADESH V. G.S. DALI & FLOUR MILLS REPORTED IN 187 ITR 478 WHEREIN IT WAS HELD THAT ALTHOUGH THE DOCTRINE OF CONTEMPORANEA EXPOSITIO CANNOT BE APPLIED TO WIDEN THE AMPLITUDE OF STATUTORY LANGUAGE AGAINST SUBJECT, IT CAN LIMIT INTERPRETATION IN FAVOUR OF SUBJECT. 3.2 THE LD. AR FURTHER SUBMITTED THAT THE GROUND O F APPEAL TAKEN BY THE ASSESSEE BEFORE THE LD. CIT (A) WAS TH AT THE ITO HAS ERRED IN ADDING AN AMOUNT OF RS. 64,39,705/- RECEIV ED TOWARDS INTEREST ON ENHANCED COMPENSATION U/S 28 OF THE LAN D ACQUISITION ACT. INSTEAD OF ADJUDICATING THIS GROUN D OF APPEAL, THE LEARNED CIT (A) HELD THAT THE LAND UNDER REFERENCE WAS NOT AGRICULTURAL LAND, AND THAT IN VIEW OF THE FACT THA T THE LAND WAS NOT AGRICULTURAL THERE WAS NO NEED TO INTERFERE WIT H THE ORDER OF THE ITO. THE LD. AR SUBMITTED THAT THE LEARNED CIT (APPEALS) HAD ERRED IN HOLDING THAT THE LAND UNDER REFERENCE WAS NOT AGRICULTURAL IN VIEW OF COPY OF REPRESENTATION MADE BY THE DDA IN THE COURT OF ADJ DELHI WHEREIN IN PARA 4.3 (PB PAGE 2) DDA HAD UNEQUIVOCALLY REPRESENTED ' THAT THE AFORESAID LAND HAS NO SUBSTANTIAL VALUE EXCEPT, THAT IT CAN BE USED ONLY FOR AGRICULTURAL PURPOSE. THE AFORESAID LAND IS NOT SURROUNDED BY DE VELOPED COLONY'. THE LD. AR ALSO SUBMITTED THAT THE LAND WAS AGRICU LTURAL ITA NO. 6055/DEL/2014 ASSESSMENT YEAR 2011-12 6 LAND IS ALSO CLEAR FROM PARA 5 OF THE ORDER OF ADDI TIONAL DISTRICT JUDGE (PAGE 19 OF PB). 3.3 THE LD. AR ALSO SUBMITTED THAT THE LD. CIT (A) DID NOT APPRECIATE THAT EVEN IF THE LAND WAS A CAPITAL ASSE T IN VIEW OF THE PROVISIONS OF SECTION 2(14)(III)(B), CAPITAL GAINS ACCRUING ON THE ACQUISITION OF SUCH LAND WAS EXEMPT U/S 10(37) OF T HE ACT AS ALREADY HELD BY THE ITO. 3.4 AS AN ALTERNATE PLEA, THE LD. AR ALSO SUBMITTED THAT THE IMPUGNED INTEREST DID NOT ACCRUE TO THE ASSESSEE IN HIS INDIVIDUAL CAPACITY BUT HAD ACCRUED TO THE HUF CONS TITUTED BY THE ASSESSEE, HIS WIFE AND HIS FOUR SONS. IT WAS S UBMITTED THAT THIS ASPECT HAD NOT BEEN CONSIDERED BY ANY OF THE L OWER AUTHORITIES AND, THEREFORE, THE ISSUE NEEDED BE RES TORED TO THE FILE OF THE ASSESSING OFFICER FOR MAKING PROPER INQUIRY AND ADJUDICATING THE ISSUE DE NOVO AFTER CONSIDERING THIS FACT. 4. IN RESPONSE, THE LD. SR. DR PLACED RELIANCE ON T HE FINDINGS RECORDED BY THE ASSESSING OFFICER. HE ALSO DREW OU R ATTENTION TO THE CHART PRODUCED ON PAGE 3 OF THE ASSESSMENT ORDE R IN WHICH THE ASSESSING OFFICER HAD WORKED OUT THE INTEREST P ORTION OF THE ENHANCED COMPENSATION. HE ALSO SUBMITTED THAT THE INCOME TAX ACT DOES NOT DISTINGUISH BETWEEN COMPENSATION PAID FOR ITA NO. 6055/DEL/2014 ASSESSMENT YEAR 2011-12 7 AGRICULTURAL LAND AND COMPENSATION PAID FOR NON-AGR ICULTURAL LAND, AND THEREFORE, THE CONTENTION OF THE LD. AR T HAT THE COMPENSATION WAS EXEMPT WAS UNTENABLE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD. ALTHOUGH THE LD. AR HAS ARGUED AT LENGTH ON THE MERITS OF THE CASE AND THE LD. SR. DR HAS ALSO VEHEMENTLY DEFENDED THE ACTION OF THE LOWER AUTHORI TIES, WE FIND THAT GROUND NO. 3 RAISED BY THE ASSESSEE IS AN ALTO GETHER NEW AVERMENT AND THE SAME WAS NEVER ARGUED BEFORE ANY O F THE LOWER AUTHORITIES. THE TAXING STATUTE REQUIRES THAT NOT ONLY SHOULD CORRECT TAX BE IMPOSED AND COLLECTED, BUT IT ALSO R EQUIRES THAT THE TAX SHOULD BE IMPOSED ON THE CORRECT PERSON. VIDE GROUND NO. 3, AS AN ALTERNATE PLEA, THE ASSESSEE HAS CLAIMED THAT THE COMPENSATION/INTEREST WAS NOT RECEIVED IN HIS INDIV IDUAL CAPACITY BUT THE SAME HAD ACCRUED TO THE HUF WHICH WAS COMPR ISED OF HIM, HIS WIFE AND HIS FOUR SONS. DURING THE COURSE OF PROCEEDINGS BEFORE US, NO DOCUMENTARY EVIDENCE WAS PLACED BEFORE US TO CORROBORATE THIS CLAIM OF THE ASSESSEE . HOWEVER, AS ADJUDICATION OF THIS ISSUE IS GERMANE TO THE ENTIRE CONTROVERSY, IT IS ESSENTIAL THAT IT IS ESTABLISHED BEYOND DOUBT AS TO WHO WERE THE ACTUAL RECIPIENTS OF THE COMPENSATION/INTEREST AND IN WHOSE ITA NO. 6055/DEL/2014 ASSESSMENT YEAR 2011-12 8 HANDS WOULD THIS AMOUNT BE ASSESSED. THEREFORE, WI THOUT GOING INTO THE MERITS OF THE CASE, IN THE INTEREST OF JUS TICE, WE RESTORE THE FILE TO THE OFFICE OF THE ASSESSING OFFICER WIT H THE DIRECTION TO EXAMINE THE ISSUE AFRESH AFTER DETERMINING AS TO WH O WAS THE RECIPIENT OF THE COMPENSATION/INTEREST I.E. WHETHER THE ASSESSEE WAS THE RECIPIENT OR WHETHER IT WAS THE HUF WHO HAD RECEIVED THE COMPENSATION/INTEREST. NEEDLESS TO SAY, THE ASSESS ING OFFICER SHALL PROVIDE DUE OPPORTUNITY TO THE ASSESSEE TO PR ESENT ITS CASE. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH APRIL, 2018. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SR IVASTAVA) PRESIDENT JUDICIAL MEMBER DT. 26 TH APRIL, 2018 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ITA NO. 6055/DEL/2014 ASSESSMENT YEAR 2011-12 9 ASSTT. REGISTRAR