Shri Vikrambhai Somabhai Patel, Ahmedabad V. The Income tax Officer,Ward-2(3), Ahmedabad

ITA 62/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94507 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 10-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment; Question of law; Revised return; Ignorance of law
• Section: 45(5); 80HHC; 234B; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI ANIL CHATURVEDI ACCOUNTANT MEMBER AND SHRI S.S. GODARA JUDICIAL MEMBER ./ ITA NO . 62 / A HD/ 20 11 / A. Y . 2007 - 08 VIKRAMBHAI SOMABHAI PATEL, C/O S L PATEL & CO., NR. BANK OF BARODA, DELHI CHAKLA, AHMEDABAD PAN : AEUPP 6088 H VS THE INCOME TAX OFFICER, WARD 2(3) AHMEDABAD. (APPELLANT S ) (RESPONDENT) B Y APPELLANT S : SMT. URVASHI SHODHAN , AR B Y RESPONDENT : SHRI D. C. MISHRA, SR DR / DATE OF HEARING : 16 / 0 9 /201 5 / DATE OF PRONOUNCEMENT: 30 / 0 9 /201 5 / O R D E R PER SHRI S.S. GODARA , JUDICIAL MEMBER THIS ASSESSEE S APPEAL FOR AY 2007 - 08 , ARISE S FROM ORDER DATED 22.10 .2010 PASSED BY THE CIT(A) - XVI AHMEDABAD IN CASE NO.CIT(A) - XVI/WD.2(3)/374/09 - 10 IN PROCEEDINGS U/S.143(3) OF THE INCOME - TAX ACT IN SHORT THE ACT . 2. THIS APPEAL RAISES FIVE GROUNDS. THE FIRST ONE IS THAT THE INTEREST AWARDED ON ENHANCEMENT COMPENSATIO N RELATING TO ASSESSEE S LAND ACQUIRED OUGHT NOT TO HAVE B E EN HELD TAXABLE IN VIEW OF HON BLE A PEX C OURT DECISION IN CIT VS. GHANSHYAM HUF (2009) 315 ITR 01 (SC). THE SECOND GROUND CHALLENGES THE CIT(A) S ORDER CONFIRMING ADDITION OF ITA NO.62/AHD/2011 VIKRAMBHAI SOMABHAI PATEL VS ITO A.Y. 2007 - 08 - 2 - RS.22,93,378/ - ON ACC OUNT OF INTEREST AWARDED ON ENHANCED COMPENSATION ON ACCOUNT OF ASSESSEE S LAND SUBJECT MATTER OF ACQUISITION. T HIRD GROUND PLEADS THAT ASSESSEE S CLAIM OF SPREADING OVER OF THE IMPUGNED INTEREST OUGHT TO HAVE BEEN ACCEPTED. THE ASSESSEE S FORTH & FIFTH G ROUND S CHALLENGE LEVY OF INTEREST U/S 234B AND INITIATION OF SECTION 271(1)(C) PENALTY; RESPECTIVELY. 3. A PERUSAL OF THE CASE FILE REVEALS THAT A C O - ORDINATE BENCH IN ITS ORDER DATED 23.05.2014 REMITTED THE ASSESSEE S FIRST THREE GROUNDS BACK TO THE ASS ESSING OFFICER AS UNDER: - 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. DURING THE COURSE OF HEARING, A QUERY WAS RAISED TO THE LD.COUNSEL FOR THE ASSESSEE THAT BEFOR E THE AO AS WELL AS THE LD.CIT(A) THE ASSESSEE HAD NOT DENIED THE TAXABILITY OF THE INTEREST AND NOT CLAIMED THE AMOUNT AS EXEMPT U/S.10(37) OF THE ACT. ON THE CONTRARY, THE PRAYER OF THE ASSESSEE WAS FOR TAXING THE AMOUNT ON ACCRUAL BASIS AND SPREAD OVER OF INTEREST. IN RESPONSE TO THIS QUERY, THE ASSESSEE HAS SUBMITTED A WRITTEN NOTE, WHICH IS REPRODUCED HEREINBELOW: - BRIEF NOTE ORIGINAL RETURN OF INCOME WAS FILED ON 16/08/2007 DECLARING TOTAL INCOME OF RS. 39,700/ - . REVISED RETURN OF INCOME WAS FIL ED ON 31/03/2008 SHOWING TOTAL INCOME OF RS. 59, 934/ - . THE APPELLANT CLAIMED EXEMPTION OF RS.14,57,444/ - (PRINCIPAL AMOUNT) RECEIVED AS ADDITIONAL COMPENSATION ON COMPULSORY ACQUISITION OF AGRICULTURAL LAND FROM LONG TERM CAPITAL GAINS TAX U/S 10 (37) OF THE ACT IN THE REVISED RETURN. IT WAS FURTHER SUBMITTED THAT INTEREST OF RS.22,93,378/ - ON ENHANCED COMPENSATION FOR AGRICULTURAL LAND COMPULSORILY ACQUIRED UNDER LAND ITA NO.62/AHD/2011 VIKRAMBHAI SOMABHAI PATEL VS ITO A.Y. 2007 - 08 - 3 - ACQUISITION ACT BE TAXED ON ACCRUAL BASIS AS HAVING ACCRUED YEAR AFTER YEAR AND NOT ON LUMPSUM BASIS IN THE YEAR IN WHICH RECEIVED. ASSESSING OFFICER ACCEPTED PRINCIPAL AMOUNT AS EXEMPT FROM TAX U/S 10(37) AS CLAIMED. BUT TAXED INTEREST OF RS.22,93,378/ - ON RECEIPT BASIS APPLYING JUDGMENT OF HON'BLE SUPREME COURT IN CASE OF CIT VS GHA NSHYAM (HUF) 315 ITR 1. LD. CIT (A) CONFIRMED ORDER OF AO REJECTING PLEA OF THE APPELLANT TO TAX ON ACCRUAL BASIS. THE APPELLANT FORM # 36BEFORE HON'BLE ITAT RAISED FOLLOWING GROUNDS - 1. THE APPELLANT SUBMITS THAT IN VIEW OF THE DECISION OF THE HON'BL E SUPREME COURT IN CIT V/S GHANSHYAM HUF (315 ITR 1) THE INTEREST AWARDED OUGHT TO HAVE BEEN HELD TO BE NOT TAXABLE AT ALL BEING MERELY INTEGRAL PART OF COMPENSATION TO THE COMPULSORY ACQUISITION OF LAND. 2. THE LD. CIT (A) ERRED IN LAW AND ON FACTS IN C ONFIRMING THE ADDITION OF RS.22,93,378 ON ACCOUNT OF INTEREST AWARDED ON ENHANCED COMPENSATION OF AGRICULTURAL LAND. 3. THE LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.22,93,378 IN THE YEAR OF APPEAL BY FOLLOWING THE DECISIO N OF APEX COURT IN CIT VS GHANSHYAM HUF (315 ITR 1) WHICH IS NOT APPLICABLE TO THE FACTS OF THE CASE OF THE CASE. THE CIT (A) ALSO ERRED IN NOT FOLLOWING THE VARIOUS DECISIONS OF THE SUPREME COURT CITED BY THE APPELLANT CLAIMING THE SPREAD OVER OF THE INTE REST AWARDED. IT BE SO HELD NOW AND ADDITION MADE TO THE RETURNED INCOME BE DELETED. 4. LEVY OF INTEREST U/S 234B IS NOT JUSTIFIED. 5. INITIATION OF PENALTY U/S 271(L)(C) OF THE ACT IS NOT JUSTIFIED. HON'BLE BENCH HAS RAISED A QUERY THAT WHEN THE APPE LLANT NEVER RAISED THE CLAIM THAT INTEREST INCOME BEING INTEGRAL PART OF ADDITIONAL COMPENSATION ON AGRICULTURAL LAND COMPULSORILY ACQUIRED WOULD ALSO BE EXEMPT SINCE PRINCIPAL AMOUNT IS EXEMPT U/S 10 (37) OF THE ACT BEFORE THE LOWER AUTHORITIES IT WOULD B E APPROPRIATE TO SET ASIDE THE ISSUE TO THE FILE OF ID. CIT (A). IT IS RESPECTFULLY SUBMITTED THAT THOUGH THE APPELLANT CLAIMED SPREAD OVER OF INTEREST INCOME BEFORE THE LOWER AUTHORITIES, VIDE GROUND # 1 (SUPRA) BEFORE HON'BLE ITAT, THE APPELLANT SPECIF ICALLY CLAIMED THAT INTEREST ITA NO.62/AHD/2011 VIKRAMBHAI SOMABHAI PATEL VS ITO A.Y. 2007 - 08 - 4 - AWARDED BEING INTEGRAL PART OF COMPENSATION RECEIVED OUGHT TO BE HELD AS NOT TAXABLE IN JUDGMENT OF CIT VS GHANSHYAM HUF(315 ITR 1). IT IS FURTHER SUBMITTED THAT EVEN IF IT IS HELD THAT CHALLENGE TO THE TAXABILITY OF INTEREST IS A 'NEW GROUND' RAISED FOR THE FIRST TIME BEFORE THE HON'BLE ITAT IT IS SUBMITTED THAT THE SAME IS A PURE QUESTION OF LAW WHICH CAN BE DECIDED BY THE HON'BLE TRIBUNAL ON THE BASIS OF FACTS ON RECORD. THE SAME VIEW IS TAKE N BY THE HON'BLE GUJARAT HIGH C OURT RECENTLY IN TAX APPEAL NO. 2562 OF 2009 AND OTHERS VIDE ORDER DATED 02/04/2014 (COPY ENCLOSED: PLEASE SEE PAGE NO. 30 & 31 IN PARA 40 & 41 REPRODUCED BELOW) '40. THEREFORE, ANY GROUND, LEGAL CONTENTION OR EVEN A CLAIM WOULD BE PERMISSIBLE TO BE RAIS ED FOR THE FIRST TIME BEFORE THE APPELLATE AUTHORITY OR THE TRIBUNAL WHEN FACTS NECESSARY TO EXAMINE, SUCH GROUND, CONTENTION OR CLAIM ARE ALREADY ON RECORD. IN SUCH A CASE THE SITUATION WOULD BE AKIN TO ALLOWING A PURE QUESTION OF LAW TO BE RAISED AT ANY STAGE OF THE PROCEEDINGS. THIS IS PRECISELY WHAT HAS HAPPENED IN THE PRESENT CASE. THE APPELLATE COMMISSIONER AND THE TRIBUNAL DID NOT NEED TO NOR DID THEY TRAVEL BEYOND THE MATERIALS ALREADY ON RECORD, IN ORDER TO EXAMINE THE CLAIM OF THE ASSESSEES FOR DE DUCTIONS UNDER SECTION 80IB AND 80HHC OF THE ACT. 41. IN THE DECISIONS THAT WE HAVE NOTED ABOVE, THE COURTS HAVE CONSIDERED SUCH QUESTIONS WHEN A LEGAL CONTENTION OR A CLAIM WAS BASED ON MATERIAL ALREADY ON RECORD BUT RAISED AT AN APPELLATE STAGE. ON SUCH PREMISE WE WHOLEHEARTEDLY AGREE THAT THE APPELLATE AUTHORITY AND THE TRIBUNAL WOULD HAVE THE POWER TO ENTERTAIN ANY SUCH NEW GROUND, LEGAL CONTENTION OR CLAIM. HOWEVER, IT IS ONLY THE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME - TAX OR PRUTHVI BROKERS AND SHAREHOLDERS P. LTD. (SUPRA), WHICH HAS TRAVELED A LITTLE BEYOND THIS PROPOSITION AND COME TO THE CONCLUSION THAT EVEN IF FACTS NECESSARY TO EXAMINE SUCH A CLAIM ARE NOT PLACED ON BEFORE THE ASSESSING OFFICER AND, THEREFORE, NOT ON RECORD, THER E WOULD BE NO IMPEDIMENT IN THE COMMISSIONER (APPEALS) ENTERTAINING SUCH A CLAIM. SUCH AN ISSUE DOES NOT ARISE IN THESE APPEALS. WE WOULD, THEREFORE, RESERVE OUR OPINION ON THIS LIMITED ASPECT OF THE MATTER IF AND WHEN IN FUTURE THE QUESTION PRESENTS BEFOR E US IN SUCH FORM. FOR THE PRESENT, WE ANSWER QUESTIONS (3) AND (4) AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEES IN MANNER DESCRIBED ABOVE.' WITH RESPECT TO THE APPELLANT CLAIMING SPREAD OVER OF INTEREST BY MISTAKE, IGNORANCE OF LAW OR INADVERTENCE INCLUDED IN HIS INCOME ANY AMOUNT THAT IS ITA NO.62/AHD/2011 VIKRAMBHAI SOMABHAI PATEL VS ITO A.Y. 2007 - 08 - 5 - EXEMPT FROM TAX THEN IT IS PERMISSIBLE TO BRING IT TO THE NOTICE OF THE AUTHORITIES TO GRANT APPROPRIATE RELIEF. THE APPELLANT FOR THIS PROPOSITION RELIES ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE O F CIT VS. SHELLY PRODUCTS AND OTHERS (261 ITR 367) WHERE HON'BLE SUPREME COURT OBSERVED THAT IF AN ASSESSEE BY MISTAKE OR INADVERTENCE OR ON ACCOUNT OF IGNORANCE INCLUDED IN HIS INCOME ANY AMOUNT WHICH IS EXEMPT FROM PAYMENT OF INCOME TAX OR IS NOT INCOME WITHIN THE CONTEMPLATION OF LAW, HE CAN LIKEWISE BRING THIS TO THE NOTICE OF THE ASSESSING OFFICER WHO, IF SATISFIED, MAY GRANT HIM RELIEF AND REFUND THE TAX PAID IN EXCESS, IF ANY. SUCH MATTERS CAN BE BROUGHT TO THE NOTICE OF THE CONCERNED AUTHORITY IN CA SE WHEN REFUND IS DUE AND PAYABLE AND THE AUTHORITY CONCERNED ON BEING SATISFIED SHALL GRANT APPROPRIATE RELIEF. THE RATIO OF THE JUDGMENT IN SHELLY PRODUCTS (SUPRA) IS APPLIED IN TTA # 3403/ABD/1997 BY THE HON'BLE ITAT ON PAGE 23 PARA 50 HOLDING(COPY EN CLOSED) - '50. IN THE INSTANT CASE, WE FIND THAT ASSESSMENT WAS NOT QUASHED BY THE LD. CIT (A) AND FURTHER THE DECISION ON MERITS OF THE ISSUE OF LD. CIT (A) WHEREVER THE DEPARTMENT HAS ANY GRIEVANCE WAS AGITATED IN APPEAL AND THE SAME HAVE BEEN DECIDED O N MERITS. WE ARE OF THE CONSIDERED VIEW THAT THE INCOME OF THE ASSESSEE IS TO BE COMPUTED AS PER PROVISIONS OF THE LAW AND SIMPLY BECAUSE AN ASSESSEE HAS SUFFERED MORE AMOUNT ON TAX THAN WHAT IS LEGALLY DUE, THEN THE DEPARTMENT CAN NOT ASSESS THE INCOME AT A HIGHER FIGURE BUT SHOULD ASSESS THE INCOME AT CORRECT AMOUNT AS PER THE PROVISIONS OF LAW. WE, THEREFORE, DO NOT FIND ARTY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE AND HENCE, THE SAME IS DISMISSED. ' IT IS RESPECTFULLY SUBMITTED THAT INTEREST REC EIVED ON ENHANCED COMPENSATION BEING INTEGRAL PART OF THE COMPENSATION IS NOT EXIGIBLE LO TAX SINCE COMPENSATION ITSELF IS EXEMPT FROM LONG TERM CAPITAL GAINS U/S 10(37) OF THE ACT. IT BE SO HELD NOW. 5.1. THE LD.COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE JUDGEMENT OF THE HON BLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX S. MITESH IMPEX IN TAX APPEAL NO.2562 OF 2009 & OTHERS, ORDER DATED 02/04/2014, WHEREIN THE HON BLE HIGH COURT VIDE PARA NOS.40 & 41 HAS HELD AS U NDER: - 40. THEREFORE, ANY GROUND, LEGAL CONTENTION OR EVEN A CLAIM WOULD BE PERMISSIBLE TO BE RAISED FOR THE FIRST TIME BEFORE THE APPELLATE AUTHORITY ITA NO.62/AHD/2011 VIKRAMBHAI SOMABHAI PATEL VS ITO A.Y. 2007 - 08 - 6 - OR THE TRIBUNAL WHEN FACTS NECESSARY TO EXAMINE, SUCH GROUND, CONTENTION OR CLAIM ARE ALREADY ON RECOR D. IN SUCH A CASE THE SITUATION WOULD BE AKIN TO ALLOWING A PURE QUESTION OF LAW TO BE RAISED AT ANY STAGE OF THE PROCEEDINGS. THIS IS PRECISELY WHAT HAS HAPPENED IN THE PRESENT CASE. THE APPELLATE COMMISSIONER AND THE TRIBUNAL DID NOT NEED TO NOR DID THEY TRAVEL BEYOND THE MATERIALS ALREADY ON RECORD, IN ORDER TO EXAMINE THE CLAIM OF THE ASSESSEES FOR DEDUCTIONS UNDER SECTION 80IB AND 80HHC OF THE ACT. 41. IN THE DECISIONS THAT WE HAVE NOTED ABOVE, THE COURTS HAVE CONSIDERED SUCH QUESTIONS WHEN A LEGAL CO NTENTION OR A CLAIM WAS BASED ON MATERIAL ALREADY ON RECORD BUT RAISED AT AN APPELLATE STAGE. ON SUCH PREMISE WE WHOLEHEARTEDLY AGREE THAT THE APPELLATE AUTHORITY AND THE TRIBUNAL WOULD HAVE THE POWER TO ENTERTAIN ANY SUCH NEW GROUND, LEGAL CONTENTION OR C LAIM. HOWEVER, IT IS ONLY THE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME - TAX OR PRUTHVI BROKERS AND SHAREHOLDERS P. L TD. (SUPRA), WHICH HAS TRAVELED A LITTLE BEYOND THIS PROPOSITION AND COME TO THE CONCLUSION THAT EVEN IF FACTS NECESSARY TO E XAMINE SUCH A CLAIM ARE NOT PLACED ON BEFORE THE ASSESSING OFFICER AND, THEREFORE, NOT ON RECORD, THERE WOULD BE NO IMPEDIMENT IN THE COMMISSIONER (APPEALS) ENTERTAINING SUCH A CLAIM. SUCH AN ISSUE DOES NOT ARISE IN THESE APPEALS. WE WOULD, THEREFORE, RESE RVE OUR OPINION ON THIS LIMITED ASPECT OF THE MATTER IF AND WHEN IN FUTURE THE QUESTION PRESENTS BEFORE US IN SUCH FORM. FOR THE PRESENT, WE ANSWER QUESTIONS (3) AND (4) AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEES IN MANNER DESCRIBED ABOVE.' 5.2. IN VIEW OF THIS BINDING PRECEDENT OF THE HON BLE JURISDICTIONAL HIGH COURT, THE CLAIM RAISED BY THE ASSESSEE IS ADMITTED FOR ADJUDICATION. THE HON BLE APEX COURT IN THE CASE OF CIT VS. GHANSHYAM (HUF) (SUPRA) HAS HELD AS UNDER: - 33. IT IS TO ANSWER THE ABOVE QUESTIONS THAT WE HAVE ANALYSED HE PROVISIONS OF SECTIONS 23, 23(1A), 23(2), 28 AND 34 OF THE 1894 ACT. AS DISCUSSED HEREINABOVE, SECTION 23(1A) PROVIDES FOR ADDITIONAL AMOUNT. IT TAKES CARE OF INCREASE IN THE VALUE AT THE RATE OF 12 PER CENT PER AN NUM. SIMILARLY, UNDER SECTION 23(2) OF THE 1894 ACT, THERE IS A PROVISION FOR SOLATIUM WHICH ALSO REPRESENTS PART OF ENHANCED COMPENSATION. SIMILARLY, SECTION 28 EMPOWERS THE COURT IN ITS DISCRETION TO AWARD INTEREST ON THE EXCESS AMOUNT OF COMPENSATION OV ER AND ABOVE WHAT IS AWARDED BY THE COLLECTOR. IT INCLUDES ADDITIONAL ITA NO.62/AHD/2011 VIKRAMBHAI SOMABHAI PATEL VS ITO A.Y. 2007 - 08 - 7 - AMOUNT UNDER SECTION 23(1A) AND SOLATIUM UNDER SECTION 23(2) OF THE SAID ACT. SECTION 28 OF THE 1894 ACT APPLIES ONLY IN RESPECT OF THE EXCESS AMOUNT DETERMINED BY THE COURT AFTER REFERE NCE UNDER SECTION 18 OF THE 1894 ACT. IT DEPENDS UPON THE CLAIM, UNLIKE INTEREST UNDER SECTION 34 WHICH DEPENDS O UNDUE DELAY IN MAKING THE AWARD. IT IS TRUE THAT INTEREST IS NOT COMPENSATION. IT IS EQUALLY TRUE THAT SECTION 45(5) OF THE 1961 ACT, REFERS TO COMPENSATION. BUT AS DISCUSSED HEREINABOVE, WE HAVE TO GO BY THE PROVISIONS OF THE 1894 ACT, WHICH AWARDS INTEREST BOTH AS AN ACCRETION IN THE VALUE OF THE LANDS ACQUIRED AND INTEREST FOR UNDUE DELAY. INTEREST UNDER SECTION 28 UNLIKE INTEREST UNDER S ECTION 34 IS AN ACCRETION TO THE VALUE, HENCE IT IS A PART OF ENHANCED COMPENSATION OR CONSIDERATION WHICH IS NOT THE CASE WITH INTEREST UNDER SECTION 34 OF THE 1894 ACT. SO ALSO ADDITIONAL AMOUNT UNDER SECTION 23(1A) AND SOLATIUM UNDER SECTION 23(2) OF TH E 1961 ACT FORMS PART OF ENHANCED COMPENSATION UNDER SECTION 45(5)(B) OF THE 1961 ACT. IN FACT, WHAT WE HAVE STATED HEREINABOVE IS REINFORCED BY THE NEWLY INSERTED CLAUSE (C) IN SECTION 45(5) BY THE FINANCE ACT, 2003 WITH EFFECT FROM 1 - 4 - 2004. THIS NEWLY A DDED CLAUSE ENVISAGES A SITUATION WHERE IN THE ASSESSMENT FOR ANY YEAR, -- - THE CAPITAL GAIN ARISING FROM THE TRANSFER OF A CAP ITAL ASSET IS COMPUTED BY TAKING THE COMPENSATION OR CONSIDERATION REFERRED TO IN CLAUSE (A) OF SECTION 45(5) OR, AS THE CASE MAY BE, - ENHANCED COMPENSATION OR CONSIDERATION REFERRED TO IN CLAUSE (B) OF SECTION 45(5), AND SUBSEQUENTLY SUCH COMPENSATION OR CONSIDERATION IS REDUCED BY ANY COURT, TRIBUNAL OR OTHER AUTHORITY. 5.3. DURING THE COURSE OF HEARING, LD.COUNSEL FOR TH E ASSESSEE HAS DRAWN OUR ATTENTION TOWARDS PAGE NOS.11 TO 19, WHEREIN THE ORDER OF THE LD.CIVIL JUDGE (S.D.) AT GANDHINAGAR PASSED IN LAND ACQUISITION REFERENCE NOS.839/98 TO 841/98, 311/98 & 332/98 TO 336/98, DATED 16/02/2005 IS ENCLOSED. THE LD.COURT HAS DECIDED THE CLAIM OF ENHANCED COMPENSATION AS UNDER: ORDER THE PRESENT LAND ACQUISITION REFERENCE CASES ARE HEREBY PARTLY ALLOWED. ITA NO.62/AHD/2011 VIKRAMBHAI SOMABHAI PATEL VS ITO A.Y. 2007 - 08 - 8 - THE OPPONENTS ARE DIRECTED TO PAY TOTAL ADDITIONAL RS.178/ - PER SQ.MTR. [RUPEES ONE HUNDRED SEVENTY EIGHT ONLY] [RS.210 / - MINUS RS.32 = RS.178/ - ] TO THE APPLICANTS OF ALL THE RESPECTIVE CASES. THE APPLICANTS ARE ALSO ENTITLED TO GET 30% AMOUNT UNDER THE HEAD OF SOLATIUM AND ALSO ENTITLED TO GET 9% INTEREST FOR THE FIRST YEAR AND THEREAFTER AT THE RATE OF 15% FOR THE SECO ND YEAR UPTO DEPOSITING OF THE AWARDED AMOUNT. THE APPLICANTS ARE ALSO ENTITLED TO GET AMOUNT AT 12% INCREASE FROM THE DATE OF PUBLICATION OF THE NOTIFICATION U/S.4 I.E. 13.08.1992 TO THE DATE OF AWARD I.E.10.04.1995 PASSED BY THE LAND ACQUISITION OFFICER AS PROVIDED U/S.23(1)(A) OF THE ACT. PARTIES TO BEAR COST OF THE REVENUE OF THEIR OWN. THE APPLICANTS ARE DIRECTED TO PAY THE DEFICIT COURT - FEE IF NECESSARY. COPY OF THIS ORDER BE KEPT IN EACH LAND REFERENCE CASES. AWARD BE DRAWN ACCORDINGLY. SIGNED AND PRONOUNCED IN OPEN COURT ON THIS 16 TH DAY OF FEBRUARY, 2005 AT GANDHINAGAR. 5.4. AS PER THE AFORESAID ORDER OF THE LD.COURT, THE ASSESSEE IS ENTITLED TO GET 30% AMOUNT UNDER THE HEAD OF SOLATIUM AND ALSO ENTITLED TO GET 9% INTEREST FOR THE FIRST Y EAR AND THEREAFTER AT THE RATE OF 15% FOR THE SECOND YEAR UPTO DEPOSITING OF THE AWARDED AMOUNT. THE LD.COURT HAS ALSO ORDERED FOR 12% INCREASE FROM THE DATE OF PUBLICATION OF THE NOTIFICATION U/S.4 I.E. 13.08.1992 TO THE DATE OF A WARD I.E. 10.04.1995 PAS SED BY THE LAND ACQUISITION OFFICER AS PROVIDED U/S.23(1)(A) OF THE ACT. AS PER THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE, ALL THESE AMOUNTS FORM PART OF THE COMPENSATION IN THE VIEW OF THE JUDGEMENT OF HON BLE SUPREME COURT IN THE CASE OF CIT VS. GHANSHYAM (HUF)[SUPRA]. IT IS ALSO SUBMITTED THAT SINCE THE CASE IS TRANSFER OF AGRICULTURAL LAND, THEREFORE, THIS AMOUNT IS EXEMPT U/S.10(37) OF THE ACT AND FOR THE SAKE OF CLARITY SECTION 10(37) IS REPRODUCED HEREUNDER: - SECTION 10(37): - IN THE CASE OF AN ASSESSEE, BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, ANY INCOME CHARGEABLE UNDER THE HEAD 'CAPITAL GAINS' ARISING FROM THE TRANSFER OF AGRICULTURAL LAND, WHERE (I) SUCH LAND IS SITUATE IN ANY AREA REFERRED TO INITEM (A) OR ITEM (B) OF SUB - CLAU SE (III) OF CLAUSE (14) OF SECTION 2; ITA NO.62/AHD/2011 VIKRAMBHAI SOMABHAI PATEL VS ITO A.Y. 2007 - 08 - 9 - (II) SUCH LAND, DURING THE PERIOD OF TWO YEARS IMMEDIATELY PRECEDING THE DATE OF TRANSFER, WAS BEING USED FOR AGRICULTURAL PURPOSES BY SUCH HINDU UNDIVIDED FAMILY OR INDIVIDUAL OR A PARENT OF HIS; (III) SUCH TRANSF ER IS BY WAY OF COMPULSORY ACQUISITION UNDER ANY LAW, OR A TRANSFER THE CONSIDERATION FOR WHICH IS DETERMINED OR APPROVED BY THE CENTRAL GOVERNMENT OR THE RESERVE BANK OF INDIA; (IV) SUCH INCOME HAS ARISEN FROM THE COMPENSATION OR CONSIDERATION FOR SUCH TRANSFER RECEIVED BY SUCH ASSESSEE ON OR AFTER THE 1ST DAY OF APRIL, 2004. EXPLANATION : FOR THE PURPOSES OF THIS CLAUSE, THE EXPRESSION 'COMPENSATION OR CONSIDERATION' INCLUDES THE COMPENSATION OR CONSIDERATION ENHANCED OR FURTHER ENHANCED BY ANY COURT, TRIBUNAL OR OTHER AUTHORITY; ] 6. IN OUR CONSIDERED VIEW, THE AUTHORITIES BELOW OUGHT TO HAVE GIVEN A CLEAR FINDING AS TO HOW THIS AMOUNT WOULD BECOME TAXABLE IF IT IS FORMING INTEGRAL PART OF THE COMPENSATION, WHEN TRANSFER IS OF THE AGRICULTURAL LAND. SINCE THIS CLAIM WAS NOT MADE BEFORE THE AUTHORITIES BELOW, BUT ARISING FROM THE MATERIAL AVAILABLE BEFORE THE AO, REQUIRES FRESH ADJUDICATION BY THE ASSESSING OFFICER. THEREFORE, THE CLAIM OF THE ASSESSEE IS RESTORED BACK TO THE FILE OF AO FOR DECISION AF RESH. THE AO IS DIRECTED TO DECIDE THE CLAIM OF THE ASSESSEE IN THE LIGHT OF JUDGEMENT OF HON BLE APEX COURT RENDERED IN THE CASE OF CIT VS. GHANSHYAM HUF (SUPRA). THE LEARNED CO - ORDINATE BENCH TREATED SECTION 234B INTEREST LEVY AS MERE CONSEQUENTIAL I N NATURE. THE ASSESSEE S FIFTH GROUND WAS HELD TO BE PRE - MATURE. 4. IT IS TO BE SEEN THAT THE ASSESSEE FILED MISCELLANEOUS APPLICATION NO.167/AHD/2014 SEEKING TO RECALL THE ABOVE STATED ORDER TO THE EXTENT THAT INTEREST LEVIED U/S 234B WAS TREATED AS ME RE CONSEQUENTIAL. THE ASSESSEE QUOTED YET ANOTHER CO - ORDINATE BENCH DECISION OF THE TRIBUNAL IN INTAS EXPORTS VS. ACIT, ITA NO.1819/AHD/2008, HOLDING THAT SECTION 234B INTEREST IS NOT LEVIABLE WHEN THE DEFAULT IN QUESTION IN PAYMENT OF ADVANCE ITA NO.62/AHD/2011 VIKRAMBHAI SOMABHAI PATEL VS ITO A.Y. 2007 - 08 - 10 - TAX IS NOT A TTRIBUTABLE TO AN ASSESSEE. THE LEARNED CO - ORDINATE BENCH HEARD BOTH THE PARTIES AND RECALLED ITS ORDER DATED 23.05.2014 HEREINABOVE TO THE LIMITED EXTENT OF CHARGEABILITY OF SECTION 234B INTEREST. IT IS IN THIS BACKDROP OF FACTS THAT WE ARE DECIDING ASS ESSEE S GROUND NO.4 ON INTEREST ISSUE ONLY. 5. NOW WE COME TO THE RELEVANT FACTS. THE ASSESSEE CO - OWNED AGRICULTURAL LAND IN THE REVENUE ESTATE OF VILLAGE VAVOL, TALUK & DISTRICT GANDHINAGAR. THE STATE G OVERNMENT ACQUIRED THE SAME IN THE YEAR 1991. THE ACQUISITION PROPOSAL IS DATED 26.09.1991. THE ASSESSEE RECEIVED COMPENSATION @ RS.32/ - PER SQ. MTR. HE SOUGHT FOR ENHANCED COMPENSATION BY WAY OF FILING LAND ACQUISITION REFERENCE. THE HON BLE REFERENCE COURT IN ITS ORDER DATED 16.02.2005 ENHANCED THE COM PENSATION AWARDED FROM RS.32/ - PER SQ. MTR. TO THAT OF RS.210/ - PER SQ. MTR. WITH 30% SOLATIUM, 9% INTEREST FOR THE FIRST YEAR AND 15% FOR SECOND YEAR UPTO 28.02.2006. THIS RESULTED IN GROSS COMPENSATION OF RS.1,50,03,287/ - IN THE HANDS OF ALL CO - OWNERS R ECEIVED ON 18.04.2006. THE ASSESSEE S SHARE CAME TO BE RS.37,50,822/ - . IT COMPRISED OF PRINCIPLE AMOUNT OF RS.14,57,444/ - , INTEREST @ 9% FOR FY 1995 - 96 OF RS.1,31,170/ - , INTEREST @ 15% FROM FY 1996 - 97 TO 28.02.2006 COMING TO RS.21,62,208/ - . THIS INTEREST AMOUNT AGGREGATED TO RS.22,93,378/ - . THE ASSESSEE SPREAD OVER THIS INTEREST SUM IN ALL CORRESPONDING ASSESSMENT YEAR S FOLLOWING ACCRUAL PRINCIPLE. HE QUOTED CASE LAW OF RAMA BHAI VS. CIT, 181 ITR 400, P S KRISHNA RAO VS. CIT, 181 ITR 408, BIKRAM SINGH & OTHERS VS. LAND ACQUISITION COLLECTOR & OTHERS, 224 ITR 551 , IN SUPPORT. THE ASSESSING OFFICER REJECTED THIS SPREADING OVER IN ASSESSMENT ORDER DATED 29.12.2009. HE INTER ALIA OBSERVED THAT THE ASSESSEE HAD RECEIVED THE COMPENSATION INCLUDING INTEREST C OMPONENT IN APRIL 2006. HOWEVER, HE DID NOT FILE RETURNS FOR ITA NO.62/AHD/2011 VIKRAMBHAI SOMABHAI PATEL VS ITO A.Y. 2007 - 08 - 11 - AYS 2005 - 06 AND 2006 - 07 AS PER TIME ALLOWED U/S 139(4) AND 139(1) OF THE ACT. THE ASSESSING OFFICER WAS OF THE VIEW THAT REGULAR BOOKS OF ACCOUNTS HAD NOT BEEN MAINTAINED ON MERCANTILE BASIS. A ND THAT SUCH A CLAIM FOR ASSESSING THE IMPUGNED INTEREST ON ACCRUAL BASIS IS ACCEPTED ONLY IN CASE OF REGULAR FILING OF RETURNS AND BOOKS BEING MAINTAINED ON MERCANTILE BASIS. HE FURTHER OBSERVED THAT THE ASSESSEE HAD ALLOWED HIMSELF TO AVOID TAX PAYMENTS IN RESPECT OF SPREAD OVER PART OF INTEREST OF AY 2001 - 02 AND EARLIER YEARS; TOTALING TO RS.12,24,251/ - . THEREAFTER, HE TOOK INTO CONSIDERATION THE H ON BLE A PEX C OURT JUDGMENT IN CASE OF GHANSHYAM HUF (SUPRA) HOLDING THAT INTEREST ON ENHANCED COMPENSATION IS LIABLE TO BE TAXED ON RECEIPT BASIS. WE FIND FROM THE CASE FILE THAT THE A SSESSING O FFICER HIMSELF ACKNOWLEDGED THAT THE HON BLE APEX COURT HAD RENDERED VARIOUS DECISIONS IN EARLIER POINT OF TIME IN ACCEPTING THIS SPREAD OVER PLEA. HE WOULD ACCORDINGL Y CONCLUDE THAT ASSESSEE S INTEREST SUM OF RS.22,93,378/ - WAS TAXABLE IN THE YEAR OF RECEIPT , I.E., APRIL 2006 CORRESPONDING TO THE IMPUGNED AY 2007 - 08. HE ACTED ACCORDINGLY AND ADDED THE ABOVE STATED INTEREST SUM IN ASSESSEE S TOTAL INCOME OF THE IMPUGNE D ASSESSMENT YEAR. INTEREST U/S 234B OF THE ACT ALSO STOOD LEVIED. 6. THE CIT(A) UPHELD THE ASSESSING OFFICER S ACTION. HIS FINDINGS QUA THE RELEVANT INTEREST U/S 234B OF THE ACT READ AS UNDER: - 5.1 THIS IS REGARDING CHARGING - OF INTEREST UNDER SECTI ON 234B. IN THE GROUND OF APPEAL AND DURING THE APPELLATE PROCEEDINGS THE APPELLANT HAS STATED THAT THE FACTS OF THE ASSESSEE'S CASE ARE COVERED BY THE BOARD'S PRESS RELEASE DATED 21/05/1996 AS PER WHICH INTEREST UNDER SECTION 234B, SHOULD NOT BE LEVIED. O N THE SAME ISSUE BOARDS OF CIRCULAR NUMBER 783 DATED 18/11/1999 ALSO PROVIDES THAT NO SUCH INTEREST SHOULD BE LEVIED. ITA NO.62/AHD/2011 VIKRAMBHAI SOMABHAI PATEL VS ITO A.Y. 2007 - 08 - 12 - 5.2 I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AND OBSERVATION OF THE AO. THERE IS A BOARD'S ORDER DATED 23/05/1996, AND THAT IS REGARDING POWER OF THE CHIEF COMMISSIONER FOR REDUCTION OR WAIVER OF INTEREST. IT SAYS 'THE BOARD HAS ISSUED AN ORDER VIDE F.NO. 400/234/95 - IT(B), DATED 23RD MAY, 1 996, INDICATING THE CLASS OF INCOME OR CLASS OF CASES IN WHICH REDUCTION OR WAIVER OF IN TEREST UNDER SECTION 234A, 234B OR 234C AS THE CASE MAY BE, COULD BE CONSIDERED BY CHIEF COMMISSIONER OF INCOME - TAX AND DIRECTOR GENERAL OF INCOME - TAX' FURTHER THE BOARD ISSUED A CLARIFICATION REGARDING THE PRESS NOTICE DATED 21/05/1996, WHICH IS AS UNDER. CLARIFICATION REGARDING WAIVER OF INTEREST CLAIMED ON THE BASIS OF PRESS NOTE DATED 21 - 5 - 1996 1. THE BOARD BY AN ORDER [VIDE F.NO. 400/234/95 - IT(B)], DATED 23 - 5 - 1996, INDICATED THE CLASS OF INCOME OR CLASS OF CASES IN WHICH REDUCTION OR WAIVER OF INTER EST UNDER SECTIONS 234A, 234B AND 234C WOULD BE CONSIDERED BY THE CHIEF COMMISSIONER OF INCOME - TAX AND DIRECTOR - GENERAL OF INCOME - TAX. PRIOR TO THE ISSUE OF THE ORDER A PRESS NOTE WAS RELEASED ON 21 - 5 - 1996 WITH A VIEW TO GIVE WIDE PUBLICITY TO THE MAJOR ST EP CONTEMPLATED BY THE BOARD TOWARDS MITIGATING HARDSHIP IN GENUINE CASES. 2. HOWEVER, THE INSTANCES HAVE COME TO THE NOTICE OF THE BOARD WHERE CERTAIN CLAIMS HAVE BEEN MADE ON THE BASIS OF PARA 2(V) OF THE. PRESS NOTE SEEKING WAIVER OF INTEREST FOR NON - P AYMENT OF ADVANCE TAX. PARA 2(E) OF ORDER DATED 23 - 5 - 1996 CONTAINS NO SUCH STIPULATION. IT IS HEREBY CLARIFIED THAT MAKING ANY CLAIM FOR WAIVER OF INTEREST BASED ON THE PRESS NOTE DATED 21 - 5 - 1996. IS NOT SUSTAINABLE. A PRESS NOTE _IS BASICALLY INTENDED TO GIVE A BROAD IDEA IN ADVANCE TO THE PUBLIC AT LARGE REGARDING A POLICY/STEP UNDER FORMULATION. TO TREAT A PRESS NOTE AS A FINAL, LEGAL DOCUMENT AND TO MAKE ANY CLAIM ON THE BASIS OF IT AS AGAINST THE CONTENTS OF THE FINAL DOCUMENT IS NOT MAINTAINABLE. 3. THE BOARD HEREBY REITERATES THAT ALL REQUESTS FOR WAIVER OF INTEREST ARE TO BE CONSIDERED BY THE CHIEF COMMISSIONER OF INCOME - TAX] AND THE DIRECTOR - GENERAL OF INCOME - TAX WITHIN THE PARAMETERS LAID DOWN BY BOARD'S ORDER DATED 23 - 5 - 1996 READ WITH THE ORDER DATED 30 - 1 - 1997, ITA NO.62/AHD/2011 VIKRAMBHAI SOMABHAI PATEL VS ITO A.Y. 2007 - 08 - 13 - 5.3 THE ABOVE CLARIFICATION SHOWS THAT THIS PRESS NOTE WAS ALSO REGARDING POWER OF THE CHIEF. COMMISSIONER TO REDUCE OR WAIVE THE INTEREST AND IT WAS NOT FOR THE ASSESSING OFFICER TO LEVY OR NOT TO LEVIED INTEREST. I HAVE ALSO GONE THROUG H THE CIRCULAR, NUMBER 783 DATED 18/11/1999. THIS CIRCULAR IS REGARDING DELEGATION OF POWER TO THE CHIEF COMMISSIONER FOR A REDUCTION OR WAIVER OF INTEREST. AS FAR AS AO IS CONCERNED, IT IS MANDATORY FOR HIM TO CHARGE INTEREST UNDER SECTION 234B. THE CHARG ING OF INTEREST IS MANDATORY AS PER THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF ANJUM M.H. GHASWALA [252 ITR 01]. HENCE THIS GROUND OF APPEAL IS DISMISSED. IN VIEW OF THE ABOVE, THIS GROUND OF APPEAL IS ALSO DISMISSED. THIS LEAVES THE ASSESSEE AGGRIEVED. 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE CASE FILE. RELEVANT FACTS STAND NARRATED IN THE PRECEDING PARAGRAPHS. THE QUESTION THAT ARISES FOR OUR CONSIDERATION IS AS TO WHETHER THE ASSESSEE CAN BE HELD LIABLE FOR INTEREST LEVY U /S 234B OF THE ACT OR NOT. TO PUT IT SIMPLY, CAN THE ASSESSEE BE HELD TO BE IN DEFAULT IN PAYMENT OF ADVANCE TAX ARISING FROM THE ABOVE STATED INTEREST INCOME. WE DEEM IT APPROPRIATE TO OBSERVE THAT THE ISSUE AS TO WHETHER THE IMPUGNED ENHANCED COMPENSATI ON IS TO BE SPREAD OVER OR TAXED IN THE YEAR OF RECEIPT STANDS REMITTED BACK TO THE ASSESSING AUTHORITIES FOR DECISION AFRESH AS PER HON BLE APEX COURT DECISION IN THE CASE OF GHANSHYAM HUF (SUPRA). WE PROCEED TO ANALYZE THE FACTS OF THE CASE QUA ASSESSEE S DEFAULT IN QUESTION. THIS IS NOT THE REVENUE S CASE THAT THE CASE LAW QUOTED DURING ASSESSMENT (SUPRA) IS NOT IN TUNE WITH THE ASSESSEE S STAND CLAIMING SPREAD OVER OF THE ENHANCED COMPENSATION INCOME. IT TRANSPIRES FROM THE CASE LAW OF GHANSHYAM HU F ITSELF THAT THE H ON BLE PUNJAB & HARYANA H IGH C OURT IN ITS LEAD JUDGMENT DATED 17.01.2007 REPORTED AS CIT VS. KARANBIR SINGH (2008) 303 ITR 231 HAD ACCEPTED SPREADING OVER BY FOLLOWING DECISION OF HON BLE SUPREME COURT ITA NO.62/AHD/2011 VIKRAMBHAI SOMABHAI PATEL VS ITO A.Y. 2007 - 08 - 14 - IN BIKRAM SINGH S CASE (SUPRA). TH E PICTURE THAT EMERGES IS THAT BEFORE THE HON BLE APEX COURT CLEARED TH IS AIR OF CONFUSION IN ITS JUDGEMENT DATED 16.07.2009 (MUCH AFTER THE IMPUGNED ASSESSMENT YEAR 2007 - 08) AS TO WHETHER THE ENHANCED COMPENSATION IS TAXABLE BY FOLLOWING PRINCIPLE OF SPRE AD OVER OR YEAR OF RECEIPT, THE ASSESSEE S CASE WAS COVERED BY ABOVE STATED DECISIONS. WE HOLD IN THESE FACTS THAT THE ASSESSEE S DEFAULT IN QUESTION WAS VERY MUCH JUSTIFIABLE. HE PROCEEDED AS PER THE LAW AS IT PREVAILED AT THE RELEVANT TIME . A C O - ORDINATE B ENCH OF THE T RIBUNAL IN INTAS EXPORTS (SUPRA) CONSIDERED ISSUE OF SIMILAR INTEREST LEVY U/S 234B WHEREIN THE ASSESSEE HAD DEFAULTED IN AY 2003 - 04 BASED ON AMENDMENT IN SECTION 80HHC OF THE ACT INTRODUCED BY THE FINANCE ACT, 2005 WITH RETROSPECTIVE EFFECT FROM 01.04.2001. IT HOLDS THAT DEFAULT GIVING RISE TO SECTION 234B INTEREST IS NOT ATTRIBUTABLE TO THE CONCERNED ASSESSEE. THE REVENUE DOES NOT POINT OUT ANY EXCEPTION ON FACTS. WE FOLLOW THE VERY DECISION AND CONCLUDE THAT THE PRESENT ASSESSEE COULD NOT HAVE FORESEEN THE HON BLE APEX COURT DECISION HOLDING ASSESSMENT OF THE ENHANCED COMPENSATION IN THE YEAR OF RECEIPT AS AGAINST THAT OF SPREAD OVER. T HE ASSESSEE S ARGUMENT S CHALLENGIN G SECTION 234B INTEREST SUCCEED. THE IMPUGNED INTEREST LEVY U/S 234B I S DELETED. GROUND NO.4 PLEADED IN THIS APPEAL IS ACCEPTED. THIS ASSESSEE S APPEAL IS ALLOWED TO THE LIMITED EXTENT OF GROUND NO.4. ORDER PRONOUNCED IN THE COURT ON THIS DAY, THE 30 TH SEPTEMBER , 201 5 AT AHMEDABAD. SD/ - SD/ - ( ANIL CHATURVEDI) ( S.S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD DATED 30 / 0 9 / 20 1 5 ITA NO.62/AHD/2011 VIKRAMBHAI SOMABHAI PATEL VS ITO A.Y. 2007 - 08 - 15 - * BT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . TRUE COPY / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD