Special Land Acquisition Officer, Shivamogga V. The Income Tax Officer, TDS Ward-1, Davangere

ITA 642/BANG/2020

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 7036 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-10-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 31-07-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence; Capital receipt; TDS
• Section: 45(5); 133A; 201(1); 201; 6; 28; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI , JUDICIAL MEMBER ITA NO S . 642 TO 645 /BANG/2 020 (ASSESSMENT YEAR S : 20 14 - 15 TO 2017 - 18 ) SPECIAL LAND ACQUISITION OFFICER, UPPER TUNGA PROJECT, OLD DC OFFICE BUILDING, SHIVAMOGGA 577 201 KARNATAKA. .APPELLANT TAN BLRS 17756E VS. INCOME TAX OFFICER , TDS WARD, C R BUILDING, DEVRAJ URS LAYOUT, C BLOCK, DAVANGERE. RESPONDENT. ITA NOS.1421 & 1422/BANG/2019 (ASSESSMENT YEARS : 2014 - 15 & 2016 - 17) (BY REVENUE) ASSESSEE BY: SHRI NITISH RANJAN, C.A. REVENUE BY: SHRI MUZAFFAR HUSSAIN, CIT (D.R) DATE OF HEARING : 18.01 .20 2 1 . DATE OF PRONOUNCEMENT : 27 .01. 20 21 . O R D E R PER SHRI CHANDRA POOJARI, A.M. : THE SE APPEALS ARE FILED BY ASSESSEE AND REVENUE AGAINST DIFFERENT ORDERS OF C OMMISSIONER OF INCOME TAX (APPEALS) , DAVANGERE . THE ASSESSEE HAS FILED APPE ALS FOR ASSESSMENT YEARS 2014 - 15 TO 2017 - 18 AND REVENUE HAS FILED FOR ASSESSMENT YEARS 2014 - 15 AND 2015 - 16. SINCE COMMON ISSUES ARE INVOLVED IN 2 ITA NO S . 642 TO 645/BANG/2020 & 1421 & 1422/BANG/2019 THESE APPEALS, THEY ARE HEARD TOGETHER AND DISPOSED OF BY CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. COMMON GROUNDS (ONLY CHANGE IN FIGURES) RAISED BY ASSESSEES APPEALS ARE AS FOLLOWS : 1. THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS ARBITRARY, OPPOSED TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD. ASSESSING OFFICER AND TH E LD. CIT (A) HAS ERRED IN IGNORING THE FACT THAT THE IMPUGNED LANDS IN THE PRESENT CASE ARE RURAL AGRICULTURAL LANDS, AS APPARENT FROM THE AVAILABLE RECORDS, INCLUDING THE ORDER OF THE HON'BLE CIVIL COURT AT SHIMOGGA PURSUANT TO REFERENCE MADE UNDER SECTI ON 18 OF THE LAND ACQUISITION ACT, 1894. 3. THE LD. ASSESSING OFFICER AND THE LD. CIT (A) OUGHT TO HAVE OBSERVED THAT THE IMPUGNED LAND BEING RURAL AGRICULTURAL LAND, THE ENTIRE COMPENSATION, INCLUDING ENHANCED COMPENSATION AND INTEREST THEREON UNDER SECTION 28 OF THE LAND ACQUISITION ACT, 1894, PAID TOWARDS THE ACQUISITION IS EXEMPT FROM INCOME TAX UNDER SECTION 10(37) OF THE INCOME - TAX ACT. 4. THE LD. ASSESSING OFFICER ERRED IN TREATING THE ASSESSEE AS AN 'ASSESSEE IN DEFAULT' UNDER SECTION 201 OF THE INCOME - TA X ACT FOR NON - DEDUCTION OF TDS ON PAYMENTS WHICH ARE EXEMPT UNDER INCOME - TAX ACT. THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ORDER OF THE LD. ASSESSING OFFICER. 5. WITHOUT PREJUDICE TO THE ABOVE, THE LD. ASSESSING OFFICER HAS ERRED ON FACTS AND IN LAW BY NO T BEING ABLE TO DISTINGUISH BETWEEN INTEREST PAYMENTS MADE IN THE NATURE OF COMPENSATION AS DEFINED UNDER SECTION 45(5) AND INTEREST PAID FOR DELAY IN PAYMENT. 6. THE LD. ASSESSING OFFICER'S CONTENTION THAT TDS HAS TO BE DEDUCTED ON ALL INTEREST PAYMENTS, I NCLUDING THOSE PAYMENTS MADE UNDER SECTION 28 UNDER THE LAND ACQUISITION ACT, IS CONTRARY TO THE POSITION OF LAW AS ESTABLISHED BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. GHANSHYAM (HUF). 3. THE GROUNDS RAISED IN REVENUES APPEALS ARE A S FOLLOWS : 1. THE LEARNED CIT (APPEALS) HAS ERRED IN ALLOWING RELIEF ON DEDUCTION OF TAX AT SOURCE ON INTEREST PAYMENTS MADE AS A CONSEQUENCE OF COURT ORDER. 3 ITA NO S . 642 TO 645/BANG/2020 & 1421 & 1422/BANG/2019 2. THE LEARNED CIT (APPEALS) HAS ERRED IN BIFURCATING THE INTEREST PAYMENTS INTO THE CATEGORI ES OF THE AMOUNTS FOR WHICH DETAILS ARE AVAILABLE AND THOSE FOR WHICH DETAILS ARE NOT AVAILABLE AND ALLOWING RELIEF ON DETAILS AVAILABLE EVEN THOUGH THERE IS NO PROVISION IN THE INCOME TAX ACT FOR GIVING RELIEF ON SAME AMOUNT BASED ON SUCH BIFURCATIO NS. 4. THE FACTS INVOLVED IN THESE APPEALS ARE THAT THE ASSESSEE IS A STATE GOVERNMENT DEPARTMENT, KARNATAKA. THE ASSESSEE ACQUIRES LANDS FOR DEVELOPMENT WORKS OF GOVT. OF KARNATAKA AND COMPENSATION IS PAID TO VARIOUS LAND OWNERS. THE ASSESSEE HAS P AID ENHANCED COMPENSATION TO VARIOUS LAND OWNERS AS PER THE ORDERS OF JUDICIAL COURTS AND INTEREST AWARDED TO LAND OWNERS BY COURTS. THE INTEREST AWARDED BY COURTS ARE DIRECTLY REMITTED TO CIVIL COURTS ONLY AS PER THE DIRECTIONS OF THE CIVIL COURTS AND TH E ASSESSEE DID NOT PAY THE INTEREST TO AWARDEES. THE ASSESSING OFFICER CONDUCTED SURVEY U/S. 133A OF THE INCOME TAX ACT, 1961 ('THE ACT') AND FOUND THAT TDS WAS NOT DEDUCTED ON I NTEREST AWARDED TO LAND OWNERS AND LEVIED TAX FOR SHORT DEDUCTION OR NON - DEDU CTION OF TDS AND T HE ASSESSING OFFICER LEVIED INTEREST U/S. 201(1) AND 201(1A) OF THE ACT. ON APPEAL, THE CIT (APPEALS) OBSERVED THAT THE ASSESSEE IS IN DEFAULT AND THE ASSESSEE IS LIABLE FOR DEDUCTION OF TDS ON INTEREST COMPONENT. THE LEARNED CIT (APPEA LS) OBSERVED THAT INTEREST AWARDED U/S. 23(1A) & 23(2) R.W.S. 28 OF THE LAND ACQUISITION ACT IS IN THE NATURE OF SOLATIUM AND INTEGRAL PART OF COMPENSATION. RECEIPT OF COMPENSATION AWARDED 4 ITA NO S . 642 TO 645/BANG/2020 & 1421 & 1422/BANG/2019 UNDER LAND ACQUISITION ACT IS A CAPITAL RECEIPT. WHEREAS, INTERES T AWARDED U/S. 34 OF THE LAND ACQUISITION ACT IS ON ACCOUNT OF DELAYED PAYMENT OF COMPENSATION IS A REVENUE RECEIPT. THE PAYMENT OF INTEREST U/S. 23(1A) AND 23(2) OF LAND ACQUISITION ACT AND INTEREST AWARDED U/S. 34 OF THE LAND ACQUISITION ACT ARE VERY DI FFERENT IN NATURE. AS PER THE AVAILABLE RECORD, HE CLASSIFIED THE COMPENSATION AS FOLLOWS : CONSIDERING THE ABOVE, THE CIT (APPEALS) OBSERVED THAT THE INTEREST PAYMENT U/S. 28 OF 1894 ACT WHERE THE DETAILS AVAILABLE, NO TDS TO BE MADE IN RESPECT OF TH IS INTEREST. ON THIS ISSUE, THE REVENUE IS IN APPEAL BEFORE US FOR THE A.YS 2014 - 15 & 2016 - 17 . ON THE OTHER HAND, THE ASSESSEE IS IN APPEAL BEFORE US WITH REGARD TO TREATING THE ASSESSEE IN DEFAULT FOR THE LAND BEING RURAL AGRICULTURAL LAND, THE ENTIRE C OMPENSATION AND INTEREST THEREON U/S. 28 OF LAND ACQUISITI O N ACT PAID TOWARDS THE ACQUISITION WHICH IS EXEMPT FROM INCOME TAX U/S. 10(37) OF INCOME TAX ACT. 5 ITA NO S . 642 TO 645/BANG/2020 & 1421 & 1422/BANG/2019 5. AT THE TIME OF HEARING, THE LEARNED AUTHORISED REPRESENTATIVE FILED PETITION DT.28.10.2020 F OR ADDITIONAL EVIDENCE SUBMITTING AS FOLLOWS : 6 ITA NO S . 642 TO 645/BANG/2020 & 1421 & 1422/BANG/2019 7 ITA NO S . 642 TO 645/BANG/2020 & 1421 & 1422/BANG/2019 5.1 THE LEARNED AUTHORISED REPRESENTATIVE PRAYED FOR ADMISSION OF ADDITIONAL EVIDENCES IN THE FORM OF COURT ORDER FROM PRINCIPLE (SR.DN) CIVIL JUDGE, SHIMOGA AND SENIOR CIVIL JUDGE, HARIHAR. WITH R EGARD TO BIFURCATION OF INTEREST COMPUTATION U/S. 28 OF THE LAND ACQUISITION ACT, 1894 , HE PRAYED THAT THE ISSUE MAY BE REMITTED TO THE FILE OF ASSESSING OFFICER FOR CONSIDERATION AFRESH . ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THE ADDITIONAL EVIDENC E MAY BE ADMITTED, HOWEVER, THE ISSUE MAY BE REMITTED TO ASSESSING OFFICER FOR FRESH CONSIDERATION. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THESE ADDITIONAL EVIDENCES WERE NOT MADE AVAILABLE AT THE TIME OF FRAMING T HE ORDER TO THE ASSESSING OFFICER BY THE ASSESSEE. T HESE COURT ORDERS ARE RELEVANT FOR DECIDING THE ISSUE. THE ASSESSEE HAS ALSO NOT PRODUCED THESE COURT ORDERS WHILE FRAMING OF PASSING OF ORDERS U/S. 201(1) AND 201(1A) OF THE ACT. T HESE ADDITIONAL EVI DENCES A RE ADMITTED FOR ADJUDICATION S INCE THE CIT (APPEALS) HAD NO OCCASION TO CONSIDER THESE ADDITIONAL EVIDENCES AND WE ARE INCLINED TO REMIT THE MATTER TO THE FILE OF CIT (APPEALS) FOR FRESH CONSIDERATION AND ADJUDICATION IN THE LIGHT OF COURT ORDERS A FTER AFFORDING AN OPPORTUNITY TO THE ASSESSEE AND CALLING REMAND REPORT FROM THE 8 ITA NO S . 642 TO 645/BANG/2020 & 1421 & 1422/BANG/2019 ASSESSING OFFICER. WITH THE ABOVE OBSERVATIONS, WE REMIT THE ISSUES IN DISPUTE TO THE FILE OF CIT (APPEALS) FOR FRESH ADJUDICATION. 7. IN THE RESULT, THE APPEAL S OF THE A SSESSEE AS WELL AS REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/ - SD/ - ( SMT. BEENA PILLAI ) ( CHANDRA POOJARI ) JUDICIAL MEMBER ACCOUNT ANT MEMBER DATED: 27 .01. 20 2 1 . *REDDY GP COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT (A) 4. PR. CIT 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE