Sh. Yashpal Singh, Gurdaspur V. The Income tax Officer, Gurdaspur

ITA 755/ASR/2013

• Counselvise Citation: 75520914 RSA 2013
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 26-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: J S BHASIN
• Keywords: Assessment record
• Section: 45(5); 37; 56; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.755(ASR)/2013 ASSESSMENT YEAR:2010-11 PAN :AEUPS6614J SH.YASHPAL SINGH VS. INCOME TAX OFFICER, S/O SH.BALDEV SINGH, GURDASPUR. NEAR POST OFFICE GALI, V & PO AWANKHA, DINANAGAR, DISTT. GURDASPUR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.J.S.BHASIN, ADV. RESPONDENT BY:SH.AMRIK CHAND, DR DATE OF HEARING: 04/03/2014 DATE OF PRONOUNCEMENT:18/03/2014 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), AMRITSAR, DATED 03.12.2013 FOR THE ASSESSMENT YE AR 2010-11.THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD. CIT(A), SHOWING SCANT RESPECT TO T HE ORDER OF HIGHEST COURT OF LAND, IN THE CASE OF GHANSHYAM (H UF) (2009) 315 ITR 1(SC), HAS COMMITTED A GRAVE LEGAL ERROR T O HOLD THAT INTEREST OF RS.17,78,877/- RECEIVED U/S 28 OF THE L AND ITA NO.755(ASR)/2013 2 ACQUISITION ACT, 1894, ON ENHANCED COMPENSATION, WA S NOT PART OF COMPENSATION BUT LIABLE TO TAX UNDER THE HEAD I NCOME FROM OTHER SOURCES. 2. THAT THE LD. CIT(A), WENT ALL THE WAY WRONG TO H OLD THAT INTEREST U/S 28 OF I.A.ACT, 1894 WAS FOR DELAY IN G RANTING THE COMPENSATION/ADDL. COMPENSATION, A VIEW APPARENTLY OPPOSED TO THE CLEAR MANDATE OF HONBLE APEX COURT IN THE C ASE OF GHANSHYAN (SUPRA), HOLDING THAT THE SAID INTEREST, UNLIKE INTEREST U/S 34 OF THE I.A.ACT,1894, WAS AN ACCRETION TO THE VALUE AND HENCE PART OF ENHANCED COMPENSATION. 3. THAT THE LD. CIT(A), ALSO FELL INTO GRAVE ERROR IN ENDORSING THE ITOS VIEW AND TO HOLD THAT HONBLE APEX COURT DECI SION SUPRA, WAS NOT APPLICABLE IN VIEW OF THE PROVISIONS OF SECTION 145A(B) READ WITH SECTION 56(2)(VIII) INTRODUCED BY FINANCE (NO.2) ACT, 2009, W.E.F. 01.04.2010. 4. THAT HAVING WRONGFULLY HELD THAT THE IMPUGNED IN TEREST U/S 28 OF I.A.ACT, 1894 WAS NOT PART OF ADDITIONAL COMPENS ATION, CONSEQUENTIAL DENIAL OF ITS EXEMPTION U/S 10(37) OF THE I.T.ACT, 1961, IS ANOTHER ACT OF LD. CIT(A), WHICH IS OPPOSE D TO THE NEAR FACTS AND THE SETTLED LEGAL POSITION. 5. THAT THE LD. CIT(A)S STAND IS CONTEMPTUOUS NOT ONLY FOR DEFYING THE DECISION OF HONBLE APEX COURT SUPRA, B UT ALSO IN IGNORING THE SUBSEQUENT DECISIONS OF HONBLE P & H HIGH COURT AND VARIOUS OTHER HIGH COURTS CITED BEFORE T HE LD. CIT(A), FULLY ACCEPTING AND FOLLOWING THE MANDATE O F HONBLE SUPREME COURT, SUPRA, ON IDENTICAL ISSUE. 6. THAT BY ANY RECKONING, THE IMPUGNED ORDER OF LD. CIT(A) BEING CONTRARY TO LAW AND THE FACTS OF THE CASE, DESERVES NOT TO BE SUSTAINED. 7. THAT HAVING BEEN PUT TO UNDUE LITIGATION, THE AS SESSEE PRAYS TO BE GRANTED APPROPRIATE COST IN THE MATTER. ITA NO.755(ASR)/2013 3 2. THE BRIEF FACTS OF THE CASE AS PER AOS ORDER AR E REPRODUCED FOR THE SAKE OF CONVENIENCE AS UNDER: 2. THE ASSESSEE IS WORKING A JUNIOR ASSTT. IN THE OFFI CE OF THE CIVIL SURGEON, GURDASPUR AND DECLARED GROSS SALARY OF RS. 2,71,289/- IN HIS ORIGINAL RETURN. HOWEVER, THE ASSESSEE IN HIS REVIS ED RETURN FILED ON 16.11.2010 HAS DECLARED RS.1,741/- ON ACCOUNT OF I NCOME FROM OTHER SOURCES, AGRICULTURAL INCOME OF RS.1,58,455/- FOR REBATE PURPOSES IN ADDITION TO INCOME DECLARED IN HIS ORIGINAL RETURN. THE ASSESSEE HAS ALSO SHOWN TOTAL RECEIPTS OF RS.28,90,019/- AS AN E XEMPT INCOME U/S 10(37) OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF A GRICULTURAL LAND COMPULSORY ACQUIRED.THE ASSESSEE HAS ALSO FILED A COPY OF FORM NO.16 DATED 16.02.2010 ISSUED BY THE COLLECTOR LAND ACQUISITION, COLONIZATION DEPARTMENT, CHANDIGARH, A PERUSAL OF W HICH INDICATES THAT THE ASSESSEE HAS BEEN AWARDED ENHANCED COMPENS ATION AMOUNTING TO RS.11,11,253/- AND INTEREST ON ENHANCE D COMPENSATION AMOUNTING TO RS.17,78,766/- ON ACCOUNT OF AGRICULTU RAL LAND MEASURING 36 KANALS 10 MARLAS, SITUATED AT VILL. AW ANKHA, DINANAGAR, DISTT. GURDASPUR ACQUIRED BY THE AFORESA ID DEPARTMENT AND TAX OF RS.1,77,877/- HAS ACCORDINGLY BEE DEDUC TED AT SOURCE ON THE AFORESAID INTEREST. THE ASSESSEE HAS DEPOSITED THE SAID PROCEEDS OF RS.27,12,147/- I.E. TOTAL PAYMENT OF ENHANCED COMPE NSATION OF RS.11,11,253/- AND INTEREST THEREON AT RS.28,90,019 /- LESS TDS OF RS.1,77,877/- IN HIS SAVING BANK A/C NO.9464010046 9178 DATED 19.03.2010, MAINTAINED WITH P.N.B. G.T.ROAD, KANWAN , P..PARMANAND. SINCE THE ASSESSEE HAS FILED A CERTIF ICATE DATED 23.08.2012 FROM THE SUB DIVISIONAL MAGISTRATE, GURD ASPUR, CERTIFYING THEREIN THAT LAND ACQUIRED BY THE AFORESAID AUTHORI TIES WAS SITUATED BEYOND THE TWO KILOMETERS FROM THE LOCAL LIMIT OF M UNICIPAL COMMITTEE, DINANAGAR AND WAS BEING USED AS AN AGRIC ULTURAL LAND, CAPITAL GAINS ON THE SAID IS EXEMPT U/S 10(37) OF T HE ACT, BEING COMPULSORY ACQUISITION OF AGRICULTURE LAND. IT IS WORTH WHILE TO MENTION HERE THAT BY VIRTUE OF AMENDMENT IN SECTION 145A(B) OF THE ACT VIDE FINANCE (NO.2) ACT OF 2009, IT HAS BEEN PROVIDED THAT INTEREST RECEIVED BY THE ASSESSE E ON COMPENSATION OR ON ENHANCED COMPENSATION AS THE CASE MAY BE, SHA LL BE DEEMED TO BE THE INCOME OF THE YEAR IN WHICH IT IS RECEIVED U NDER THE HEAD INCOME FROM OTHER SOURCES UNDER CLAUSE (VIII) OF SUB SECTION 2 OF ITA NO.755(ASR)/2013 4 SECTION 56 OF THE I.T.ACT, 1961. AS THE ASSESSEES COUNSEL IN HIS REPLY DATED 3.10.2012 HAS WRONGLY INTERPRETED THE JUDGMEN T OF THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. GHAN SHYAM (HUF) (2009) 182 TAXMAN 368 (SC), IN WHICH IT HAS BEEN S TATED THAT INTEREST ON ENHANCED COMPENSATION AWARDED U/S 28 OF THE LAND ACQUISITION ACT, 1894, RECEIVED BY THE ASSESSEE FORMS PART OF COMPENSATION U/S 45(5) OF THE ACT AND ALSO CLAIMED TO BE EXEMPT UNDE R SUB SECTION 37 OF SECTION 10 OF THE ACT. SINCE THE INTEREST AWARDED B Y THE ACQUISITION AUTHORITIES TO THE ASSESSEE ON ACCOUNT OF COMPULSOR Y ACQUISITION OF AGRICULTURAL LAND AT RS.17,78,766/- IS CHARGEABLE TO TAX BY THE AMENDMENT SECTION 145A(B) OF THE ACT UNDER THE HEAD INCOME FROM OTHER SOURCES W.E.F. 01.04.2010 (A.Y. 2010-11), TH E ASSESSEE HAS CATEGORICALLY BEEN ASKED TO EXPLAIN VIDE THIS OFFIC E SHOW CAUSE NOTICE DATED 16.10.2012 AS TO WHY AN ADDITION OF RS.8,89, 383/- I.E. TOTAL INTEREST AWARDED AT RS.17,78,766/- LESS DEDUCTION O F RS.8,89,383/- ALLOWABLE UNDER CLAUSE (IV) OF SECTION 57 OF THE AC T SHOULD NOT BE MADE. 3. THE ASSESSEE SUBMITTED THE REPLY TO THE SHOW CAUSE NOTICE AND ULTIMATELY, THE AO MADE AN ADDITION OF RS.8,89,383/ - AND THE RELEVANT FINDINGS ARE REPRODUCED FOR THE SAKE OF CONVENIENCE , AS UNDER: I HAVE GONE THROUGH THE ASSESSMENT RECORDS AS WELL AS CONTENTION OF THE ASSESSEES COUNSEL PUTFORTH BY HIM IN HIS REPLY DATED 02.11.2012 AND FOUND THAT INTEREST OF RS.17,78,766/- WAS AWARD ED TO THE ASSESSEE ON THE ENHANCED COMPENSATION BY THE ADDL. DISTT. JU DGE VIDE HIS ORDER DATED 14.03.2008 U/S 28 OF THELAND ACQUISITIO N ACT. BY VIRTUE OF AMENDMENT IN SECTION 145A(B) OF THE ACT VIDE FIN ANCE (NO.2) OF 2009 WHICH IS EFFECTIVE FROM 01.04.2009 (A.Y. 2010- 11), INTEREST RECEIVED BY AN ASSESSEE ON COMPENSATION OR ON ENHAN CED COMPENSATION AS THE CASE MAY BE, FORMS PART OF THE ASSESSEES INCOME OF THE YEAR IN WHICH SAME IS RECEIVED UNDER THE HEA D INCOME FROM OTHER SOURCES UNDER CLAUSE (VIII) OF SUB SECTION ( 2) OF SECTION 56 OF THE ACT. THE CONTENTION TAKEN BY THE ASSESSEES COU NSEL THAT AMENDMENT MADE BY THE FINANCE (NO.2) ACT, 2009 IS NOT CLEAR WITH REGARD TO CHARGEABILITY OF INTEREST AWARDED U/S 28 OF THE LAND ACQUISITION ACT DOES NOT CARRY ANY WEIGHT AS THE SA ID AMENDMENT HAS CLEARLY PROVIDED FOR TAXABILITY OF INTEREST AWARDE D EITHER U/S 34 OF THE ITA NO.755(ASR)/2013 5 LAND ACQUISITION ACT, 1894 ON ACCOUNT OF INTEREST O N DELAYED PAYMENT OR UNDER SECTION 28 OF THE SAID ACT ON ACCOUNT OF I NTEREST ON ENHANCED COMPENSATION. AFTER TAKING INTO CONSIDERATION THE F ACTS OF THE CASE REFERRED SUPRA, INTEREST AWARDED TO THE ASSESSEE AM OUNTING TO RS.17,78,766/- BY THE COLLECTOR LAND ACQUISITION CO LONIZATION DEPARTMENT, CHANDIGARH IS CHARGEABLE TO TAX BY VIRT UE OF AMENDMENT MADE BY THE FINANCE (NO.2) ACT, 2009 WHICH IS APPLI CABLE W.E.F. FROM 01.04.2010 (A.T.2010-11) AND AS DISCUSSED ABOVE, TH E RATIO OF DECISION OF THE APEX COURT IN THE CASE TITLED AS CI T, FARIDABAD VS. GHANSHYAM (HUF) (2009) 182 TAXMAN 368 (SC) DOES NOT APPLY IN THE ASSESSEES CASE AS THE ASSESSMENT YEAR INVOLVED IN THE SAID CASE WAS 1999-2000 I.E.. PRIOR TO THE AMENDMENT OF PROV ISION OF SECTION 145(B) AS WELL AS AMENDMENT OF CLAUSE (VIII) OF SUB SECTION (2) OF SECTION 56 OF THE ACT BY THE FINANCE (NO.2) ACT,20 09. HAVING REGARD TO THE ABOVE REFERRED FACTS, AN ADDITION OF RS.8,89 ,383/- IS HEREBY MADE UNDER THE HEAD INCOME FROM THE OTHER SOURCES IN THE ASSESSEES TOTAL INCOME ON ACCOUNT OF YOUR INTEREST RECEIVED BY HIM ON THE ENHANCED COMPENSATION ON THE ACQUISITION OF YOU R LAND SITUATED AT VILL. AWANKHA DURING THE PREVIOUS YEAR RELEVANT TO A.Y. UNDER CONSIDERATION AFTER ALLOWING DEDUCTION THERE FROM @ 50% AS PROVIDED IN CLAUSE IV OF SECTION 57 OF THE ACT. 4. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSES SING OFFICER. 5. THE LD. COUNSEL FOR THE ASSESSEE READ THE DECISI ON OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS.GHANSHYAM (HUF ) (2009) 182 TAXMAN 368 (SC) AND ARGUED THAT THE AMOUNT RECEIVED BY THE ASSESSEE IS UNDER SECTION 28 OF THE LAND ACQUISITION ACT, 1894 AND NOT U/S 34 OF THE SAID ACT. THE RELEVANT PARA OF THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF CIT VS. GHANSHYAM (HUF) (2009) 315 ITR 1 I S REPRODUCED AS UNDER: 24. TO SUM UP , INTEREST IS DIFFERENT FROM COMPENS ATION. HOWEVER, INTEREST PAID ON THE EXCESS AMOUNT U/S 28 OF THE 18 94 ACT DEPENDS ITA NO.755(ASR)/2013 6 UPON A CLAIM BY THE PERSON WHOSE LAND IS ACQUIRED W HEREAS INTEREST U/S 34 IS FOR DELAY IN MAKING PAYMENT. THIS VITAL D IFFERENCE NEEDS TO BE KEPT IN MIND IN DECIDING THIS MATTER. INTEREST U/S 28 IS PART OF THE AMOUNT OF COMPENSATION WHEREAS INTEREST U/S 34 IS O NLY FOR DELAY IN MAKING PAYMENT AFTER COMPENSATION AMOUNT IS DETERMI NED. INTEREST U/S 28 IS PART OF ENHANCED VALUED OF THE LAND WHICH IS NOT THE CASE IN THE MATTER OF PAYMENT OF INTEREST U/S 34. IT IS TO ANSWER THE ABOVE QUESTIONS THAT WE HAVE AN ALYSED THE PROVISIONS OF SECTION 23, 23(IA), 23(2), 28 AND 34 OF THE 1894 ACT. AS DISCUSSED HEREINABOVE, SECTION 23(IA) PROVIDES FOR ADDITIONAL AMOUNT. IT TAKES CARE OF INCREASE IN THE VALUE @ 12% PER A NNUM. SIMILARLY, U/S 23(2) OF THE 1894 ACT, THERE IS A PROVISION FO R SOLATIUM WHICH ALSO REPRESENTS PART OF ENHANCED COMPENSATION. SIMILARLY , SECTION 28 EMPOWERS THE COURT IN ITS DISCRETION TO AWARD INTE REST ON THE EXCESS AMOUNT OF COMPENSATION OVER AND ABOVE WHAT IS AWARD ED BY THE COLLECTOR. IT INCLUDES ADDITIONAL AMOUNT U/S 23(IA) AND SOLATIUM U/S 23(2) OF THE SAID ACT. SECTION 28 OF THE 1894 ACT A PPLIES ONLY IN RESPECT OF THE EXCESS AMOUNT DETERMINED BY THE COUR T AFTER REFERENCE U/S 18 OF THE 1894 ACT. IT DEPENDS UPON THE CLAIM, UNLIKE INTEREST U/S 34 WHICH DEPENDS UPON UNDUE DELAY IN MAKING THE AWA RD. IT IS TRUE THAT INTEREST IS NOT COMPENSATION. IT IS EQUALLY TRUE THAT SEC. 45(5) OF THE ACT REFERS TO COMPENSATION. BUT AS DISCUSSED HEREINABOVE, WE HAVE TO GO BY THE PROVISIONS OF 1894 ACT WHICH AWAR DS INTEREST BOTH AS AN ACCRETION IN THE VALUE OF THE LANDS ACQ UIRED AND INTEREST FOR UNDUE DELAY. INTEREST U/S 28 UNLIKE INTEREST U /S 34 IS AN ACCRETION TO THE VALUE, HENCE, IT IS A PART OF ENHANCED COMPE NSATION OR CONSIDERATION WHICH IS NOT THE CASE WITH THE INTERE ST U/S 34 OF THE 1894 ACT. SO ALSO ADDITIONAL AMOUNT U/S 23(IA) AND SOLAT IUM U/S 23(2) OF THE 1961 (SIC-1894) ACT FORMS PART OF ENHANCED COMP ENSATION U/S 45(5)(B) OF THE 1961 ACT. IN FACT, WHAT WE HAVE STA TED HEREINABOVE IS REINFORCED BY THE NEWLY INSERTED CLAUSE (C) OF SEC TION 45(5) BY THE FINANCE ACT, 2003 W.E.F. 1.4.2004. THE NEWLY INSERT ED CLAUSE ENVISAGES A SITUATION WHEREIN THE ASSESSMENT FOR A NY YEAR:- -THE CAPITAL GAIN ARISING FROM THE TRANSFER OF A CA PITAL ASSET IS COMPUTED BY TAKING THE -COMPENSATION OR CONSIDERATION REFERRED TO IN CLAUS E (A) OF SECTION 45(5) OR AS THE CASE MAY BE ITA NO.755(ASR)/2013 7 -ENHANCED COMPENSATION OR COMPENSATION REFERRED TO IN CLAUSE (B) OF SEC.45(5). AND SUBSEQUENTLY SUCH COMPENSATION OR CONSIDERATION IS REDUCED BY ANY COURT, TRIBUNAL OR OTHER AUTHORITY. 6. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE ISSUE ON THE DECISIONS OF VARIOUS COURTS OF LAW: I) CIT VS. SMT. PARKASH KAUR & OTHERS (2011) 330 IT R 332 (P&H). II) JAGMAL SINGH VS. STATE OF HARYANA CIVIL REVISIO N NO. 7740 OF 2012 DATE OF DECISION 18 JULY, 2013 III) CIT VS. KESHWA DEVI (2012) 19 TAXMAN 220 HP IV) CIT VS. JOGINDER SINGH APPEAL NO.-120-2008 ORDER DA TED 30 TH OCT.2012 HP. 7. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF BOTH THE AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE ENHANCED C OMPENSATION IS AWARDED BY THE ADDITIONAL DISTRICT JUDGED VIDE HIS ORDER DATED 14.03.2008 UNDER SECTION 28 OF THE LAND ACQUISITION ACT, AS HAS BEEN AFFIRME D BY THE AO IN HIS ORDER REPRODUCED HEREINABOVE. IT IS ALSO NOT UNDER DISPUT E THAT THE HONBLE SUPREME COURT, IN THE CASE OF CIT VS. GHANSHYAM (HU F) (2009) 315 ITR 1 HAS LAID DOWN THAT THE AMOUNT RECEIVED UNDER SECTIO N 28 IS PART OF THE AMOUNT OF COMPENSATION WHEREAS INTEREST U/S 34 IS O NLY FOR DELAY IN MAKING PAYMENT AFTER COMPENSATION. IN THE PRESENT CASE, T HE AMOUNT IS RECEIVED U/S 28 OF THE LAND ACQUISITION ACT, 1894 AND THEREFORE, ACCORDING TO US THIS IS A ITA NO.755(ASR)/2013 8 COMPENSATION AND CANNOT TAKE PART OF THE COMPENSATI ON U/S 45(5) AND IS EXEMPT U/S 10(37) OF THE INCOME TAX ACT, 1961. ACC ORDINGLY, THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE A.O. AND IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F CIT VS. GHANSHYAM (HUF) (2009) 315 ITR 1 AND OTHER DECISIONS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE, WE DIRECT THE A.O. TO DELETE THE ADDITION MADE. THUS, ALL THE GROUNDS OF THE ASSESSEE ARE ALLOWED. 9 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I N ITA NO.755(ASR)/2013 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18TH MARCH, 2014. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 18TH MARCH, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. YASHPAL SINGH, VPO AWANKHA, DISTT. GURDASPUR. 2. THE ITO GURDASPUR. 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR