ITO, Chandigarh V. Sh. Avinash Singh Grewal, Chandigarh

ITA 946/CHANDI/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6122 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-05-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 26-09-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMARVEER SINGH
• Assessee Lawyers: J B BHASIN
• Keywords: Question of law
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 460/CHD/2008 ASSESSMENT YEARS : 2005-06 I.T.O. WARD 4(1), CHANDIGARH V AVINASH SINGH GREWA L SCO 59, SECTOR 26, CHANDIGARH ACFPG 8979 B ITA NO. 642/CHD/2009 ASSESSMENT YEARS : 2006-07 ITA NO. 946/CHD/2011 ASSESSMENT YEARS : 2007-08 ITA NO. 947/CHD/2011 ASSESSMENT YEARS : 2008-09 I.T.O. WARD 5(1), CHANDIGARH V AVINASH SINGH GREWA L SCO 59, SECTOR 26, CHANDIGARH ACFPG 8979 B (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI AMARVEER SINGH RESPONDENT BY: SHRI J.B. BHASIN DATE OF HEARING 28.5.2014 DATE OF PRONOUNCEMENT 10.06.2014 O R D E R PER BENCH THESE APPEALS ARE DIRECTED AGAINST THE ORDER DATED 25.3.2008, 16.3.2009, 6.7.2011 & 6.7.2011 OF THE LD CIT(A), CHANDIGARH. SOME ISSUES ARE COMMON AND COMMON GROU NDS HAVE BEEN RAISED IN THESE APPEALS, SO THESE WERE HE ARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLI DATED ORDER. WE ARE REPRODUCING THE GROUNDS TAKEN IN ASSESSMENT YEAR 2005-06. 1 WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS CORRECT IN DELETING THE ADDITION OF RS. 7596009/- IN APPEAL NO. 331/P/07-08 DATED 25.3.2008 WHICH WAS MA DE BYTHE 2 ASSESSING OFFICER ON ACCOUNT OF INTEREST RECEIVED ON BANK DEPOSITS. 2 IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 2 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SHR I AVINASH SINGH GREWAL ENTERED INTO A PARTNERSHIP WITH ONE SA TBIR SINGH ON 10.11.1969 FOR A PERIOD OF 20 YEARS WITH RESPECT TO LAND MEASURING 302 ACRES 3 KANALS AND 3 MARLAS SITUATED AT VILLAGE BIR AISHWAN (TEH & DISTT SANGRUR) WHICH BELONGED TO THE GRANDFATHER OF SHRI SATBIR SINGH WHO HAD SETTLED TH E SAID LAND UPON HIS SON I.E. FATHER OF SHRI SATBIR SINGH FOR T WO GENERATIONS. AFTER EXPIRY OF SAID PERIOD OF 20 YEAR S, DISPUTE AROSE BETWEEN THE SAID PARTIES IN RESPECT OF USUFRU CT AND POSSESSION OF THE SAID LAND. THE PARTIES EVENTUALLY COMPROMISED BY A WRITTEN SETTLEMENT ON 24.5.1993 DE CREED ON 7.6.1993 BY WHICH SHRI AVINASH SINGH GREWAL WAS ENT ITLED TO 35% OF THE ABOVE SAID TOTAL AREA OF LAND. WHEN CERTAIN PORTION OF LANDS WHICH FELL IN THE 35 % SHARE OF AVINASH SINGH GREWAL WAS SOUGHT TO BE ACQUIRED B Y THE STATE FOR SETTING UP PETROLEUM PRODUCTS STORAGE INS TALLATIONS, BOTH PARTIES FILED LAND REFERENCES AGAINST THE RESP ECTIVE AWARDS, CLAIMING PAYMENT OF COMPENSATION AMOUNT AND ALSO FOR ENHANCED COMPENSATION AMOUNT AS UNDER: AWARD NO. & DATE COMPENSATIONAMT (RS. LAND AREA LAND REFERENCE NO. & DATE AVINASH SINGH SATBIR SINGH GREWAL 4/LAC 10.3.1998 2 CRORES 35 ACRES, 2 KANALS AND 16 MARLAS 020 DATED 5.8.1998 019 DATED 5.8.1998 5/LAC 24.5.2000 18357453/- 24 ACRES 2 KANALS AND 13 MARLAS 006 DATED 24.7.2000 007 DATED 24.7.2000 2.2 TWO AWARDS DATED 10.3.1998 AND 24.5.2000 WERE P ASSED BY LAC, SANGRUR BY WHICH THE COMPENSATION AMOUNT WA S ORDERED TO BE KEPT IN GOVT TREASURY TILL THE SETTLE MENT OF DISPUTE REGARDING ENTITLEMENT OF COMPENSATION AMOUN T. 3 CONSEQUENTLY THE ABOVE AMOUNTS ARE PRESENTLY LYING DEPOSITED AS FIXED DEPOSITS IN THE NAME OF THE COURT IN ORIEN TAL BANK OF COMMERCE, SANGRUR BRANCH, SANGRUR. 3 THE ASSESSEE RECEIVED ON THESE FDRS INTEREST AMOU NTING TO RS. 11749161/-. THE ASSESSEE WAS ASKED WHY THIS INTEREST SHOULD NOT BE SUBJECTED TO TAX. IN RESPONSE A DETA ILED REPLY WAS FURNISHED WHICH HAS BEEN INCORPORATED BY THE AS SESSING OFFICER AT PARA 2.3 OF HIS ORDER. CERTAIN CASE LAW S WERE ALSO RELIED. THE ASSESSING OFFICER DID NOT FOUND FORCE IN THE SAME AND OBSERVED THAT DISPUTE ON ACCOUNT OF INTEREST O N FDRS HAS ALREADY BEEN CONSIDERED BY HON'BLE HIGH COURT OF PU NJAB & HARYANA AND IT HAS BEEN HELD THAT THE ASSESSEE WAS ENTITLED TO RECEIVE INTEREST. AN SLP WAS FILED AGAINST THIS OR DER WHICH HAS BEEN DISMISSED BY THE HON'BLE SUPREME COURT. IN VIE W OF THIS INTEREST HAS BEEN CREDITED TO THE ACCOUNT OF THE AS SESSEE, THEREFORE ACCORDING TO THE ASSESSING OFFICER INTERE ST BELONG TO THE ASSESSEE. IN RESPECT OF QUANTUM OF INTEREST TO BE TAXED IN THIS YEAR THE COMPUTATION HAS BEEN DONE VIDE PARA 2 .4 AND 2.5 WHICH ARE AS UNDER: 2.4 TO ASCERTAIN THE YEAR IN WHICH INTEREST AMOUNT IS TO BE TAXED, INFORMATION U/S 133(6) WAS CALLED FOR FROM O RIENTAL BANK OF COMMERCE, SANGRUR. THE SENIOR MANAGER OF THE BANK THROUGH HIS LETTER DATED 20.11.2007 HAS GIVEN THE YEAR WISE BR EAK UP OF INTEREST PAID/CREDITED TO THE ASSESSEE AS UNDER: FY INTEREST PAID / CREDITED TDS 2003-04 7301464/- 803162/- 2004-05 7586009/- 816015/- 2005-06 2088282/- 218330/- 2006-07 2828699/- 313658/- 2.5 KEEPING IN VIEW THE FACTS NARRATED ABOVE, THE A MOUNT OF INTEREST OF RS. 7586009/- PAID / CREDITED TO THE AS SESSEE IS HELD TO BE INCOME OF THE ASSESSEE FROM OTHER SOURCES IN THE YEAR UNDER CONSIDERATION AND TOTAL INCOME OF THE ASSESSEE IS C OMPUTED AFTER INCLUDING THE SAME. SINCE THE ASSESSEE HAS FURNISH ED INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF RS. 7586009/ -, SO PENALTY PROCEEDINGS U/S 271(1)(C) ARE BEING INITIATED. 4 4 ON APPEAL DETAILED SUBMISSIONS WERE MADE WHICH HA VE BEEN INCORPORATED BY THE LD. CIT(A) AT PARA 6 TO 12 OF HIS ORDER. IN THESE SUBMISSIONS IT HAS BEEN MAINLY CONT ENDED THAT DISPUTE REGARDING COMPENSATION ON LANDS IS STILL OU TSTANDING. 5 THE LD. CIT(A) FOLLOWING THE DECISION OF HON'BLE HIGH COURT OF PUNJAB & HARYANA IN CASE OF CIT V KARANBI R SINGH ITR NO. 26 OF 1997 (214 CTR 585) HELD THAT INTEREST WAS NOT LIABLE TO BE TAXED IN THE HANDS OF THE ASSESSEE BEC AUSE DISPUTE HAS BEEN SETTLED ONLY WITH RESPECT TO RIGHT OF INTEREST AND NOT ON COMPENSATION ITSELF. THE LD. CIT(A) HAS ALSO REFERRED TO THE DECISION OF CIT V HINDUSTAN HOUSING AND LAND DEVELOPMENT TRUST LTD, 161 ITR 524 (S.C). 6 AT THIS STAGE IT IS PERTINENT TO NOTE THAT THE TR IBUNAL HAS CONFIRMED THE ORDER OF THE LD. CIT(A) AND DECIDED T HE ISSUE AGAINST THE REVENUE. THE REVENUE HAD TAKEN THE MAT TER TO THE HON'BLE HIGH COURT WHO HAS REVERSED THE ORDER OF TH E TRIBUNAL AND THE CASE HAS BEEN REMANDED BACK TO THE TRIBUNAL FOR FRESH ADJUDICATION AFTER PROVIDING AN OPPORTUNITY TO THE ASSESSEE THAT IS WHY THE APPEAL OF THE REVENUE FOR ASSESSMENT YEA R 2005-06 WAS FIXED FOR HEARING. THE OTHER THREE APPEALS ALS O INVOLVE IDENTICAL ISSUES, THEREFORE SAME WERE ALSO FIXED AN D ALL THESE APPEALS WERE HEARD TOGETHER. 7 BEFORE US, THE LD. D.R FOR THE REVENUE STRONGLY C ONTENDED THAT THE DECISION OF CIT V KARANBIR SINGH (SUPRA) W AS ITSELF REVERSED BY THE HON'BLE SUPREME COURT IN VIEW OF TH E AMENDMENT IN SEC 45 AND IN VIEW OF THE DECISION IN CASE OF CIT V GHANSHYAM (HUF) 315 ITR 1 (S.C). HE THEN REFERRE D TO THE DECISION OF HON'BLE HIGH COURT OF PUNJAB & HARYANA IN CASE OF ASSESSEE, ITA NO. 460/CHD/2008 WHERE THIS POSITION HAS BEEN 5 NOTED BY THE HON'BLE HIGH COURT AND THE APPEAL OF T HE REVENUE HAS BEEN ALLOWED AND CASE HAS BEEN REMANDED TO THE TRIBUNAL. 8 HE FURTHER SUBMITTED THAT SO FAR AS THE ASSESSEE IS CONCERNED, HE IS NOT A PARTY TO THE DISPUTE IN RESP ECT OF COMPENSATION AND THEREFORE THE ASSESSEE MAY HAVE UL TIMATELY NOTING TO DO WITH THE COMPENSATION. HOWEVER, BECAU SE OF THE SETTLEMENT AGREEMENT ENTERED WITH THE ASSESSEE AND THE FAMILY OF SHRI SATBIR SINGH THE ASSESSEE GOT 35% SHARE OF THE LAND, THE ASSESSEE HAS BEEN HELD TO BE ENTITLED TO RECEIV E THE INTEREST ON FDRS BY HON'BLE HIGH COURT OF PUNJAB & HARYANA AND THE SLP FILED ON BEHALF OF SATBIR SINGH HAS BEE N DISMISSED IN THIS REGARD BY THE HON'BLE SUPREME COURT. THEREF ORE THE RIGHT OF THE ASSESSEE TO RECEIVE INTEREST HAS BECOM E FINAL AND ACCORDINGLY THE INTEREST BECOMES TAXABLE. IN THIS BACKGROUND THE LD. CIT(A) HAS GIVEN WRONG REASONING FOR ALLOWI NG RELIEF THAT DISPUTE REGARDING COMPENSATION WAS STILL PENDI NG, THEREFORE DECISION OF HON'BLE SUPREME COURT IN CAS E OF CIT V HINDUSTAN HOUSING AND LAND DEVELOPMENT TRUST LTD (S UPRA) IS NOT APPLICABLE. 9 ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESS EE WHILE STRONGLY SUPPORTING THE ORDER OF THE LD. CIT (A) SUBMITTED THAT INTEREST HAS BEEN RECEIVED BY THE ASSESSEE AFT ER FURNISHING NECESSARY GUARANTEES AND THEREFORE DECIS ION OF HON'BLE HIGH COURT OF PUNJAB & HARYANA REGARDING R IGHT OF THE ASSESSEE TO RECEIVE INTEREST, DOES NOT SETTLE THE D ISPUTE PERMANENTLY.HE CONTENDED THAT DISPUTE REGARDING COM PENSATION IS STILL PENDING AND THEREFORE DECISION OF THE HON' BLE SUPREME COURT IN CASE OF CIT V HINDUSTAN HOUSING AND LAND DEVELOPMENT TRUST LTD (SUPRA)HAS BEEN RIGHTLY APPLI ED BY THE LD. CIT(A). UNLESS AND UNTIL THE DISPUTE REGARDING AWA RD OF 6 COMPENSATION IS SETTLED IT CANNOT BE SAID THAT THE ASSESSEE HAS VAST RIGHT TO RECEIVE THE INTEREST. 10 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. AS NOTED EARLIER THE TRIBUNAL IN EARLIER ROUND DECIDED THIS ISSUE AGAINST THE REVENUE AGAINST WHICH THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE HON'BLE HIGH COURT OF PUNJAB & HARYANA WHICH H AS BEEN ADJUDICATED BY HON'BLE HIGH COURT IN ITA NO. 162 O F 2009 WHICH HAS BEEN DISPOSED OFF BY HON'BLE HIGH COURT VIDE O RDER DATED 9.9.2013. AFTER NOTING FACTS VIDE PARA 2 OF THIS O RDER THE HON'BLE HIGH COURT HAS DECIDED THE ISSUE VIDE PARA 3 TO 6 WHICH ARE AS UNDER: 3 LD. COUNSEL FOR THE APPELLANT SUBMITTED THAT THE TRIBUNAL WHILE DISMISSING THE APPEAL OF THE REVENUE HAD RELIED UPO N THE DECISION IN KARANBIR SINGHS CASE (SUPRA) AGAINST WHICH SLP WAS FILED BEFORE THE HON'BLE SUPREME COURT. THE HON'BLE APEX COURT REMA NDED THE MATTER TO THIS COURT FOR DECIDING THE APPEAL AFRESH IN VIEW O F THE JUDGMENT IN CIT V GHANSHYAM (SUPRA). LD. COUNSEL RELIED UPON SUBSEQU ENT DECISIONS OF THIS COURT IN ITA NO. 283 OF 2006, CIT, FARIDABAD V KARANBIR SINGH L/H OF LATE SHRI KHUSHI RAM DECIDED ON 24.8.2010, CIT V SMT. BURFI, ITA NO. 356 OF 2007 DECIDED ON 1.9.2010 AND CIT V BIR SINGH (HUF) ITA NO. 209 OF 2004, DECIDED ON 27.10.2010 TO SUBMIT THAT THE M ATTER MAY BE DECIDED AFRESH KEEPING IN VIEW THE LATEST POSITION OF LAWS. 4 WE HAVE HEARD LD. COUNSEL FOR THE APPELLANT-REVEN UE. NO ONE HAS APPEARED ON BEHALF OF THE RESPONDENT-ASSESSEE. 5 THIS COURT IN KARANBIR SINGHS CASE (SUPRA) ALLOW ED THE APPEAL WHILE ANSWERING THE SUBSTANTIAL QUESTION OF LAW IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE, IN VIEW OF THE DECISION O F THE HON'BLE APEX COURT IN GHANSHAYAMS CASE (SUPRPA). SIMILAR VIEW HAS BEEN EXPRESSED IN SMT. BURFI AND BIR SINGHS CASES (SUPRA). 6 IN VIEW OF THE ABOVE, THE APPEAL IS ALLOWED. THE IMPUGNED ORDER DATED 31.10.2008, ANNEXURE P.3 PASSED BY THE TRIBUN AL IS SET ASIDE AND THE CASE IS REMANDED TO THE TRIBUNAL FOR DECIDING T HE ISSUE AFRESH AFTER AFFORDING AN OPPORTUNITY OF HEARING TO THE PARTIES IN ACCORDANCE WITH LAW. THE ABOVE ORDER ITSELF SHOWS THAT THE DECISION OF K ARANBIR SINGH (SUPRA) RENDERED BY THE HON'BLE HIGH COURT EARLIER WAS REVERSED LATER ON BECAUSE HON'BLE SUPREME COURT HAD REMANDE D THIS ISSUE TO THE HON'BLE HIGH COURT IN VIEW OF THE DECISION OF CIT V GHANSHYAM (HUF) (SUPRA). SIMILAR ISSUE WAS DECIDED IN FAVOUR OF REVENUE IN CASE OF CIT V SMT. PARKASH KAUR AND OTHE RS, 330 ITR 332 AND CIT V SMT. BURFI, 331 ITR 1. IN BOTH THESE CASES IT HAS BEEN HELD THAT INTEREST PORTION IS TAXABLE ON RECEI PT BASIS. 7 11 ON THE BASIS OF ABOVE BACKGROUND, HON'BLE HIGH COURT OF PUNJAB & HARYANA ALLOWED REVENUES APPEAL EVEN IN CASE OF ASSESSEE FOR ASSESSMENT YEAR 2005-06 WHICH BECOMES ABSOLUTELY CLEAR FROM PARA 5 AND AT THE COST OF REPETITION WE AGAIN REPRODUCE PARA 5 WHICH ARE AS UNDER: 6 IN VIEW OF THE ABOVE, THE APPEAL IS ALLOWED. THE IMPUGNED ORDER DATED 31.10.2008, ANNEXURE P.3 PASSED BY THE TRIBUN AL IS SET ASIDE AND THE CASE IS REMANDED TO THE TRIBUNAL FOR DECIDING T HE ISSUE AFRESH AFTER AFFORDING AN OPPORTUNITY OF HEARING TO THE PARTIES IN ACCORDANCE WITH LAW. 12 DESPITE OF ABOVE OBSERVATION THE COURT HAS REMAN DED THE MATTER BACK TO THE TRIBUNAL FOR AFFORDING AFRESH OP PORTUNITY WHICH WAS GRANTED AND THE CASE HAS BEEN HEARD AGAIN. FRO M RELEVANT MATERIAL ON RECORD IT BECOMES CLEAR THAT THE ASSESS EE WAS HELD TO BE ENTITLED TO INTEREST AND THAT THE ORDER HAS BEEN CONFIRMED BY HON'BLE HIGH COURT OF PUNJAB & HARYANA AND EVEN SL P FILED BY OTHER PARTY AGAINST THIS ORDER, WAS DISMISSED BY TH E HON'BLE SUPREME COURT AND THEREFORE IT BECOMES ABSOLUTELY CLEAR THAT THE ASSESSEE IS ENTITLED TO RECEIVE INTEREST ON FDRS. THE SAME ARE TO BE TAXED ON THE BASIS OF RECEIPT. THE LD. CIT(A) HAS MISDIRECTED HIMSELF IN ALLOWING RELIEF TO THE ASSESSEE. THIS H AS BEEN DONE PERHAPS BECAUSE THE BENEFIT OF THE DECISION OF HON' BLE HIGH COURT OF PUNJAB & HARYANA IN CASE OF ASSESSEE ITSELF IN ITA NO. 162 OF 2009 WAS NOT AVAILABLE TO THE LD. CIT(A). THEREFORE WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO THE A SSESSING OFFICER BY HOLDING THAT INTEREST HAS TO BE TAXED ON THE BAS IS OF RECEIPT OF THE SAME. 13 SINCE THE ISSUES INVOLVED IN ITAS NO. 642, 946 A ND 947 ARE IDENTICAL TO THE SAME TO THE ISSUES RAISED IN ITA N O. 460/CHD/2008 AND THEREFORE IN ALL THESE YEARS WE DECIDE THE ISSU E IN FAVOUR OF THE REVENUE. 14 IN THE RESULT, ALL THE APPEALS OF REVENUE ARE A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.06.2014 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10.06.2014 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR