ITO-WARD-3, PANCHKULA, PANCHKULA V. SH. SAWARN SINGH, PINJORE

MA 15/CHANDI/2022

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The case revolves around a dispute concerning the taxation of interest on enhanced compensation received by the assessee, Sawarn Singh, during the assessment year 2015-16. Initially, the Assessing Officer taxed this interest under section 56(2)(viii) read with section 145A(b) of the Income-tax Act, 1961, after allowing a deduction under section 57(iv). The CIT(A) upheld this addition, but the Tribunal later deleted it, relying on Supreme Court judgments predating the relevant statutory amendments. The Revenue's application for rectification argued that the Tribunal overlooked these amendments and relevant High Court judgments, which led to a mistake apparent from the record.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 826144 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 5 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-01-2026
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 15-07-2022
• Other Referred Cases: CIT v. Ghanshyam (HUF), CIT v. Chet Ram (HUF), Union of India v. Hari Singh, Manjeet Singh (HUF) v. Union of India, Puneet Singh v. CIT, Mahender Pal Narang v. CBDT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RANJIT KAUR
• Assessee Lawyers: NEELAM DHIMAN; C.A

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “ए” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH ŵी लिलत क ुमार, Ɋाियक सद˟ एवं ŵी मनोज क ुमारअŤवाल, लेखा सद˟ BEFORE: SHRI. LALIET KUMAR, JM &SHRI. MANOJ KUMAR AGGARWAL, AM Misc. Application No. 15/Chd/2022 In (आयकर अपील सं./ ITA No.264 /Chd/2021 ) िनधाŊरण वषŊ / Assessment Year : 2015-16 The ITO Ward-3, Panchkula बनाम Sawarn Singh S/o Niranjan Singh C/o Dhiman Bansal & Associates 68, Shiv Shakti Colony, Pinjore-134102 ˕ायी लेखा सं./PAN NO: BGZSPS7923N अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Smt. Neelam Dhiman, C.A राजˢकी ओर से/ Revenue by : Dr. Ranjit Kaur, Sr. DR सुनवाई की तारीख/Date of Hearing : 07/01/2026 उदघोषणा की तारीख/Date of Pronouncement : 08/01/2026 आदेश/Order PER LALIET KUMAR, J.M: This Miscellaneous Application has been filed by the Revenue under section 254(2) of the Income-tax Act, 1961 seeking rectification/recall of the order passed by this Tribunal in ITA No. 264/Chd/2021 dated 24.02.2022. 2. The assessee had received interest on enhanced compensation amounting to Rs.32,03,891/- during the year under consideration and claimed exemption under section 10(37) of the Act. The Assessing Officer, however, taxed the said interest under section 56(2)(viii) read with section 145A(b) of the Act after allowing deduction of 50% under section 57(iv). 3. The addition was upheld by the Ld. CIT(A). On further appeal, this Tribunal vide order dated 24.02.2022 deleted the addition by relying upon its earlier Printed from counselvise.com 2 decisions, primarily following the judgments of the Hon’ble Supreme Court in CIT v. Ghanshyam (HUF), CIT v. Chet Ram (HUF) and Union of India v. Hari Singh. 4. The Ld. DR submitted that the Tribunal committed mistakes apparent from the record by not considering the statutory amendments introduced by the Finance (No.2) Act, 2009, namely sections 56(2)(viii), 57(iv) and 145A(b), applicable from Assessment Year 2010-11 onwards. 5. It was contended that the Supreme Court judgments relied upon in the impugned order pertained to assessment years before AY 2010-11 and therefore could not govern the issue post-amendment. 6. The Ld. DR further submitted that the issue stands settled by the Hon’ble Punjab & Haryana High Court in Manjeet Singh (HUF) v. Union of India, Puneet Singh v. CIT and Mahender Pal Narang v. CBDT, holding that interest received on compensation or enhanced compensation is taxable as “Income from Other Sources” under section 56(2)(viii), subject to deduction under section 57(iv). The dismissal of SLPs against these judgments by the Hon’ble Supreme Court was also emphasized. 7. It was argued that non-consideration of binding jurisdictional High Court judgments constitutes a mistake apparent from the record warranting recall under section 254(2). 8. The Ld. counsel for the assessee opposed the Miscellaneous Application and submitted that the Tribunal had taken a conscious view after considering binding Supreme Court decisions and that the Revenue is seeking review of the order under the guise of rectification, which is impermissible under section 254(2). 9. We have carefully considered the rival submissions and perused the material available on record. The limited question before us is whether there Printed from counselvise.com 3 exists a mistake apparent from the record in the order dated 24.02.2022, warranting interference under section 254(2) of the Act. 10. The scope of section 254(2) is well settled. The Hon’ble Supreme Court in Honda Siel Power Products Ltd. v. CIT (2007) 295 ITR 466 (SC) has held that the purpose behind section 254(2) is to ensure that no party suffers on account of a mistake committed by the Tribunal, and that non-consideration of a binding precedent constitutes a mistake apparent from the record, rectifiable under the said provision. It was further clarified that such rectification does not amount to review. 11. Similar principles has been reiterated in ACIT v. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227 (SC), wherein it was held that failure to consider a binding judgment of the jurisdictional High Court or the Hon’ble Supreme Court constitutes a mistake apparent from the record. 12. In the present case, we find that while deciding the appeal, the Tribunal relied upon Supreme Court judgments rendered in the context of assessment years prior to AY 2010-11, without examining the impact of the statutory amendments brought into force with effect from AY 2010-11. The binding judgments of the Hon’ble Punjab & Haryana High Court, which have specifically interpreted the amended provisions of sections 56(2)(viii), 57(iv) and 145A(b), and which have attained finality with dismissal of SLPs by the Hon’ble Supreme Court, were not considered. 13. Non-consideration of the aforesaid binding jurisdictional High Court judgments, which go to the root of the issue, in our considered view, constitutes a mistake apparent from the record within the meaning of section 254(2) of the Act. 14. In view of the foregoing discussion, the Miscellaneous Application filed by the Revenue is allowed. The order dated 24.02.2022 passed in ITA No. Printed from counselvise.com 4 264/Chd/2021 is recalled. The Registry is directed to fix the appeal for a fresh hearing on 04/02/2026. The parties shall be informed accordingly. 15. In the result, Misc. Application filed by the Revenue is allowed. Order pronounced in the open Court on 08/01/2026 Sd/- Sd/- मनोज क ुमारअŤवाल लिलत क ुमार (MANOJ KUMAR AGGARWAL) (LALIET KUMAR) लेखा सद˟/ ACCOUNTANT MEMBER Ɋाियक सद˟/JUDICIAL MEMBER AG आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "