MANSUKHBHAI KANJIBHAI SAKARIYA,RAJKOT V. PRINCIPAL COMMISSIONER OF INCOME TAX, RAJKOT-1, RAJKOT

ITA 318/RJT/2024

AI Insights

The case revolves around the appeal by Mansukhbhai Kanjibhai Sakariya against the order of the Principal Commissioner of Income Tax (PCIT), which invoked revisional jurisdiction under section 263 of the Income-tax Act, 1961. The PCIT had set aside the assessment order passed under sections 147 and 144B, which accepted the returned income without adding the interest received on enhanced compensation for the compulsory acquisition of agricultural land. The Tribunal examined whether the PCIT was justified in setting aside the assessment order, considering the legal precedents and the nature of the interest received.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 771832 (ITAT-RAJKOT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2016-2017
• Other Referred Cases: Movaliya Bhikhubhai Balabhai Vs. ITO, CIT v. Ghanshyam (HUF), Paramjeet Singh Parvesh Kumar Sharma, Karnat vs. ACIT, Central Karnal, New Delhi, Manjeet Singh (HUF) Karta Manjeet Singh vs. Union of India, Hari Singh vs. Union of India, Malabar Industrial Co. Ltd. vs. CIT, CIT vs. Thana Electricity Supply Ltd., Consolidated Pneumatic Tool Co. (India) Ltd. vs. CIT, CIT vs. Indo German Fabs
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY PUNGLIA; LD.
• Assessee Lawyers: RAJENDRA SINGHAL; LD
• Keywords: Capital asset; Opportunity of being heard; Capital Gains; Principle of natural justice; TDS; Revision of order; Non-deduction of tax; FORM 26AS
• Section: 147; 148; 143(3); 142(1); 263; 56; 56(2); 28; 2(14); 45(5)

Judgement Text

"आयकरअपीलȣयअͬधकरण,राजकोटÛयायपीठ,राजकोट। IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकरअपीलसं/.ITA No.318/RJT/2024 Ǔनधा[रणवष[ / Assessment Year: 2016-17 Mansukhbhai Kanjibhai Sakariya At Khajuri Gundala Post Station: Vavdi Amarnagar, Khajuri Gundala. PAN : ASLPS 7027 E बनाम Vs. The Pr.Commissioner of Income Tax-1, Rajkot. (अपीलाथȸ/assessee) : (Ĥ×यथȸ/Respondent) Ǔनधा[ǐरतीकȧओरसे/Assessee by : Shri Rajendra Singhal, ld.AR राजèवकȧओरसे/Revenue by : Shri Sanjay Punglia, ld.CIT-DR सुनवाईकȧतारȣख /Date of Hearing : 11/06/2025 घोषणाकȧतारȣख /Date of Pronouncement : 27/08/2025 ORDER Per,Dr. Arjun Lal Saini, Accountant Member: By way of this appeal, the assessee has challenged the correctness of the order dated 30.03.2024 passed by the Learned Principal Commissioner of Income-tax (in short “Ld PCIT”) under section 263 of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), for the assessment year 2016-17. Grievances raised by the assessee, which, being interconnected, will be taken up together, are as follows: Printed from counselvise.com MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT ITA No.318/RJT/2024 2 (i)The order passed u/s. 263 of the Act by the Id. Pr. Commissioner of Income- tax, Rajkot-1 [hereinafter referred to as the Id. \"PCIT\"] is bad in law, invalid, and therefore, the same may kindly be quashed as the relevant assessment order was not erroneous as well as prejudicial to the interest of the revenue. (ii)The Id. PCIT erred on facts as also in law in passing order u/s. 263 of the Act, against the principles of natural justice, without providing reasonable opportunity of being heard. (iii)The Id. PCIT erred on facts as also in law in passing order u/s. 263 of the Act, without considering the submission dated 05.03.2024 made against the notice u/s. 263 of the Act. (iv)The Id. PCIT erred on facts as also in law in passing order u/s. 263 of the Act, in respect of an invalid assessment order dated 28.03.2022 passed u/s 147 r.w.s 144B of the I.T. Act. (v)The Id. PCIT erred on facts as also in law in passing order, invoking clause (a) of Explanation 2 to sec. 263 of the Act, as the assessment order u/s 147 r.w.s 144B of the IT. Act dated 28.03.2022 was passed, after conducting necessary & diligent enquiries and conscious application of mind & deliberation to the material on record. (vi)The Ld. PCIT erred in law and on fact in arriving at a conclusion to the effect that the assessment order passed by the assessing officer was erroneous as well as prejudicial to the interest of the revenue on the ground that interest awarded on enhanced compensation in respect of compulsory acquisition of agricultural land is chargeable to tax. (vii)The Id. PCIT erred on facts as also in law in setting aside the assessment order dated 28.03.2022 passed u/s 147 r.w.s 144B of the IT. Act and directing the assessing officer to pass a fresh assessment on the issue related to interest awarded on enhanced compensation in respect of compulsory acquisition of agricultural land. The grounds of appeal mentioned hereunder are without prejudice to one another, as appeal is against the validity of revisional jurisdiction of Pr. CIT. 2.Succinctly, the factual panorama of the case is that assessee before us is an Individual. The assessee had filed his return of income for assessment year (AY) 2016–17, declaring total income of Rs.10,26,350/-. The assessment was finalised under section 147 read with section 144B of the Income tax Act, 1961, on 28th March 2022, accepting returned income of Rs.10,26,350/- 3. Later on, Learned Principal Commissioner of Income-tax (in short “Ld PCIT”) has exercised his jurisdiction under section 263 of the Income-tax Act, 1961. The Printed from counselvise.com MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT ITA No.318/RJT/2024 3 learned PCIT, on perusal of case records, it was noticed that during the previous year 2015-16 relevant to assessment year (A.Y.) 2016-17, the assessee had received interest on enhanced compensation on acquisition of agricultural land of Rs.1,89,62,258/-, along with other co-owners. During the course of assessment proceedings, the assessee had submitted that the entire amount of interest of Rs.1,89,62,258/-, received on enhanced compensation was taxed in the hands of Babubhai Kanjibhai Sakaria (one of the co-owner and brother of the assessee), vide assessment order dated 21.12.2018. The entire amount of TDS made on said interest by Land Acquisition Officer reflected in 26AS of Shri Babubhai Kanjibhai Sakariya, one of the co-owner of the ancestral property acquired by Land Acquisition Officer. On verification, it was also seen by learned PCIT that the share of the assessee, in said ancestral property was 25% and accordingly, share of the assessee in interest received on enhance compensation on acquisition of agricultural land would worked out to Rs.47,40,565/- ( 25% of Rs.1,89,62,258). On further verification, it was found by ld.PCIT that an addition of Rs.94,81,129/- (Rs.23,70,283/- on substantive basis and balance said to be pertaining to other co-owners on protective basis) being 50% of total interest received on enhanced compensation on acquisition of agricultural land has been made in the case of one of the co- owner (i.e. Shri Babubhai Kanjibhai Sakaria) of the ancestral agricultural land acquired by Land Acquisition Officer. Therefore, addition of Rs.23,70,282/- being 50% of interest of Rs.47,40,565/- being 25% of total interest on enhance compensation on acquisition of agricultural land was required to be added in the total income of the assessee on substantive basis. However, the assessing officer has not made any addition in this regards. The Assessing Officer, in the assessment order, failed to make addition of Rs. 23,70,282/- (25% share of total addition of Rs. 94,81,129/- made in the case of Babubhai Kanjibhai Sakariya, brother of the assessee). Therefore, the assessment order passed by the assessing officer u/s 147 r.w.s. 144B of the Printed from counselvise.com MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT ITA No.318/RJT/2024 4 Income tax Act, 1961 on 28.03.2022, is erroneous and prejudicial to the interest of the revenue. 4.Considering above such facts, notice u/s 263 of the Income-tax Act, 1961, was issued by ld.PCIT, on 29.02.2023 and duly served upon the assessee.The ld. PCIT stated in the notice that assessee case was reopened on the basis of information available with the Department that during the year under consideration, assessee has received interest on enhanced compensation on acquisition of agricultural land of Rs.1,89,62,258/-. During the course of assessment proceedings, assessee has submitted that the entire amount of interest of Rs.1,89,62,258/- received on enhanced compensation has been taxed in the hands of Babubhai Kanjibhai Sakana vide assessment order dated 21.12.2018. The entire amount of TDS made on said interest by Land Acquisition Officer reflected in 26AS of Shri Babubhai Kanjibhai Sakariya, one of the co -owners of the ancestral property,that is, agricultural land acquired by Land Acquisition Officer. On verification, it was noticed by the ld. PCIT that assessee share in said ancestral property is 25% and accordingly, assessee share in interest received on enhanced compensation on acquisition of agricultural land would worked out to Rs.47,40,565/-. On further verification, it was found that an addition of Rs.94,81,129/- (Rs.23,70,283/- on substantive basis and Rs.23,70,283/- on protective basis) being 50% of total interest received on enhanced compensation on acquisition of agricultural land has been made in the case of one of the co - owners (i.e. Shri Babubhai Kanjibhai Sakaria) of the ancestral agricultural land acquired by Land Acquisition Officer. Therefore, addition of Rs.23,70,282/- being 50% of interest of Rs.47,40,565/-, being 25% of total interest on enhanced compensation on acquisition of agricultural land was required to be added assessee income. However, the assessing officer has not made any addition in this regards. The Assessing Officer has failed to make addition of Rs. 23,70,282/- (25% share of total addition of Rs. 94,81,129/-, made in the case of Babubhai Printed from counselvise.com MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT ITA No.318/RJT/2024 5 Kanjibhai Sakariya, assessee brother) as narrated in the assessment order dated 21.12.2018 in the case of assessee brother Shri Babubhai Kanjibhai Sakariya. The assessing officer has not properly verified/ examined the facts of the case and the issue under consideration. Therefore, assessment order has been passed without making due inquiry/verification. Hence, in terms of Explanation 2 to section 263 of the Income-tax Act. 1961, such order is erroneous in so far as it is prejudicial to the interest of revenue. 5.In response to the above show- cause notice of the ld.Pr.CIT, the assessee submitted its reply before the ld.Pr.CIT, which is reproduced in his revision order vide page No.5 and 6. Before the ld. Pr. CIT, the assessee submitted that reassessment order itself is not valid, therefore, subsequent order passed by the ld.Pr.CIT by exercising the revisionary jurisdiction is also bad in law. 6.The assessee also submitted before ld. PCIT that during the assessment proceedings, the assessing officer has conducted sufficient inquiry in respect of the issue raised by the ld. Pr. CIT. The assessee also submitted before the ld.Pr.CIT that the Government has acquired the land on account of compulsory acquisition and the subject land was belonged to two co-parceners, who were owners of the land, which was acquired by the Government. However, the Government has paid entire payment to one co-parcener,that is, Shri Babubhai K. Sakariya. The interest on compensation was also paid to the Shri BabubhaiK. Sakariya , which in turn had been divided amongst the co-owners as per their shares. The assessee also submitted before the ld.Pr.CIT that the interest received on enhanced compensation is not taxable under section 56(2)(viii) of the Act, as it is a part of the main compensation. 7.However, the ld.Pr.CIT rejected the above contentions of the assessee and observed that during the previous year 2015-16 relevant to A.Y. 2016-17, the assessee along with other co-owners had received interest on enhanced Printed from counselvise.com MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT ITA No.318/RJT/2024 6 compensation on acquisition of agricultural land of Rs.1,89,62,258/-. During the course of assessment proceedings in case of the assessee, the assessee had submitted that the entire amount of interest of Rs.1,89,62,258/- received on enhanced compensation was taxed in the hands of Babubhai Kanjibhai Sakaria, vide assessment order dated 21.12.2018. The entire amount of TDS made on said interest by Land Acquisition Officer reflected in 26AS of Shri Babubhai Kanjibhai Sakariya, one of the co-owners of the ancestral property acquired by Land Acquisition Officer. On verification, it was also seen that the share of the assessee in said ancestral property was 25% and accordingly, share of the assessee in interest received on enhanced compensation on acquisition of agricultural land would worked out to Rs.47,40,565/-. On further verification, it was found that an addition of Rs.94,81,129/- (Rs.23,70,283/- on substantive basis and balance said be pertaining to other co-owners on protective basis) being 50% of total interest received on enhanced compensation on acquisition of agricultural land has been made in the case of one of the co- owners (i.e. Shri Babubhai Kanjibhai Sakaria) of the ancestral agricultural land acquired by Land Acquisition Officer. Therefore, addition of Rs.23,70,282/- being 50% of interest of Rs.47,40,565/-, being 25% of total interest on enhance compensation on acquisition of agricultural land was required to be added in the total income of the assessee on substantive basis. Further, as stated above, during the assessment proceedings, the assessee had submitted that the addition has already been made in case of Shri Babubhai Kanjibhai Sakaria (co-owner and brother of the assessee). However, on perusal of the assessment order of Shri Babubhai it has been found that the total substantive addition of Rs.23,70,283/- on substantive basis and Rs. 71,10,846/-, said to be pertaining to other co-owners on protective basis was made in the hands of Babubhai Sakaria. In view of the above facts, the assessing officer ought to have added the amount of Rs.23,70,282/- in the hands of the assessee on substantive basis. However, the assessing officer has not made Printed from counselvise.com MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT ITA No.318/RJT/2024 7 any addition in this regards, therefore, order passed by the assessing officer is erroneous and prejudicial to the interest of the revenue and hence learned PCIT directed the assessing officer to pass a fresh assessment order after making necessary enquiries. 8.Aggrieve by the order of the ld.Pr.CIT, the assessee is in appeal before us. 9.Shri Rajendra Singhal, Learned Counsel for the assessee submitted that during the assessment proceedings, the assessing officer had conducted adequate inquiry by issuing notice under section 142(1) of the Act, which is placed at Paper Book Page no.18-19, which is reproduced below: “2. In order to examine the issue of claim of substantial undisclosed Interest received on enhanced compensation paid for compulsory acquisition of agricultural land of Rs. 1,89,62,2587- you are requested to furnish the following details/documents: • Brief note on the nature of business carried on by the assessee during the previous year. • Detailed computation of income. • You are requested to explain if the Interest received on enhanced compensation has been offered to tax under the head 'income from other sources' as per the section 56(2)(viii) r.w.s. 145B(1') of the IT. Act, 1961. • Kindly submit the instrument of acquisition/transfer of the property. Document supporting enhancement of compensation. • Kindly furnish the bank statement for the financial year 2015-16. 3.In order to examine other issues emanating from your case during the complete scrutiny proceedings, you are requested to furnish the following details/ documents: • Kindly reconcile the TDS details as per Form 26AS with the income declared by you. • Kindly find attached herewith the ITS details. Please reconcile the same with the income declared by you. • Please furnish copies of the last assessment order in your case and if any addition/disallowances were made therein or any earlier order what is the present appellate result or has the same reached finality.” 10.The ld. Counsel for the assessee, also took us through the replies submitted by the assessee, during the assessment proceedings, in response to the above notice Printed from counselvise.com MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT ITA No.318/RJT/2024 8 under section 142(1) of the Act, which is placed at PB Page No.21 to 27, and the same is reproduced below: “In order to examine the issue of claim of substantial undisclosed interest received on enhanced compensation paid for compulsory acquisition of agricultural land of Rs.1,89,62,258/-, you are requested to furnish the following details/documents: Brief note on the nature of business carried on by the assessee during the previous year. The brief note on the nature of business carried on by me during the previous year are as under: I am earning income from share of profit, interest and remuneration from the partnership firm Parmeshwar Impex, income from other sources i.e. bank interest, PPF interest, FD interest, deposit interest, long term capital gain, dividend income and income from business and profession. Detailed computation income. I am enclosing herewith the detailed computation of income at Annexure-B. You are requested to explain if the interest received on enhanced compensation has been offered to tax under the head 'income from other sources' as per the section 56(2)(viii) r.w.s. 145B(1) of the I.T. Act, 1961. In this regard, I have to submit that I had credited the amount of 47,37,762/- in my capital account being agri. Land-survo Dam- interest and not offered to tax the interest received on enhanced compensation under the head 'income from other sources' as per the section 56(2) (viii) r.w.s. 145B(1) of the I.T. Act, 1961. Reasons for not offering the interest received on enhanced compensation under the head 'income from other sources' as per the section 56(2) (viii) r.w.s. 145B(1) of the I.T. Act, 1961 are under: In respect of receipt of Rs. 1,89,51,049/- towards interest u/s 28 of Land Acquisition Act, 1894 on Enhanced Compensation on compulsory acquisition of rural agricultural land by government, I would like to clarify that the land so acquired by government was originally owned by my father Late Shri Kanjibhal Kababhai. And we four co-owners (4) namely Smt. Ujiben Kanjibhai Sakariya, Shri Jerambhai Kanjibhai Sakariya, Shri Mansukhbhai Kanjibhai Sakariya, myself and Babubhai Kanjibhai Sakariya were possessing the same in capacity of his legal heirs and each having share of 25% and therefore my share in interest so received will be of Rs.47,37,762/-. Due to wrongly quoting of only PAN of Shri Babubhai Kanjibhai Sakaria, one of the co-owners having 25% share, by the office of Land Acquisition Officer, the entire interest amount of Rs.1,89,51,049/- and entire TDS thereon of Rs.18,95,105/- is being shown in the name Shri Babubhai Kanjibhai Sakariya and shown in his name in the ITS data with you. Since the entire TDS of Rs. 18,95,105/- is being shown in the PAN and 26AS in the name of Babubhai Kanjibhai Sakariya, who is a one of the co-owners having 25% share and he has claimed the same in his Return of income. Further, it is to submit that the case of Shri Babubhai Kanjibhai Sakariya was selected for scrutiny for A.Y. 2016-17 and entire addition of Rs.1,88,51,049/- has been considered and addition Printed from counselvise.com MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT ITA No.318/RJT/2024 9 has been by the concerned assessing officer by passing the scrutiny assessment u/s 143(3) on 21.12.2018 determining the total income at Rs.94,81,130/-. In support of the same, 1 am enclosing herewith the copy of assessment order supra at Annexure-C. Therefore, your authority is requested to kindly consider the submission as above and drop the present proceedings, as the once entire amount has been taxed in the case of one of the co-owners case, then if considered then it will be double taxation. Further, without prejudice to the above, I have to submit the following for no taxability of the amount under the provisions of section 56(2) (viii) r.w.s. 145B(1) of the Act: The land so acquired by government is agricultural land situated in rural area and hence it is not a capital asset as defined under section 2(14) of the Income Tax Act, 1961. Further it is settled position that Interest on enhanced compensation received u/s.28 of the Land Acquisition Act, 1894 forms part of enhanced compensation/consideration for land as it is an accretion in the value of land. This has been held by Supreme Court in case of CIT v. Ghanshyam (2009) 182 Taxman 368 (SC). Therefore, interest received of Rs.47,37,762/- being 25% share (18962258 / 25%) is consideration for compulsory acquisition of land itself. And being rural agricultural land it is not a capital asset, and accordingly the same is not chargeable to tax under the head income from capital gains or under any other head of income. In connection with reference invited to section 56(2)(viii) r.w.s. 145B(1) of the Act, by you, for chargeability of the interest income under the said section, I would like to state that interest as stipulated under the provisions of section 56(2)(viii) of the Income Tax Act, 1961, is interest other than interest u/s.28 of the Land Acquisition Act, 1894. In my case interest of Rs.47,37,762/- received is on enhanced compensation, the same forms part of compensation/consideration. Taking the ratio laid down of the High Court of Gujarat in the case of Movaliya Bhikhubhai Balabhai v. ITO wherein it was held that Interest on compensation/enhanced compensation under section 28 of the Land Acquisition Act, 1894 forms part of compensation/consideration and not interest as contemplated u/s. 56(2)(viii) of the Income Tax Act, 1961, interest of Rs.47,37,762/- will also not be chargeable to tax under the head income from other sources. The aforesaid interest of Rs.47,37,762/- is credited to my capital account on 23-07- 2015. For your kind reference, I enclose herewith copy of my capital account for the year under consideration as Annexure-D. I have offered total income of Rs.4,47,370/- under the head income from other sources which includes income as mentioned. The computation of income is enclosed herewith for your reference as Annexure-B above. In view of the above submission and legal as well as factual facts, I request your authority not to considered the amount of Rs.47,37,762/- being 25% share of Rs. 1,89,62,258/- under the head 'income from other sources as per provisions of section 56(2)(viii) r.w.s. 145B(1) of the Act. Kindly submit the instrument of acquisition/transfer of the property. Documentssupporting compensation enhancement of compensation. Printed from counselvise.com MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT ITA No.318/RJT/2024 10 In this regard, I am enclosing herewith the copies of order of the Hon'ble High Court of Gujarat bearing first appeal No.709 of 2015, the Principal Senior Civil Judge at Gondal LAR.78/2004 at Annexure-E. Further, I rely on the decision of the ITAT, \"A\" Bench, Ahmedabad ITA No.246/Ahd/2015 for A.Y. 2007-08 and copy of the same is enclosing herewith at Annexure-F. I also relies on the decision of the Hon'ble ITAT, Delhi Bench 'F', New Delhi - ITA No. 1393/Del/2017 (Α.Υ. 2011-12), dated 16.04.2021 Paramjeet Singh Parvesh Kumar Sharma, Karnat vs. ACIT, Central Karnal, New Delhi. Kindly submit the bank statement for the financial year 2015-16. I am enclosing herewith the copy of bank statement for the F.Y. 2015-16 at Annexure- G Kindly reconcile the TDS details as per form 26AS with the income declared by you. In this regard, I am enclosing herewith the form No.26AS with the income declared by me at Annexure-H. Please furnish copies of the last assessment order in your case and if any addition/disallowances were made therein or any earlier order what is the present appellate result or has the same reached finality. With regard to above, I would like to submit that no such assessment order made. I have provided herewith the necessary clarifications, explanations and documents. If you require any further information/explanations please ask me before taking any adverse decision, it will be pleasure for me to submit the same. Further, respectfully following the fact raised in my objection against the validity of notice and reasons as earlier submitted, I request your authority to kindly cancel the notice issued u/s 148 of the Act dated 31.03.2021 and drop the subsequent proceedings also and oblige.” 11. Therefore, the ld.Counsel for the assessee submitted that by issuing notice under section 142(1) of the Act, and inresponse to the notice under section 142(1) of the Act, the assessee has submitted detailed reply during the assessment proceedings. Not only that the assessing officer has examined the documents and details, however, assessing officer also examined the Land Acquisition Act and as per the judgment of the Hon’ble jurisdictional High Court of Gujarat in the case of Movaliya Bhikhubhai Balabhai (supra), assessing officer also examined that the land enhanced compensation and interest thereon, is a part of the Printed from counselvise.com MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT ITA No.318/RJT/2024 11 compensation. The ld. Counsel also submitted that the Explanation-2 to section 263 is not applicable to the assessee under consideration. 12. On the other hand, the ld. CIT-DR for the Revenue submitted that if the compensation is received, then, it is taxable under section 28 of the Act. However, in the assessee’s case, the assessee has received interest, on compensation, which is not a compensation, and therefore, it is clearly assessable under the head “income from other sources” and this inquiry was not conducted by the assessing officer. Besides, the entire compensation and interest, have been taxed in the hands of one co-owner, however, it should be taxable in the hands of all the co-owners, in the ratio of their respective shares in the property. Therefore, the order passed by the assessing officer is erroneous as well as prejudicial to the interest of the Revenue. 13.We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position.We note that Hon’ble Gujarat High Court in the case of Movaliya Bhikhubhai Balabhai Vs. ITO, SCA No.17944 of 2015 dated 31.3.2016 stated that the interest received for enhanced compensation is part of the compensation and this judgment has been delivered by the jurisdictional High Court of Gujarat, after the amendment made in section 145B and section 56 (2) (viii) of the Income Tax Act. We note that theld.Pr.CIT has heavily relied on the judgment of Hon’ble Punjab & Haryana High Court in the case of Manjeet Singh (HUF) Vs. UOI, CWP No.15506 of 2013 dated 29.1.2016 wherein the Hon’ble Punjab & Haryana High Court held that interest received on enhanced compensation is a revenue receipt and it is taxable in the hands of the assessee under section 56 of the Act, under “income from other sources” in the year of receipt. However, we note that jurisdictional High Court in the case of Movaliya Bhikhubhai Balabhai Vs. ITO(supra) clearly stated that the compensation and interest received on enhanced compensation has character of compensation and it does not fall within Printed from counselvise.com MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT ITA No.318/RJT/2024 12 the expression “interest” as contemplated in section 145B r.w.s. 56(2) (viii) of the Act. We note that before this Bench, jurisdictional High Court’s decision in the case of Movaliya Bhikhubhai Balabhai Vs. ITO(supra) would be applicable, as it is a judgment of jurisdictional High Court of Gujarat. However, the judgment relied on by the ld.Pr.CIT in the case of Manjeet Singh (HUF) Vs. UOI (supra) is related to Hon’ble Punjab & Haryana High Court, which is not a jurisdictional High Court, for us. Therefore, judicial discipline mandates that we suppose to follow the judgment of the jurisdictional High Court. Thus, we note that the judgement of jurisdictional High Court of Gujarat in the case of Movaliya Bhikhubhai Balabhai Vs. ITO [2016] 70 taxmann.com 45 (Gujarat),(supra) Is clearly applicable to us, wherein following ratio was laid down by the Hon`ble Court: “6. The facts as emerging from the record are that the petitioner's agricultural lands came to be acquired underthe provisions of the Act of 1894 for the public purpose of the Ozat-2 Irrigation Scheme. The award passed bythe Collector came to be challenged by the petitioner before the learned Principal Senior Civil Judge,Junagadh (hereinafter referred to as the \"Reference Court\"), who by an order dated 20th March, 2011 awardadditional compensation of Rs. 5,01,846/- in favour of the petitioner together with other statutory benefits.Pursuant to such award, the second respondent calculated the amount payable to the petitioner and in terms of the statement showing the amount of compensation to be deposited in the court, computed an amount of Rs.20,74,157/- as payable to the petitioner by way of interest under section 28 of the Act of 1894. In support ofsuch statement, the second respondent has also issued a communication dated 12th October, 2015 certifyingthat the interest shown in Columns No. 13 and 14 indicates the interest under section 28 of the Act of 1894. Itmay be noted that Column No. 15 is comprised of the total amount of interest under Columns No. 13 and 14of the above statement. Undisputedly, therefore, the amount of interest from which the income tax is sought tobe deducted at source, is interest payable under section 28 of the Act of 1894. 7. At this juncture, reference may be made to the decision of the Supreme Court in the case of Ghanshyam(HUF) (supra) wherein, the court has examined the provisions of the Land Acquisition Act, 1894 as well asthe provisions of section 45 of the I.T. Act and the intention behind insertion of sub-section (5) of section 45.The court noted that sub- section (5) of section 45 was inserted to provide for taxation of additionalcompensation in the year of receipt instead of in the year of transfer of the capital asset. The court consideredthe provisions of sections 23(1), 23(1-A) and section 23(2) of the Act as well as section 28 and section 34 ofthe Act of 1894 and observed that section 23(1-A) was introduced in the 1894 Act to mitigate the hardshipcaused to the owner of the land who is deprived of its enjoyment by taking possession from him and using itfor public purpose, because of the considerable delay and offering payment thereof. To obviate Printed from counselvise.com MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT ITA No.318/RJT/2024 13 such hardship,section 23(1-A) was introduced and the legislature envisaged that the owner is entitled to 12% per annumadditional amount on the market value for a period commencing on or from the date of publication of thenotification under section 4(1) of the 1894 Act up to the date of the award of the Collector or the date oftaking possession of the land, whichever is earlier. The court held that the additional amount payable undersection 23(1-A) of the 1894 Act is neither interest nor solatium. It is an additional compensation designed tocompensate the owner of the land for the rise in price during the pendency of the land acquisition proceedings.It is a measure to offset the effect of inflation and the continuous rise in the value of properties. Therefore, theamount payable under section 23(1-A) of the Act is an additional compensation in respect to the acquisitionand has to be reckoned as part of the market value of the land. The court further held that the award of interestunder section 28 of the 1894 Act is discretionary. Section 28 applies when the amount originally awarded hasbeen paid or deposited and when the court awards excess amount. In such cases, interest on that excess alone is payable. Section 28 empowers the court to award interest on the excess amount of compensation awardedby it over the amount awarded by the Collector. The compensation awarded by the court includes theadditional compensation awarded under section 23(1-A) and the solatium under section 23(2) of the said Act.This award of interest is not mandatory but is left to the discretion of the court. It was further held that section28 is applicable only in respect of the excess amount which is determined by the court after a reference undersection 18 of the 1894 Act. Section 28 does not apply to cases of undue delay in making award forcompensation. The court observed that interest is different from compensation. However, interest paid on the excess amount under section 28 of the 1894 Act depends upon a claim made by a person whose land isacquired whereas interest under section 34 is for the delay in making payment. This vital difference needs tobe kept in mind in deciding the matter. Interest under section 28 is part of the amount of compensationwhereas interest under section 34 is only for delay in making payment after the compensation amount isdetermined. Interest under section 28 is a part of the enhanced value of the land which is not the case in thematter of payment of interest under section 34. The court, thereafter, specifically considered the question as towhether additional amount under section 23(1-A), solatium under section 23(2), interest paid on excesscompensation under section 28 and interest under section 34 of the 1894 Act, could be treated as part ofcompensation under section 45(5) of the 1961 Act and the court held thus: —\"47. The issue to be decided before us-what is the meaning of the words \"enhancedcompensation/consideration\" in Section 45(5)(b) of the 1961 Act? Will it cover \"interest\"? Thesequestions also bring in the concept of the year of taxability.48. It is to answer the above questions that we have analysed the provisions of Sections 23, 23(1-A),23(2), 28 and 34 of the 1894 Act.49. As discussed hereinabove, Section 23(1-A) provides for additional amount. It takes care of theincrease in the value at the rate of 12% per annum. Similarly, under Section 23(2) of the 1894 Actthere is a provision for solatium which also represents part of the enhanced compensation.Similarly, Section 28 empowers the court in its discretion to award interest on the excess amount ofcompensation over and above what is awarded by the Collector. It includes additional amount underSection 23(1-A) and solatium under Section 23(2) of the said Act. Section 28 of the 1894 Actapplies only in respect of the excess amount determined by the court after reference under Section18 of the 1894 Act. It depends upon the claim, unlike interest under Section 34 which depends onundue delay in making the award.50. It is true that \"interest\" is not compensation. It is equally true that Section 45(5) of the 1961 Actrefers to compensation. But as discussed hereinabove, we have to go by the provisions of the 1894Act which awards \"interest\" Printed from counselvise.com MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT ITA No.318/RJT/2024 14 both as an accretion in the value of the lands acquired and interest forundue delay. Interest under Section 28 unlike interest under Section 34 is an accretion to the value,hence it is a part of enhanced compensation or consideration which is not the case with interestunder Section 34 of the 1894 Act. So also, additional amount under Section 23(1-A) and solatiumunder Section 23(2) of the 1961 Act forms part of enhanced compensation under Section 45(5)(b)of the 1961 Act.\"Thus, the court has held that interest under section 28 of the Act of 1894 is an accretion to compensation andforms part of the compensation and, therefore, exigible to tax under section 45(5) of the Act. Such decisionwas, therefore, rendered in favour of the revenue. 8. The above referred decision in the case of Ghanshyam (HUF) (supra) came to be followed by the SupremeCourt in the case of CIT v. Govindbhai Mamaiya [2014] 52 taxmann.com 270/367 ITR 498/[2015] 229Taxman 138, wherein the court after referring to the above decision in the case of Ghanshyam (HUF) (supra)held that it is clear that whereas interest under section 34 of the Act of 1894 is not treated as a part of incomesubject to tax, the interest earned under section 28, which is on enhanced compensation, is treated as anaccretion to the value and, therefore, part of the enhanced compensation or consideration making it exigible totax under section 45(5) of the Income Tax Act. 9. Thus, the Supreme Court in the case of Ghanshyam (HUF) (supra) has held that the interest under section28 of the Act of 1894 unlike interest under section 34 is an accretion to the value and hence, it is a part of theenhanced compensation or consideration which is not the case with interest under section 34 of the 1894 Act.Therefore, interest under section 28 of the Act of 1894 would form part of the enhanced compensation andwould be exigible to capital gains under section 45(5) of the I.T. Act. In other words, in case of a transactionwhich is otherwise exigible to capital gains tax under section 45 of the I.T. Act, the interest received undersection 28 of the Act of 1894 being an accretion to the value, would form part of the compensation and wouldbe exigible to tax under section 45(5) of the I.T. Act, whereas the interest received under section 34 of the Actof 1894 would be \"interest\" within the meaning of such expression as envisaged under section 145A of theI.T. Act and would be deemed to be the income of the year under consideration, chargeable to tax as incomefrom other sources under section 56 of the I.T. Act. 10. In the facts of the present case, it is an admitted position that the interest on which the tax is sought to bededucted at source under section 194A of the Act is interest under section 28 of the Act of 1894 and not undersection 34 thereof. As noted hereinabove, the petitioner's application for a certificate under section 197 of theI.T. Act for no deduction of tax at source has been rejected on the ground that the interest amount receivedunder section 28 of the Act of 1894 is taxable as per the provisions of section 57(iv) read with section 56(2)(viii) and section 145A(b) of the I.T. Act. Section 145A of the I.T. bears the heading \"Method of accounting incertain cases\". Section 145A(b) provides that notwithstanding anything to the contrary contained in section145, interest received by an assessee on compensation or on enhanced compensation, as the case may be, shallbe deemed to be the income of the year in which it is received. Clause (viii) of sub-section (2) of section 56 ofthe I.T. Act provides for income by way of interest received on compensation or on enhanced compensationreferred to in clause (b) of section 145A which is chargeable as income from other sources. The firstrespondent Income Tax Officer seeks to tax the interest received by the petitioner Printed from counselvise.com MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT ITA No.318/RJT/2024 15 under section 28 of the Actof 1894 as income from other sources under section 56(2)(viii) read with section 145A(b) of the I.T. Act. Inthe opinion of this court, in the light of the law laid down by the Supreme Court in the case of Ghanshyam (HUF) (supra), the interest received under section 28 of the Act of 1894 would not fall within the ambit of theexpression \"interest\" as envisaged under section 145A(b) of the I.T. Act, inasmuch as, the Supreme Court inthe above decision has held that interest under section 28 of the Act of 1894 is not in the nature of interest butis an accretion to the compensation and, therefore, forms part of the compensation. At this stage it may be aptto quote the following part of the decision of the Supreme Court in Ghanshyam (HUF)'s case (supra):\"54. Section 45(5) read as a whole [including clause (c)] not only deals with reworking as urged onbehalf of the assessee but also with the change in the full value of the consideration (computation)and since the enhanced compensation/consideration (including interest under Section 28 of the1894 Act) becomes payable/paid under the 1894 Act at different stages, the receipt of suchenhanced compensation/consideration is to be taxed in the year of receipt subject to adjustment, ifany, under Section 155(16) of the 1961 Act, later on. Hence, the year in which enhancedcompensation is received is the year of taxability. Consequently, even in cases where pending appeal, the court/tribunal/authority before which appeal is pending, permits the claimant towithdraw against security or otherwise the enhanced compensation (which is in dispute), the sameis liable to be taxed under Section 45(5) of the 1961 Act. This is the scheme of Section 45(5) andSection 155(16) of the 1961 Act. We may clarify that even before the insertion of Section 45(5)(c)and Section 155(16) w.e.f. 1-4-2004, the receipt of enhanced compensation under Section 45(5)(b)was taxable in the year of receipt which is only reinforced by insertion of clause (c) because theright to receive payment under the 1894 Act is not in doubt.55. It is important to note that compensation, including enhanced compensation/consideration under the1894 Act, is based on the full value of property as on the date of notification under Section 4 of thatAct. When the court/tribunal directs payment of enhanced compensation under Section 23(1-A), orSection 23(2) or under Section 28 of the 1894 Act it is on the basis that award of the Collector orthe court, under reference, has not compensated the owner for the full value of the property as ondate of notification.\"Thus, it is clear that the Supreme Court after considering the scheme of section 45(5) of the I.T. Act hascategorically held that payment made under section 28 of the Act of 1894 is enhanced compensation, as anecessary corollary, therefore, the contention that payment made under section 28 of the Act of 1894 isinterest as envisaged under section 145A of the I.T. Act and has to be treated as income from other sources,deserves to be rejected. 11. It has been vehemently contended on behalf of the first respondent that the above decision has beenrendered prior to the substitution of section 145A of the I.T. Act by Finance (No. 2) Act, 2009 with effectfrom 1st April, 2010, and hence, would have no applicability to the facts of the present case. The scope andeffect of the substitution (with effect from 1st April, 2010) of section 145A, as also amendment made insection 56(2) by Act 33 of 2009 have been elaborated in the following portion of the departmental circularNo. 5/2010, dated 3.6.2010, as follows:\"Rationalizing the provisions for taxation of interest received on delayed compensation or on enhancedcompensation.-46.1 The existing provisions of Income Tax Act, 1961, provide that income chargeable under the head\"Profits and gains of business or profession\" or \"Income from other sources\", shall be computed inaccordance with either cash or mercantile system of accounting regularly employed by the assessee.Further the Printed from counselvise.com MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT ITA No.318/RJT/2024 16 Hon'ble Supreme Court in the case of Smt. Rama Bai v. CIT (1990) 84 CTR (SC) 164 :(1990) 181 ITR 400 (SC) has held that arrears of interest computed on delayed or enhancedcompensation shall be taxable on accrual basis. This has caused undue hardship to the taxpayers.46.2 With a view to mitigate the hardship, section 145A is amended to provide that the interest receivedby an assessee on compensation or enhanced compensation shall be deemed to be his income forthe year in which it was received, irrespective of the method of accounting followed by theassessee.46.3 Further, clause (viii) is inserted in sub-section (2) of the section 56 so as to provide that income byway of interest received on compensation or enhanced compensation referred to in clause (b) ofsection 145A shall be assessed as \"income from other sources\" in the year in which it is received.46.4 Applicability. - This amendment has been made applicable with effect from 1st April, 2010, and itwill accordingly apply in relation to assessment year 2010-11 and subsequent assessment years.\"Thus, the substitution of section 145A by Finance (No. 2) Act, 2009 was not in connection with the decisionof the Supreme Court in Ghanshyam (HUF)'s case (supra) but was brought in to mitigate the hardship causedto the assessee on account of the decision of the Supreme Court in Rama Bai v. CIT [1990] 181 ITR400/[1991] 54 Taxman 496 whereby it was held that arrears of interest computed on delayed or enhancedcompensation shall be taxable on accrual basis. Therefore, when one reads the words \"interest received oncompensation or enhanced compensation\" in section 145A of the I.T. Act, the same have to be construed inthe manner interpreted by the Supreme Court in Ghanshyam (HUF)'s case (supra). 12. On behalf of the first respondent, reliance has been placed upon decisions of different High Courts takinga different view. This court is not in agreement with the view adopted by the other High Courts which are notconsistent with the law laid down in the case of Ghanshyam (HUF) (supra). In Manjet Singh (HUF) KartaManjeet Singh's case (supra), the Punjab and Haryana High Court has chosen to place reliance upon variousdecisions of the Supreme Court rendered during the period 1964 to 1997 and has chosen to brush aside thesubsequent decision of the Supreme Court in Ghanshyam (HUF)'s case (supra) which is directly on the issueby observing that the assessee cannot derive any benefit from the observations made by the Supreme Court asquoted therein. In Hari Kishan's case (supra), the Punjab and Haryana High Court has placed reliance upon itsearlier decision in the case of Manjet Singh (HUF) Karta Manjeet Singh (supra). In Bir Singh (HUF)'s case(supra), the Punjab and Haryana High Court has held that under the scheme of the 1894 Act, interest undersection 34 is part of compensation while interest under section 28 is not the interest which partakes thecharacter of compensation and is treated differently. In the opinion of this court, the above view of the Punjaband Haryana High Court is contrary to what has been held in the decision of the Supreme Court inGhanshyam (HUF)'s case (supra) wherein it has been held that interest under section 28 unlike interest undersection 34 is an accretion to the value, hence it is a part of enhanced compensation or consideration which isnot the case with interest under section 34 of the 1894 Act. This court is in agreement with the view adoptedby the Punjab and Haryana High Court in Jagmal Singh's case (supra), which has been extensively referred toin paragraph 4.1 above. The decision of the Delhi High Court in Sharda Kochhar's case (supra), having beenrendered in the context of a different controversy would have no applicability to the facts of the present case. 13. The upshot of the above discussion is that since interest under section 28 of the Act of 1894, partakes thecharacter of compensation, it does not fall within the ambit of the Printed from counselvise.com MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT ITA No.318/RJT/2024 17 expression \"interest\" as contemplated insection 145A of the I.T. Act. The first respondent - Income Tax Officer was, therefore, not justified in refusingto grant a certificate under section 197 of the I.T. Act to the petitioner for non-deduction of tax at source,inasmuch as, the petitioner is not liable to pay any tax under the head \"income from other sources\" on theinterest paid to it under section 28 of the Act of 1894. 14. The petitioner had earlier challenged the communication dated 9th February, 2015 whereby its applicationfor a certificate under section 197 of the I.T. Act had been rejected, and subsequently, tax on the interestpayable under section 28 of the Act of 1894 has already been deducted at source. Consequently, the challengeto the above communication has become infructuous and hence, the prayer clause came to be modified.However, since the amount paid under section 28 of the Act of 1894 forms part of the compensation and notinterest, the second respondent was not justified in deducting tax at source under section 194A of the I.T. Actin respect of such amount. The petitioner is, therefore, entitled to refund of the amount wrongly deductedunder section 194A of the I.T. Act. 15. For the foregoing reasons, the petition succeeds and is accordingly allowed. The second respondenthaving wrongly deducted an amount of Rs. 2,07,416/- by way of tax deducted at source out of the amount ofRs. 20,74,157/- payable to the petitioner under section 28 of the Act of 1894 and having deposited the samewith the income-tax authorities, taking a cue from the decision of the Punjab and Haryana High Court inJagmal Singh's case (supra), the first respondent is directed to forthwith deposit such amount with theReference Court, which shall thereafter disburse such amount to the petitioner herein. Rule is made absoluteaccordingly with costs. 14. So far as facts are concerned we note that during the assessment proceedings, the assessing officer has made enough inquiries, as we have noted above, the assessing officer issued notice under section 142(1) of the Act, dated 16.02.2022, which is placed at PB Page no.18.Therefore, respectfully following the judgment of the Hon’ble jurisdictional High Court in the case of Movaliya Bhikhubhai Balabhai Vs. ITO(supra), we note that there is no any case of lack of inquiry on the part of the assessing officer, and the assessing officer has passed order as per the judgement of jurisdictional High Court cited (supra).Besides, the original compensation and enhanced compensation and interest thereon have already been suffered taxation in the hands of one of the co-owners, therefore, there is no loss to the revenue. Now, to tax such compensation/ enhanced compensation, and interest thereon, in the hands of other co-owner, would be tantamount to double Printed from counselvise.com MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT ITA No.318/RJT/2024 18 taxation. Therefore, the order passed by the assessing officer is sustainable in the eyes of law. 15. We note that the assessee had filed return of income, declaring total income of Rs. 10,26,350/-. The assessee is earning share in profit, interest and remuneration from a partnership firm, Parmeshwar Impex, capital gain and income from other sources. Besides during the year, assessee received 25% share in enhanced compensation, totalling to Rs. 2,69,41,878/-, on compulsory acquisition of ancestral agricultural land of his family.The above compensation of Rs. 2,69,41,878/- was inclusive of interest of Rs. 1,89,62,258/-, granted u/s. 28 of the Land Acquisition Act. 1884 (the LA Act).As submitted by ld Counsel for the assessee that the enhanced compensation, was received in respect of their ancestral agricultural land, which is fully satisfying the prescribed conditions to be an agricultural land in terms of section 2(14)(iii) of the Act, and thereby the land is not a capital asset. The Collector had made payment of entire enhanced compensation with interest to his brother Shri Babubhai K Sakariya.An assessment has been made in case of Shri Babubhai, the relevant land was held as an agricultural land, not a capital asset as per section 2(14) of the Act.However, the interest awarded as per section 28 of the Act, has been considered as chargeable to tax u/s 56(2)(viii) of the Act. Substantial addition for 25% share in interest and protective addition for 75% share in interest has been made in hands of Babubhai.Accordingly, information was given to the assessing officer of remaining co-owners, directing to reject claim of exempt interest income, making a substantial addition for 25% share in interest awarded in hands of respective co- owners.A notice u/s 148 of the Act has been issued, reopening the assessment. In re-assessment proceedings, the assessing officer had made necessary inquiry and verification in respect of interest awarded by the Court with enhanced compensation.In response, the assessee had furnished all the information related to the transaction under consideration. It was requested that his share in the Printed from counselvise.com MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT ITA No.318/RJT/2024 19 interest awarded as per section 28 of the Act, might be considered as part of full value of consideration received on compulsory acquisition of agricultural land, relying upon the judgments of the Hon'ble Supreme Court in case of CIT vs. Ghanshyam (HUF) (2009) 315 ITR 1, the Hon'ble Gujarat High Court in case of Movaliya Bhikhubhai Balabhai v. ITO (2016) 388 ITR 343 and the Hon'ble ITAT, Ahmedabad in case of Mukeshkumar K. Patel in ITA No. 246/AHD/2015 dated 26.09.2017. After examination of the facts and evidences, as collected and the binding law as settled by the Hon'ble Supreme Court, Jurisdictional Gujarat High Court and the Jurisdictional Bench of the Hon'ble ITAT ( supra), the assessing officer had held that the interest awarded as per section 28 of the Act, is part of full value of consideration received on compulsory acquisition of agricultural land, hence, the provisions of section 56(2) (viii) r.w.s. 145B of the Act are not applicable in the case. 16.Subsequently, the Ld. Pr. CIT-1, has issued a notice u/s. 263 of the Act, alleging that the assessing officer has not properly verified/ examined the facts of the case and the issue under consideration.However, we note that assessing officer had made all necessary inquiry and verification in respect of the interest under consideration and taken a judicious judgment relying upon the binding law as settled by the Hon'ble Supreme Court, Jurisdictional Gujarat High Court and the Jurisdictional Bench of the Hon'ble ITAT (supra). The assessing officer has taken a plausible view, duly supported by the law settled by the Judicial pronouncements, holding that the interest awarded as per section 28 of the Act, is part of full value of consideration received on compulsory acquisition of agricultural land, hence, the provisions of section 56(2)(viii) r.w.s. 145B of the Act are not applicable.Hence, the order is neither erroneous as provided in Explanation 2 to section 263 of the Income-tax Act, nor the order is prejudice to interest of the Revenue. Printed from counselvise.com MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT ITA No.318/RJT/2024 20 17.We note that the sole reason, as coming out from the order u/s. 263 of the Act is that the assessment should have been made, relying upon order of the Hon'ble Punjab and Haryana High Court in the case of Manjeet Singh (HUF) Karta Manjeet Singh vs. Union of India (CWP No. 15506 of 2013) (65 Taxman.com 160)(2016) on 29/01/2016. We note that the Hon'ble Principal Senior Civil Court has directed to pay the interest u/s. 28 of the land acquisition (LA) Act along with enhanced compensation and solatium. The ratio settled by the Hon'ble Gujarat High Court in the case of Movaliya Bhikhubhai Balabhai v. ITO (Supra) is squarely applicable to the facts of the present case. The said judgment was not accepted by the Department, but the SLP filed by the Department but the SLP of the Department has been decided against the revenue by the Hon'ble Supreme Court in a speaking and detailed judgment dated 15.09.2017 along with other cases and reported as case inUnion of India vs. Hari Singh [2018] 91 taxmann.com 20 (SC). Under the circumstances, the ratio upheld by the Hon'ble Supreme Court has become law of the land and binding upon all the authorities. We note that ld.PCIT relied on the judgement ofHon'ble Punjab and Haryana High Court in the case of Manjeet Singh (HUF) Karta Manjeet Singh vs. Union of India (CWP No. 15506 of 2013) (65 Taxman.com 160)(2016) on 29/01/2016, which is not the judgement of jurisdictional High Court, therefore does not have binding force. As per the Doctrine of Stare Decisis and Doctrine of Precedent, all lower Courts, Tribunals and authorities, exercising judicial or quasi-Judicial functions, are duty bound by the decisions of the High Court within whose territorial jurisdiction they function. The Doctrine of Stare decisis is a whole some doctrine which gives certainty to law and guides the people to mould their affairs in future. The Hon'ble Supreme Court in Sakhi vs. Union of India AIR 2004 SC 3566 as observed and recorded in Para 23 that: \"Stare decisis is a well-known doctrine in legal jurisprudence. The Doctrine of Stare decisis, meaning to stand by decided cases, rests upon the principle that law by which men are governed should be fixed, define and known, and that, Printed from counselvise.com MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT ITA No.318/RJT/2024 21 when the law is declared by Court of competent jurisdiction authorised to construe it.\" Further, the Doctrine of Stare Decisis is applicable in case under Income Tax Act, 1961, also as held in CIT vs. Thana Electricity Supply Ltd. (1994) 206 ITR 727 (Bom.) and Consolidated Pneumatic Tool Co. (India) Ltd. vs. CIT (1994) 209 ITR 277 (Bom.).We note that Ld. Pr. CIT has passed impugned order u/s. 263 of the Act, relying upon order of the Hon'ble Punjab and Haryana High Court in the case of Manjeet Singh (HUF) vs. Union of India (Supra). However, with due respect, the above cited decision of the Hon'ble Punjab and Haryana High Court is not binding on the Authorities, falling under jurisdiction of the Hon'ble Gujarat High Court.Therefore, assessing officer was right in following the judgement of the jurisdictional High Court of Gujarat in the case ofMovaliya Bhikhubhai Balabhai (supra). Therefore, we note that the Hon'ble Supreme Court has laid down law through judgment in case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83, wherein it was held as under: \"When an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the Revenue unless the view taken by the Income Tax Officer is unsustainable in law.\" Our view is further fortified from the judgement of the Hon'ble Punjab & Haryana High Court in the case of CIT v. Indo German Fabs in IT Appeal No. 248 of 2012, dated 24-12-2014, where in, it was held as follows: \"Section 263 of the Act confers power to examine an assessment order so as to ascertain whether it is erroneous and prejudicial to the interest of the revenue but does not confer jurisdiction upon the CIT to substitute his opinion for the opinion of the Assessing Officer. The words prejudicial and erroneous have to be read in conjunction and therefore, it is not each and every error in an assessment that invites exercise of powers under Section 263 of the Act, but only orders that are erroneous and prejudicial to the interest of the revenue. 18.Therefore, we note that when the Assessing Officer has taken a legally plausible view, duly supported by judicial precedents, then, the Ld. Pr. CIT is Printed from counselvise.com MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT ITA No.318/RJT/2024 22 precluded from taking recourse to revisionary proceedings u/s. 263 of the Act. He cannot thrust his view to substitute view taken by the assessing officer, unless such view taken by the assessing officer is wholly unsustainable in law. Since in the assessee`s case, the view taken by the assessing officer is a plausible view; legally sustainable, therefore, in our view the Ld. Pr. CIT has erred in invoking revisionary jurisdiction u/s 263 of the Act, hence, we quash the order passed by the learned PCIT under section 263 of the Act. 19.In the result, appeal filed by the assessee is allowed. Order is pronounced in the open court on 27/08/2025. Sd/- Sd/- (DINESH MOHAN SINHA) JUDICIAL MEMBER (DR. ARJUNLAL SAINI) ACCOUNTANT MEMBER राजकोट/Rajkot िदनांक/ Date: 27/08/2025 *vk आदेशकìÿितिलिपअúेिषत/ Copy of the order forwarded to :  अपीलाथê/ The assessee  ÿÂयथê/ The Respondent  आयकरआयुĉ/ CIT  आयकरआयुĉ(अपील)/ The CIT(A)  िवभागीयÿितिनिध, आयकरअपीलीयआिधकरण, राजकोट/ DR, ITAT, RAJKOT  गाडªफाईल/ Guard File /True copy/ By order Assistant Registrar/Sr. PS/PS ITAT, Rajkot Printed from counselvise.com "