PR. CIT, PANCHKULA V. SHRI ISHWAR SINGH, JAGADHARI

MA 10/CHANDI/2022

AI Insights

The case revolves around the assessment of Shri Ishwar Singh, who received enhanced compensation and interest from land acquisition, which was initially scrutinized and later subjected to a revised assessment under sections 143(3) and 263 of the Income Tax Act, 1961. The Principal Commissioner of Income Tax, Panchkula, challenged the ITAT's earlier decision, which had favored the assessee, arguing that the interest received should be taxable. However, the ITAT dismissed the Revenue's application, maintaining that the interest is in the nature of compensation and not taxable as income.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 705554 (ITAT-CHANDIGARH)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-07-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Assessment Year: 2015-2016
• Other Referred Cases: CIT vs. Ghanshyam, Manjeet Singh HUF vs. Union of India, Puneet Singh Vs CIT, Karnal
• Laws Referred To: Income Tax Act, 1961, Land Acquisition Act of 1894
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM VARDHAN
• Assessee Lawyers: AJAY JAIN
• Keywords: Set aside; Tax effect; Earning of tax free income; Assessment record; Revision of order
• Section: 143(3); 263; 28; 80C

Judgement Text

" आयकर अपीलȣय अͬधकरण, चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, ‘A’, CHANDIGARH BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT & SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER M.A. No. 10/Chd/2022 (Arising out of ITA No. 45/CHD/2020 Ǔनधा[रण वष[ / Assessment Year : 2015-16 Principal Commissioner of Income Tax, Aayakar Bhawan, Panchkula बनाम Vs. Shri Ishwar Singh, Jagadhari èथायी लेखा सं./PAN NO: CMHPS2458D अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent ( HYBRID MODE ) Ǔनधा[ǐरती कȧ ओर से/Assessee by : Shri Ajay Jain, CA राजèव कȧ ओर से/ Revenue by : Sh. Vikram Vardhan, Addl. CIT, Sr. DR सुनवाई कȧ तारȣख/Date of Hearing : 27.06.2025 उदघोषणा कȧ तारȣख/Date of Pronouncement : 02.07.2025 आदेश/Order Per Krinwant Sahay, AM : The present Miscellaneous Application has been filed by the Revenue against the order passed by the ITAT Chandigarh in ITA No. 45/Chd/2020 on 20.01.2022 in the case of Assessee i.e., Shri Ishwar Singh S/o Shri Faqir Singh, 1507, M.A.No.10-Chd-2022- Sh. Ishwar Singh 2 Jaroda Gate, Old Grain Market, Bilaspur Road, Jagadhri, Yamunanagar. 2. Brief facts of the case as per the M.A. filed are as under:- “2.1 Originally, the case was selected for scrutiny through CASS on the reason \"Claim of large exempt income\". The assessment was completed u/s 143(3) of the Income Tax Act, 1961 vide order dated 28.12.2017 disallowing the deduction u/s 80C of IT Act of amounting Rs. 1,50,000/-. Thereafter, on perusal of assessment record it was revealed that the assessee had also received enhanced compensation from land acquisition officer, Panchkula along with interest amounting to Rs. 3,76,15,370/- u/s 28 of Land Accusation act of 1894 during the F.Y. 2014-15 relevant to the A.Υ. 2015-16. 2.2 Based on these findings a show cause notice u/s 263 of IT Act 1961 was issued on 15.10.2019 asking the assessee to explain as to why the assessment should not be set aside u/s 263 of IT Act. In response to the notice the assessee submitted a reply which was not found satisfactory and the case was reopened u/s 263 of IT Act, 1961. M.A.No.10-Chd-2022- Sh. Ishwar Singh 3 2.3 The case was transferred to NFAC and assessment was completed u/s 143(3) r.w.s 263 r.w.s 144B of IT Act, 1961 on 21.09.2021 making addition of Rs. 2,72,89,831/- after disallowing interest on enhanced compensation u/s 10(37) of the IT Act, 1961 and addition of Rs. 1,50,000/-was done after disallowing deduction of 80C of IT Act, 1961. Total Aggregate income was assessed at 2,84,99612/-. 3. Aggrieved to the order u/s 263 passed by the Pr. CIT, Panchkula vide order dated 02.12.2019, the assessee filed appeal before ITAT, Chandigarh. The ITAT Chandigarh vide its order dated 20.01.2022 held that once the issue has been examined by the assessing officer in assessment proceedings and has considered the possible views duly supported by the judgment rendered by the Hon'ble Apex court in the case of CIT vs. Ghanshyam and decided that the Assessment order cannot be said to be erroneous. 3.1 The jurisdictional ITAT has taken a view that the interest received by the assessee during the impugned year on the compulsory acquisition of his land u/s 28 of the Land M.A.No.10-Chd-2022- Sh. Ishwar Singh 4 Acquisition Act, is in the nature of compensation,\" and not interest and is exempt u/s 10(3) of the Income Tax Act, 1961. The ITAT has considered the decision of the jurisdictional High Court in the case of Manjeet Singh HUF (supra) and the decisions of the Apex Court in the case of Ghanshyam HUF.” 3. During proceedings before us, the ld. DR brought it on record following reasons for filing of this M.A. 4. Further, it is submitted that the order of Hon'ble ITAT is not acceptable for the following reasons: - “4.1 As per the provisions of section 56(2)(viii) r.w.s. 145A(b) of the I.T. Act, 1961, interest received on enhanced compensation is taxable after allowing deduction of 50% u/s 57(iv) of the I.T. Act, 1961. 4.2 Further, as per the latest judgment in the case of Puneet Singh Vs CIT, Karnal of the jurisdictional Hon'ble P&H High Court in ITA- 132-2018 (O&M) dated 19.11.2018, the Hon'ble Punjab & Haryana High Court has upheld the decision of the Hon'ble ITAT in favour of the revenue, and has dismissed the appeal of the M.A.No.10-Chd-2022- Sh. Ishwar Singh 5 assessee, observing that \"the Hon'ble Tribunal relying upon the decision of this court in Manjeet Singh (HUF) Karta Manjeet Singh vs. Union of India and others, CWP-15506-2013 decided on 14.01.2014 against which the SLP No. 34642 of 2014 having been dismissed by the Supreme Court, had held that the interest received u/s 28 of the 1894 Act is not exempt under the Act as it could not partake the character of compensation for acquisition of agricultural land. It was further held that the interest received on enhanced compensation in the case of the assessee was liable to tax under the head ‘Income from Other Sources' in the year of receipt.\" 4.3 In view of the facts, the order of the ITAT has not been found acceptable on merits. However, the tax effect involved in this case is Rs. 92,75,815/- which is below the monetary limit prescribed by the Board in Circular No. 17/2019 dated 8.8.2019. Hence, further appeal has not been recommended in this case. 4. Per contra, the Ld. Counsel of the Assessee argued that the order passed by the ITAT in this case is a very speaking one and there was nothing wrong and no law was wrongly interpreted as on the date of order was passed. M.A.No.10-Chd-2022- Sh. Ishwar Singh 6 5. We have considered the impugned order and the submissions filed in the form of M.A. by the Revenue. We have also considered the arguments of the ld. DR as well as that of the ld. counsel of the Assessee. The ld. DR could not bring anything on record as to the what shortcoming / wrong interpretation of law was there in the impugned order on the date it was passed by the Tribunal. We also find that there is nothing wrong in the order passed by the Tribunal. There is no misinterpretation of law as on the date of order was passed. The ld. DR also could not bring any such thing on record. Accordingly, the M.A. filed by the Revenue stands dismissed. 6. In the result, M.A. filed by the Revenue is dismissed. Order pronounced on 02.07.2025. Sd/- Sd/- ( RAJPAL YADAV ) ( KRINWANT SAHAY) Vice President Accountant Member “आर.क े.” आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the order forwarded to : 1. अपीलाथȸ/ The Appellant 2. Ĥ×यथȸ/ The Respondent M.A.No.10-Chd-2022- Sh. Ishwar Singh 7 3. आयकर आयुÈत/ CIT 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय आͬधकरण, चÖडीगढ़/ DR, ITAT, CHANDIGARH 5. गाड[ फाईल/ Guard File सहायक पंजीकार/ Assistant Registrar "