SRI VIJAY LAXMAN VAIDYA V. THE PRINCIPAL COMMISSIONER OF INCOME TAX

WP/7971/2020

AI Insights

The case revolves around a writ petition filed by Sri Vijay Laxman Vaidya challenging the taxability of interest on compensation received from the acquisition of property, which he co-owns with his brother, Surendra Laxmanrao Vaidya. The Income Tax Officer had taxed this interest for the assessment year 2013-14, leading to the issuance of demand notices. The petitioner's brother had previously contested a similar tax assessment, which was exempted by the Income Tax Appellate Tribunal under Section 10(37) of the Income Tax Act, 1961. The petitioner argued for similar treatment, citing the precedent set in his brother's case. The court, acknowledging the prima facie merit in the petitioner's argument, allowed him to appeal the assessment order and stayed the demand notices pending the appeal's outcome.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 754617 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 24-02-2021
• Assessment Year: misc
• Laws Referred To: Articles 226 and 227 of the Constitution of India, Section 10(37) of the Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K ARAVIND
• Assessee Lawyers: GAUTAM BHARADWAJ
• Keywords: Appeal; Assessment Order; Income Tax; Interest on compensation; Taxability; Writ petition
• Section: 10(37); 226; 227

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF FEBRUARY, 2021 BEFORE THE HON'BLE MR.JUSTICE S. SUNIL DUTT YADAV WRIT PETITION No. 7971/2020 (T-IT) BETWEEN: Sri Vijay Laxman Vaidya, Son of Late Laxman Rao, Aged about 68 years, Residing at No.313, 8th Main, 3rd Cross, BCC Layout, Bengaluru - 560 040. … Petitioner (By Sri Gautam Shreedhar Bharadwaj, Advocate) AND: 1. The Principal Commissioner of Income Tax, 3rd Floor, Central Revenue Building, Queens Road, Bengaluru - 560 001. 2. The Income Tax Officer, Ward 3 (3), JMT Bhavan, No.59, Bellary Road, Ganganagar, Bengaluru - 560 032. … Respondents (By Sri K. Aravind, Advocate) 2 This Writ Petition is filed under Articles 226 and 227 of the Constitution of India, praying to quash the impugned order dated 13.01.2015 passed by the Income Tax Officer, Ward 3(3), annexed as Annexure-D and the consequential demand notices dated 13.01.2015 and 29.01.2020 marked as Annexures-E and K respectively and etc. This Writ Petition coming on for orders this day, the Court, made the following: ORDER Petitioner has sought to set aside the order dated 13.01.2015 passed by the Income Tax Officer, copy of which is produced at Annexure-D and has sought for setting aside the consequential demand notices dated 13.01.2015 and 29.01.2020 produced at Annexures-E and K. 2. It is the contention of the petitioner that the assessment order at Annexure-D for the assessment year 2013-14 has made the interest on compensation subject to tax and has raised appropriate demand. It is pointed out that the interest on compensation has been received by all the co-owners of the property which includes his brother- Surendra Laxmanrao Vaidya, who has interest of 1/4th share in the property that was subject to acquisition. It is further submitted that insofar as the assessment order as 3 regards to his brother, same came to be questioned before the Income Tax Appellate Tribunal in I.T.A.No.1952/Bang/2017 and the appeal filed by his brother came to be allowed upholding exemption under Section 10(37) of the Income Tax Act, 1961. 3. Petitioner submits that as the acquisition of the property and receipt of compensation is with respect to the property in which the petitioner and his brother had interest and the assessment order as modified by the Income Tax Appellate Tribunal with respect to the taxability of interest on compensation, cannot have different consideration as regards himself and hence, sought for parity in treatment. 4. Learned counsel for the Revenue on the other hand would submit that the question as to the factual finding as to whether the petitioner's brother and petitioner are entitled for similar treatment is to be verified and such verification could be done by the Appellate Authority. 4 5. It is a fit case where the petitioner must be permitted to call in question by way of an appeal the assessment order at Annexure-D while noting that prima facie the assessment as regards to the petitioner's brother with respect to taxing of interest on compensation is same and requires similar treatment as regards to petitioner However, subject to factual verification of the transaction as noticed above, it would be a fit case to relegate the matter to the appellate authority. Contentions of the parties are however kept open. 6. The petitioner is permitted to file an appeal against the assessment order at Annexure-D. If the said appeal is filed within a period of two weeks from the date of release of this order, the appellate authority to take up the appeal and decide the same without raising the question of delay in filing the appeal. Taking note that prima facie petitioner appears to be entitled to the relief as granted to his brother as per the order at Annexure-J, the demand notice at Annexures-E and K would be kept in abeyance till 5 the disposal of the appeal in light of the peculiar facts of the present case. Accordingly, the petition is disposed off. Sd/- JUDGE VP "