Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2024 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (4) TMI 880 - AT - Income TaxRectification u/s 154 - Characterization of receipts - Exemption of interest on enhanced compensation from tax denied u/s. 10(37) - HELD THAT:- Sections 56(2)(viii) and 57(iv) came on the statute w.e.f. 01.04.2010, i.e., AY 2010-11 onwards. The decision in Ghanshyam (HUF) [2009 (7) TMI 12 - SUPREME COURT] is for AY 1999-00. The said decision by the Hon'ble Apex Court thus has no bearing on the said provisions, invoked by the AO in bringing the impugned interest to tax. Even as observed by the Bench during hearing, it is only where a Constitutional Court declares the same as ultra vires the Act (i.e., on a view that interest u/s. 28 of LAA is capital in nature), that would entitle the assessing authority to disregard the same. The Hon'ble Apex Court per it’s Constitutional Bench decision in Punjab Distilling Industries Ltd. [1965 (2) TMI 6 - SUPREME COURT] explained that there is no conflict between a receipt being capital in nature and, by fiction of law, an income chargeable to tax under the Act. That is, the nature of the receipt as capital, which is the purport of the decision in Ghanshyam (HUF) (supra), would not per se preclude interest from being, at the same time, subject to tax. Further, per it’s larger bench decision in Sham Lal Narula (Dr.)[1964 (4) TMI 10 - SUPREME COURT], not referred to in it’s later decision in Ghanshyam (HUF)(supra), the Apex Court held the provisions of s. 28 and 34 of LAA as analogous, i.e., compensatory, and, thus, not part of compensation. The decision in P.V. Kurien [1962 (3) TMI 123 - KERALA HIGH COURT] holding interest on enhanced compensation as capital in nature, was negated by the Hon’ble Court. The upshot thereof is that even de hors s. 56(2)(viii), applied by the AO, it may not be possible to say that interest u/s. 28 of LAA is not income, much less of it being regarded as so by him as ‘mistaken’, liable to be rectified u/s. 154. Assessee’s appeal is dismissed.
|