2010 (8) TMI 1021 - AT - Income Tax

Summary

Issues Involved:
1. Assessability of interest received as part of enhanced compensation against the acquisition of agricultural land.
2. Justification of CIT(A) in deleting the addition made by the Assessing Officer.
3. Admissibility of fresh evidence by CIT(A) without confronting the Assessing Officer.

Summary:

1. Assessability of Interest Received:
The primary issue in these appeals is the assessability of interest received by the assessee as part of the enhanced compensation for the acquisition of agricultural land. The Revenue contended that the interest received should be taxed in the year of receipt based on the Supreme Court's judgment in CIT Vs Ghanshyam (HUF) 315 ITR 1, which held that the whole of the interest received is taxable in the year of receipt. However, the CIT(A) held that the interest received u/s 28 of the Land Acquisition Act, 1894 is part of the enhanced compensation and thus exempt u/s 10(37) of the Income Tax Act, 1961.

2. Justification of CIT(A) in Deleting the Addition:
The CIT(A) found that the interest received by the assessee on enhanced compensation is in terms of Section 28 of the Land Acquisition Act, 1894, and thus partakes the nature of enhanced compensation. The enhanced compensation received was exempt u/s 10(37) as the lands acquired were agricultural lands. Consequently, the interest received was also accorded the same exemption. The Tribunal upheld this view, noting that the Assessing Officer had already accepted that the enhanced compensation was exempt and thus the interest, being part of the enhanced compensation, was also exempt.

3. Admissibility of Fresh Evidence:
The Revenue argued that the CIT(A) wrongly admitted fresh evidence in the form of a calculation sheet without confronting the Assessing Officer, violating Rule 46A of the Income Tax Rules, 1962. However, the Tribunal found this argument misplaced, as the Assessing Officer had already concluded that the interest received was part of the enhanced compensation. Furthermore, a report from the Assessing Officer confirmed that the interest was received in terms of Section 28 of the Land Acquisition Act, 1894.

Conclusion:
The Tribunal dismissed the Revenue's appeals, affirming the CIT(A)'s decision to delete the addition made by the Assessing Officer. The interest received by the assessee was held to be part of the enhanced compensation and thus exempt u/s 10(37) of the Income Tax Act, 1961. The Tribunal found no merit in the Revenue's arguments regarding the admissibility of fresh evidence and the applicability of the Supreme Court's judgment in Ghanshyam, HUF. The decision in ITA No. 561/Chd/2010 was applied mutatis mutandis to the other appeals, resulting in the dismissal of all 52 appeals.