2015 (2) TMI 117 - HC - Income Tax

Nature of additional Compensation received - ITAT held that the alleged amount of compensation cannot be brought within the meaning of income u/s 45(5) - Held that - Considering the decision of the Apex Court in the case of Ghanshyam (2009 (7) TMI 12 - SUPREME COURT) wherein the Apex Court has distinguished its earlier decision in the case of Hindustan Housing and Land Development Trust Ltd (1986 (7) TMI 10 - SUPREME Court) which has been relied upon by the Tribunal in the impugned order, we are of the opinion that these matters are required to be remanded to the Tribunal for reconsideration. Thus these matters are remanded to the Tribunal, which shall consider the issues afresh in light of the provisions of law

Summary

Issues:
1. Interpretation of Section 45(5) of the Income Tax Act, 1961 regarding taxability of compensation and interest.
2. Reconsideration of the case in light of the decision in Commissioner of Income-Tax vs. Ghanshyam.

Analysis:
1. The High Court considered the appeals filed by the revenue against the order of the Income Tax Appellate Tribunal. The substantial questions of law involved the taxability of compensation and interest under Section 45(5) of the Income Tax Act, 1961. The revenue argued that the Tribunal erred in its decision by relying on previous judgments. The Apex Court's decision in Commissioner of Income-Tax vs. Ghanshyam was cited, emphasizing the distinction between compensation and interest under different sections of the law.

2. The advocate for the assessees requested the Court to remand the matter to the Tribunal for reconsideration based on the Ghanshyam case. After hearing both sides, the High Court agreed that a remand was necessary for the Tribunal to reevaluate the issues in light of the legal provisions clarified by the Apex Court. The Court emphasized that the Tribunal should make its decision independently without being influenced by previous observations.

3. The High Court directed the Tribunal to conduct a fresh examination of the case, considering the legal principles established by the Apex Court. The Tribunal was instructed to provide a reasoned decision after evaluating the contentions raised by both parties. The Court clarified that it did not delve into the merits of the case but focused on the need for a thorough reconsideration by the Tribunal.

4. Acknowledging that some assessees had already paid taxes based on previous orders, the Court directed that the tax liability should be recalculated, taking into account any taxes already paid to prevent double taxation. The impugned order of the Tribunal was quashed and set aside, and the appeals were allowed. The High Court concluded by stating that the questions raised were not answered due to the remand of the case for further review.