2019 (6) TMI 439 - HC - Income Tax

Accrual of income - interest and compensation amount receipt - Sections 145A and 10(37) applicability - method of computation of the income - HELD THAT - It is not in dispute that under the amended provision of sub-section 37 of section 10 of the Income Tax Act the income in the case of an assessee, being an individual or a Hindu undivided family, any income chargeable under the head Capital Gains arising from the transfer of agricultural land and such transfer is by way of compulsory acquisition under any law, or a transfer the consideration for which is determined or approved by the Central Government or the Reserve Bank of India and where such income has arisen from the compensation or consideration for such transfer received by such assessee on or after received, such income would not form part of the total income. During the course of arguments, the learned Senior counsel placed reliance on the provisions of Section 10(37) of the Income Tax Act which undoubtedly came to be inserted vide amendment dated 01.04.2005 and the provision of Section 145A came to be substituted with effect from 01.04.2010. Substantial question of law is answered in the affirmative. Appeal is allowed in part. The order under challenge is set aside. The appeal is remitted back to the competent authority for re-assessment in accordance with law and more particularly with reference to Sections 10(37) and 145A

Summary

Issues:
1. Interpretation of Sections 10(37) and 145A of the Income Tax Act.
2. Requirement of remanding the appeal for re-assessment based on the application of the mentioned sections.

Analysis:

Issue 1: Interpretation of Sections 10(37) and 145A
The High Court deliberated on the substantial question of law concerning the application of Sections 10(37) and 145A of the Income Tax Act. The counsel for the Revenue argued that the appellant's reliance on these sections was not part of the original case presented before the authorities. The court noted that the method of income computation was previously established by the Supreme Court in Commissioner of Income Tax Vs. Ghanshyam [(2009) 315 ITR 1 (SC)], emphasizing income calculation on a receipt basis. The court highlighted the provisions of Section 10(37), which exempt income from capital gains arising from the transfer of agricultural land through compulsory acquisition from forming part of the total income.

Issue 2: Requirement of Remanding the Appeal
The court acknowledged that the appellant's new argument based on Sections 10(37) and 145A necessitated further examination by the Assessing Officer. Consequently, the court allowed the appeal in part, setting aside the previous order and remitting the case back to the competent authority for re-assessment in alignment with the provisions of Sections 10(37) and 145A of the Income Tax Act. The court emphasized the need for the re-assessment to be conducted in accordance with the law, specifically referencing the mentioned sections for proper consideration.

In conclusion, the High Court's judgment focused on the interpretation and application of Sections 10(37) and 145A of the Income Tax Act, highlighting the necessity of remanding the appeal for re-assessment to ensure compliance with the relevant legal provisions and established principles of income computation.