2019 (6) TMI 482 - HC - Income Tax

Addition u/s 10(37) and 145A - interest and the compensation amount were declared on accrual basis - HELD THAT - Method of computation of the income came to be settled in the case of Commissioner of Income Tax Vs. Ghanshyam 2009 (7) TMI 12 - SUPREME COURT wherein the Hon ble Apex Court was pleased to lay down the law that the computation of income sought to be made on receipt basis. 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) 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. The substantial question of law is answered in the affirmative.

Summary

Issues:
1. Whether the appeal requires to be remanded due to assessments made without reference to Section 10(37) and 145A of the Income Tax Act?

Analysis:
The judgment delivered by the Karnataka High Court involved a detailed consideration of the substantial question of law regarding the necessity of remanding the appeal due to assessments conducted without considering Section 10(37) and 145A of the Income Tax Act. The learned counsel for the Revenue argued that the appellant's reliance on these sections was not presented before the lower authorities. It was emphasized that the law on income computation was settled by the Supreme Court in a previous case, where income was to be computed on a receipt basis. The amended provision of sub-section 37 of section 10 of the Income Tax Act was also discussed, highlighting that certain types of income, such as arising from the transfer of agricultural land through compulsory acquisition, would not form part of the total income. The Revenue's counsel insisted that the new arguments raised by the appellant needed to be examined by the Assessing Officer, as they were not part of the original case presented.

The judgment further elaborated on the provisions of Section 10(37) and Section 145A of the Income Tax Act, noting their respective amendment dates and implications. Ultimately, the High Court answered the substantial question of law in the affirmative and allowed the appeal in part. The court set aside the order under challenge and remitted the appeal back to the competent authority for re-assessment in compliance with the law, specifically referencing Sections 10(37) and 145A of the Income Tax Act. It was explicitly stated that there would be no order as to costs in this matter. The judgment provided a comprehensive analysis of the legal issues raised and ensured that the appeal process was conducted in accordance with the relevant provisions of the Income Tax Act.