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2019 (7) TMI 933 - AT - Income TaxRevision u/s 263 - CIT directed to bring to tax interest received on compensation / enhanced compensation - interest received by the assessee u/s 28 of the Land Acquisition Act, 1894 was to be taxed u/s 56(2)(vi) - HELD THAT - In the instant case, no interest has been awarded by the Sub Court u/s 34 of the Land Acquisition Act, 1894. It is a fact that the Pr.CIT had agreed that the interest was received u/s 28 of the Land Acquisition Act, 1894. The issue has been correctly decided by the Assessing Officer in the light of the judgment of the Hon ble Supreme Court in the case of Ghanshyam (HUF) 2009 (7) TMI 12 - SUPREME COURT and hence there was no need for the Pr.CIT to invoke revisionary jurisdiction u/s 263 of the I.T.Act to set aside the assessment completed u/s 143(3) of the I.T.Act. In the instant case, the Assessing Officer had applied his mind on the assessability of interest received u/s 28 of the Land Acquisition Act, 1894 in the light of the judgment of the Hon ble Apex Court on the subject. Thus order u/s 263 of the I.T.Act passed by the Pr.Commissioner of Income-tax is quashed. - Decided in favour of assessee.
Issues Involved:
- Whether the Commissioner of Income-tax was justified in invoking revisionary powers u/s 263 of the Income-tax Act to tax interest received on compensation/enhanced compensation? Analysis: Issue 1: Justification of invoking revisionary powers u/s 263 The Appellate Tribunal ITAT Cochin dealt with an appeal against the Commissioner of Income-tax's order invoking revisionary powers u/s 263 of the Income-tax Act. The core issue revolved around the taxability of interest received on compensation or enhanced compensation. The CIT contended that interest received on enhanced compensation should be taxed under the head "income from other sources" as per relevant provisions of the Income-tax Act. The CIT observed that the Assessing Officer had not considered this aspect while framing the assessment order, leading to an apparent error prejudicial to the revenue's interest. The CIT set aside the assessment order, prompting the appeal by the assessee. Issue 2: Taxability of interest on enhanced compensation The case involved an individual who received enhanced compensation for the compulsory acquisition of immovable property. The assessee argued that the interest allowed by the Sub Court under the Land Acquisition Act was part of the compensation and hence not taxable. The assessee relied on a Supreme Court judgment to support this stance. The Assessing Officer had initially considered taxing the interest but later decided not to tax it based on the nature of the interest awarded by the Sub Court. The CIT sought to tax the interest under a specific section of the Income-tax Act, alleging that the Assessing Officer failed to consider the taxability of a portion of the interest. However, the Tribunal found that the Assessing Officer had correctly applied the law and the Supreme Court judgment in determining the taxability of the interest. The Tribunal distinguished the CIT's reliance on other judgments, emphasizing that the Assessing Officer had indeed applied his mind to the issue, leading to the quashing of the CIT's revisionary order. In conclusion, the Tribunal allowed the appeal, ruling in favor of the assessee based on the correct application of the law and the Supreme Court judgment regarding the taxability of interest on enhanced compensation.
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