2022 (5) TMI 502 - AT - Income Tax

Intimation u/s. 143(1) - assessee has apparently claimed exemption u/s. 10(37) towards enhanced compensation along with interest u/s. 28 of the land acquisition Act. - enhanced compensation has been taxed as per the provisions of Section 56(2) and tax liability has been created as per the provisions of Section 57(iv) - HELD THAT - The question is firstly the requisite facts have to be brought on record in terms of nature of the land being acquired by the government and the quantum of compensation, enhanced compensation and interest and the relevant provisions of land acquisition Act under which such compensation and interest has been granted and thereafter, the relevant provisions as applicable needs to be applied. Further, Wthere are decisions rendered by the Highest Court of the land and which are duly brought to the notice of the ld. CIT(A), the latter cannot merely rely on the relevant provisions of the Act without taking into consideration the legal proposition so laid down in the said decisions regarding the exact nature of compensation and how the same needs to be construed under the relevant statute and the tax statue. The judicial discipline requires that the law laid down by the Highest Court of the land need to be followed irrespective of individual opinion or view point which the ld. CIT(A) may have in a particular matter. At the same time, where there is change in law or any subsequent jurisdictional High Court decision(s) where such decisions rendered by the Hon'ble Supreme Court have been considered and which the ld. CIT(A) ought to rely upon, the ld. CIT(A) has to say so by way of a speaking order rather than maintaining silence on the applicability of the said decisions. Therefore, in light of the aforesaid discussion and in the entirety of facts and circumstances of the case, we deem it appropriate to remand the matter to the file of the ld. CIT(A) to decide the same afresh after bring on record the relevant facts and the decide the same as per law after providing reasonable opportunity to the assessee.

Summary

Issues:
1. Whether the enhanced compensation received by the assessee is exempt under section 10(37) of the Income Tax Act.
2. Whether the adjustment made by the CPC under section 143(1) was justified.
3. Whether the legal propositions laid down by the Hon'ble Supreme Court were considered by the Ld. CIT(A).

Issue 1: Enhanced Compensation Exemption under Section 10(37):
The assessee received enhanced compensation under the Land Acquisition Act, claiming it to be exempt under section 10(37) of the Act. The Ld. AR cited various Supreme Court decisions to support this claim. However, the Ld. CIT(A) confirmed the addition made by the CPC, stating that the details submitted for claiming exemption were not part of the return of income. The ITAT emphasized the importance of disclosing the nature and quantum of exemption claimed in the return of income. It noted that the CIT(A) should have examined the requisite documentation in support of the claim of exemption and considered it as per law. The ITAT held that the matter should be remanded to the CIT(A) to decide afresh after bringing on record the relevant facts and providing a reasonable opportunity to the assessee.

Issue 2: Justification of Adjustment by CPC under Section 143(1):
The Ld. Sr. DR argued that the adjustment made by the CPC was justified under Section 56(2) and Section 57(iv) of the Act, as the information was part of the return and Form 26AS. While acknowledging that the Supreme Court decisions cited by the Ld. AR were not considered by the CIT(A), the Ld. Sr. DR supported the CPC's action. The ITAT, however, stressed the need to bring on record the requisite facts regarding the nature of the land acquisition and compensation before applying the relevant provisions. It highlighted that the legal propositions laid down by the Supreme Court should be followed, and the CIT(A) should provide a speaking order when relying on relevant provisions without considering Supreme Court decisions.

Issue 3: Consideration of Legal Propositions by CIT(A):
The ITAT noted that the CIT(A) did not consider the legal propositions laid down by the Hon'ble Supreme Court, despite being brought to his notice. It emphasized the importance of following the law laid down by the Highest Court of the land and providing a speaking order when relying on relevant provisions or subsequent jurisdictional High Court decisions. The ITAT directed the CIT(A) to decide the matter afresh after considering the relevant facts and legal provisions, ensuring a reasonable opportunity for the assessee.

In conclusion, the ITAT allowed the appeal of the assessee for statistical purposes and remanded the matter to the CIT(A) for a fresh decision based on the relevant facts and legal considerations.

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