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TMI Blog2006 (11) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee s land was acquired under the provision of Land Acquisition Act, 1894 and enhanced compensation was granted to the assessee by the Appellate Court, enhanced compensation was to be taxed in the year of receipt notwithstanding that the order under which compensation of interest was received was challenged before the higher courts and litigation was pending. He submitted that as regards interest income on enhanced compensation, it has been held that it is to be assessed on accrual basis from year to year. However, the question of assessment on such accrual basis would not arise unless it is finally determined. In case of dispute relating to interest payable on enhanced compensation is pending before a court of law and not attained finality, the same will not accrue and not liable to tax. Only after it is finally determined, the same can be subjected to tax in the light of decision of the Hon ble Supreme Court in CIT v. Hindustan Housing Land Development Trust Ltd. [1986] 161 ITR 524 . Hence it was the submission that following the said decision, the ground No. 2 of the appeal of the revenue which relates to enhanced compensation should be allowed and ground No. 1 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellate powers by the Tribunal." Hence, he submitted that following the decision laid down by the Punjab and Haryana High Court in the case of Abhishek Industries Ltd. ( supra ) and the decision of the Madras High Court in the case of Smt. T. Girijammal ( supra ), the appeal of the revenue should be dismissed on these grounds of appeal. 4. We have heard the rival submissions and deliberated upon the decision cited at the bar and perused the orders of the lower authorities and the materials available on record. We find that the issue stands decided by the decision of the Special Bench of the Tribunal in the case of Padam Prakash (HUF) ( supra ), wherein it has been held : "25. It is no doubt true that Legislature while inserting sub-section (5) in section 45 through the Finance Act, 1987 with effect from 1-4-1988, did not provide for cases where enhanced or further enhanced compensation was subsequently reduced by any Court, Tribunal or other authority. Such situation has been taken care of by insertion of clause ( c ) to sub-section (5). The said clause no doubt was inserted by Finance Act, 2003 with effect from 1-4-2004, but it has to be taken to be declaratory in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions or without any condition. This simple answer follows from obvious and plain language. What is required to be considered is that compensation had been paid and received. If for any reason, it is subsequently reduced then assessment is required to be modified to take reduced compensation of income. Thus, statutory provision leave no scope for not taxing compensation on receipt basis under any situation. There is no way to read in clear language of statute that receipt, if conditional or allowed as per interim order of High Court is no receipt of compensation and would not be taxed in the year of the receipt. If the arguments of counsel for the assessee and Interveners are adopted, it would tantamount to adopting a narrow and pedantic construction and reduce legislation to futility. Therefore, we do not find any substance in the arguments advanced on behalf of the assessee and the interveners. 29. There is no doubt that in the case of Hindustan Housing Land Development Trust Ltd. ( supra ), it was laid down by their Lordship of Supreme Court that there is no accrual of income unless right to receive compensation is finally determined. Such a view had been taken by severa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attained finality, the same will not accrue and not liable to tax. Only after it is finally determined the same can be subjected to tax, in the light of decision of the Hon ble Supreme Court, referred to above. In the light of our directions, the Assessing Officer would revise assessment and tax enhanced compensation and interest, after providing reasonable opportunity of being heard to the assessee. All the above appeals are allowed in terms stated above." 5. The judicial discipline demands that the orders of the superior courts should be followed by lower courts. Therefore, the decision rendered by the Special Bench is binding on the Division Bench of the Tribunal and therefore, should be followed by it. If the assessee has any grievance against the decision rendered by the Special Bench, then the same should be agitated before the Appropriate Forum. The facts being identical, respectfully following the decision of the Special Bench of the Tribunal, we hold that additional compensation received by the assessee against the acquisition of land is taxable in the year of receipt i.e., the present year under appeal, whereas the interest of the additional compensation is taxab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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