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TMI Blog2012 (7) TMI 551X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in assuming / exercising jurisdiction u/s. 263 of the IT Act, 1961. 2. That order dated 23.3.2010 passed by the C.I.T.- XIV, New Delhi u/s. 263 of the IT Act, 1961 is arbitrary as well as bad in law and the order has been passed without considering or distinguishing the ratio 'that interest on enhanced land compensation is taxable on accrual basis by spreading it year wise' repeatedly laid down by the three member benches of the Hon'ble Supreme court in the following cases which were also cited during the course of the proceedings: i) Bikram Singh & Others vs. Land Acquisition Collector & Others 224 ITR 551 (1996). ii) K.S. Krishna Rao vs. C.I.T 181 ITR 400 (1989). iii) Rama Bai vs. C.I.T. 181 ITR 400 (1989). iv) Dr. Sham Lal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Addl. & District Judge (ADJ), Hissar, who ordered enhancement of the compensation payable by the Government on these lands. As a consequence, the assessee received an additional sum of Rs. 45,05,464/- towards enhancement in compensation and Rs. 16,49,139/- by way of interest on enhanced compensation (total amount Rs. 61,54,603/-). In the note enclosed to the return of income, the assessee stated that though he had received the sum of Rs. 61,54,603/- during the previous year, the State Government had challenged the orders of the ADJ, Hissar before the Hon'ble High Court of Punjab and Haryana. The assessee claimed that since the issue of quantum of compensation had not yet finally been decided, the compensation shall be offered for tax, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income Tax further noted that in the in the note enclosed with the return of income, the assessee had stated that though he had received the sum of Rs. 61,54,603/- during the previous year, the State Government had challenged the order of the ADJ, Hissar, before the Hon'ble High Court of Punjab and Haryana. The assessee claimed that since the issue of quantum of compensation had not yet finally been decided, the compensation shall be offered for tax, if and when the mater is fianlised by the Highest Court in favour of the assessee. The Ld. Commissioner of Income Tax further observed that assessee had thus not shown interest amounting to Rs. 1649139/- on enhanced compensation, either on accrual basis, or on receipt basis. The Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r was neither erroneous nor prejudicial to the interests of the revenue; that it is settled law that interest on enhanced compensation paid for compulsory acquisition of land under the Land Acquisition Act is taxable on accrual basis, by spreading it year-wise; that even though the jurisdiction u/s. 263 of the Act was sought to be exercised on specific grounds of non-assessment of interest on the enhanced compensation and non-charging of interest u/s. 234A of the Act, the Ld. C.I.T. erred in ordering cancellation of the whole assessment; that the Ld. C.I.T. has failed to appreciate that the decisions in 'DCIT, Karnal vs. Bhim Singh Latther', 99 ITD 50 (Del) (TM) and 'DCIT, Meerut vs. Padam Prakash', 104 ITD 7 (Del) (SB), which cases have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of interest income on enhanced compensation received during the year; and that moreover, interest u/s. 234A of the Act having not been charged for late furnishing of the return of income in response to notice u/s. 148 of the Act, this issue had also remained being examined by the Assessing Officer and on this count also, invocation of the revisionary jurisdiction by the Ld. C.I.T. was justified. The Ld. Departmental Representative has, thus, contended that there being no force in the appeal filed by the assessee, the same be dismissed and the well-reasoned order passed by the Ld. C.I.T. be maintained. 8. We have heard the rival contentions in the light of the material produced and precedent relied upon. We find that the Ld. Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder has been passed in complete oblivion of this Note, rendering the order bad in law as this order is an order passed as a result of non-reading of the said Note 2 in the assessment order. 8.2 Thus, we find that the Assessing Officer has applied his mind and it was his conscious decision not to bring to tax interest amounting to Rs. 1649139/-. It was one of the possible views. Later on, the matter was settled by the Hon'ble Apex Court in the case of C.I.T. vs. Ghanshyam (HUF) 315 ITR 1. But at the time of passing of the assessment order, this decision had not come. So, the Assessing Officer having adopted one of the possible views, his order cannot be treated as erroneous or prejudicial to the interests of the revenue. In this view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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