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TMI Blog2017 (11) TMI 370X X X X Extracts X X X X X X X X Extracts X X X X ..... ), as per details given below: ITA No. A.Y. Date of order of the CIT(A) ITA No. 141/DEL/2016 2013-14 19.10.2016 ITA No. 1388/DEL/2017 2010-11 06.01.2017 ITA No. 1390/DEL/2017 2011-12 06.01.2017 ITA No. 1392/DEL/2017 2011-12 06.01.2017 2. As the issues raised in all the four appeals are identical and were heard together, the same are disposed of by this common order for the sake of convenience and brevity. 3 3. Almost identical grounds have been raised in all the four appeals. First of all, I am taking up the appeal in ITA No. 141/DEL/2017 for assessment year 2013-14. The assessee has raised as many as 8 grounds of appeal. However, only ground Nos. 4 and 5 have been pressed which are reproduced hereinbelow: 4. That having regard to the facts and circumstances of the case, the ld. CIT(A) has erred in law and on facts in upholding the action of the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for delay in making payment. Interest u/s 28 is a part of enhanced value of land which is not the case in the matter of payment of interst u/s 34. 9. The Hon'ble Punjab Haryana High Court considered this issue in the case of Manjeet Singh (HUF) Karta Manjeet Singh V/s Union of India and Ors. CWP No. 15506 of 2013 dated 14/01/2014 (2016) 237 taxmann 116. The Hon ble Jurisdictional High Court considered the issue whether the interest u/s 28 of the 1894 Act. is taxable u/s 56 of the IT Act. as income from other sources. In this case the Hon'ble High Court referred to the decision of the Hon'ble Supreme Court in the case of CIT V/s Ghanshyam (Supra). The Hon'ble High Court also referred to a number of other decisions of the Hon'ble Supreme Court and held as under 7. The primary question for consideration that arises in these petitions relates to the nature of interest received by the landowner-assessee under Section 28 of the 1894 Act. In other words, whether the interest which is received by the assessee-landowner partakes the character of income or not and, in such a situation is it taxable under the provisions of the Act. 8. It would be ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also Section 28 of the 1894 Act clearly spells out that additional benefits are available on the market value of the acquired lands under Section 23(1A) and 23(2) whereas Section 28 is available in respect of the entire compensation. The Constitution Bench of the Supreme Court in Sunder s case (supra) had approved the following observations of the Division Bench of this Court in State of Haryana vs. Smt.Kailashwati and others, AIR 1980 P H 117:- 10. Once it is held as it inevitably must be that the solatium provided for under Section 23(2) of the Act forms an integral and statutory part of the compensation awarded to a landowner, then from the plain terms of Section 28 of the Act, it would be evident that the interest is payable on the compensation awarded and not merely on the market value of the land. Indeed the language of Section 28 does not even remotely refer to market value alone and in terms talks of compensation or the sum equivalent thereto. The interest awardable under Section 28 therefore would include within its ambit both the market value and the statutory solatium. It would be thus evident that the provisions of Section 28 in terms warrant and authorize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a revenue receipt and is taxable. It was held as under The controversy is no longer res integra. This question was considered elaborately by this Court in Dr. Shamlal Narula v.s- CWP Commissioner of Income-tax, Jammu [51 ITR 151]. Therein, K. Subba Rao, J., as he then was, considered the earlier case law on the concept of interest laid down by the Privy Council and all other cases and had held at page 158 as under: In a case where title passes to the State, the statutory interest provided thereafter can only be regarded either as representing the profit which the owner of the land might have made if he had the use of the money or the loss he suffered because he had not that use. In no sense of the term can it be described as damages or compensation for the owner's right to retain possession, for he has no right to retain possession after possession was taken under Section 16 or Section 17 of the Act. We, therefore, hold that the statutory interest paid under Section 34 of the Act is interest paid delayed payment of the compensation amount and, therefore, is a revenue receipt tax under the Incomet ax Act. This position of law has been consistently by this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest awarded by the court on enhanced amount of compensation under Section 28 of the 1894 Act falls for taxation under Section 56 as 'income from other sources' in the year of receipt. 16. The reliance was placed upon following observations in Ghanshyam (HUF)'s case (supra):- To sum up, interest is different from compensation. However, interest paid on the excess amount under Section 28 of the 1894 Act depends upon a claim by the person whose land is acquired whereas interest under Section 34 is for delay in making payment. This vital difference needs to be kept in mind in deciding this matter. Interest under Section 28 is art of the amount of compensation whereas interest under Section 34 is only for delay in 'king payment after the compensation amount is determined. Interest under Section 28 is a part of the enhanced value of the land which is not the case in the matter of payment of interest under Section 34. 17. In view of the authoritative pronouncements of the Apex Court in Dr. Sham Lai Narula, T.N.K.Govindaraja Chetty, Amarjit Singh, Sunder, Bikram Singh's cases (supra), Rama Bai vs. CIT (1990) 181 ITR 400 and K.S.Krishna Rao v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling with the issue of tax deducted at source under similar circumstances had recorded as under:- 8. This Court, in Income Tax Appeal No. 209 of 2004, decided on 27.10.2010 (Commissioner of Income Tax, Faridabad v. Bir Singh (HUF), Ballabgarh) had held that interest paid to the assessee under Section 28 of the Land Acquisition Act, 1894 (for brevity, 1894 Act ) on enhanced amount of compensation in respect of the acquired land falls for taxation under Section 56 of the Act as income from other sources and is exigible to tax in the year of receipt under cash system of accountancy. It had also been observed that where the assessee is not maintaining books of accounts by adopting any specific method, it shall be treated to be cash system of accountancy. In the present case, the interest received by the petitioner was on account of delay in making the payment of enhanced compensation and, therefore, would fall under Section 28 of the 1894 Act. Such payment could not par-take the character of compensation for acquisition of agricultural land and, thus, was not exempt under the Act. Once that was so, the tax at source had been rightly deducted by the payer. 13. In v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance Act 2009 w.e.f 01.04.2010, the issue whether the interest received on enhanced compensation was taxable as income from other sources has been finally settled. In these circumstances the decisions of the Hon ble Supreme Court in the case of CIT vs. Ghanshyam (HUF) (Supra) is not applicable in the appellant s case. The appellant has contended that a different view has been taken by the Hon ble Gujarat High Court in the case of Movaliya Bhikhubhai Balabhai vs. ITO in Special Civil Application no. 17944 of 2015 dated 31.03.2016. In this case, the Hon'ble High Court has held as under:- 12. On behalf of the first respondent, reliance has been placed upon decisions of different High Courts taking a different view. This court is not in agreement with the adopted by the other High Courts which are not consistent with the law laid in the case of Ghanshyam (HUF) (supra). In Manjeet Singh (HUF) Karta Manjeet Singh s case (supra), the Punjab and Haryana High Court has chosen to place reliance upon various decisions of the Supreme Court rendered during the period 1964 to 1997 and has chosen to brush aside the subsequent decision of the Supreme Court in Ghanshyam (HUF) s case (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X
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