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TMI Blog2019 (10) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... income from other sources u/s 56 of the Act as held by the authorities below. The compensation being exempt u/s 10(37) of the Act is not disputed. In view of the same the order passed by the CIT(Appeals) upholding the addition made by the AO on account of interest on enhanced compensation is not sustainable. - Decided in favour of assessee - ITA No.1591/Chd/2018 - - - Dated:- 30-9-2019 - Smt. Diva Singh, Judicial Member And Smt. Annapurna Gupta, Accountant Member For the Assessee : Shri Vineet Krishan, Adv. For the Revenue : Shri Kultej Singh Bains, Sr.DR ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER: The above appeal has been preferred by the Revenue challenging the order of the Commissioner of Income Tax (Appeals), Panchkula [(in short referred to as CIT(A)] dated 17.10.2018 relating to assessment year 2010-11, passed u/s 250(6) of the Income Tax Act, 1961 (hereinafter referred to as Act . 2. The Revenue has raised following grounds of appeal: 1. Whether on the facts and in the circumstances of the case, the Ld. Income Tax Appellate Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the AO had held the same to be taxable u/s 56(2)(viii) read with sections 57(iv) and 145A of the Act. Referring to the facts of the case as find mention in para 6 of the CIT(A) s order, it was pointed out that the assessee had received enhanced compensation during the year of ₹ 6,98,99,901/- with ₹ 1,96,55,982/- as principal component and ₹ 5,02,43,999/- as interest on the compensation. That the assessee had treated the entire amount as being in the nature of compensation and exempt u/s 10(37) of the Act. It was pointed out that during assessment proceedings the AO confronted the assessee as to why the interest component be not subjected to tax, to which the assessee submitted that having been received u/s 28 of the Land Acquisition Act,1894, it was in the nature of compensation and thus eligible for exemption u/s 10(37) of the Act. The assessee relied upon the decision of the Hon'ble Apex Court in the case of CIT Vs. Ghanshyam(HUF), 315 ITR 1 (SC) in support of its above contention. The AO dismissed the contention of the assessee stating that the issue of taxability of interest on enhanced compensation was now covered by the amended provisions of sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on enhanced compensation. The relevant findings of the Ld.CIT(A) at paras 6.4 to 69 of the order are as under: 6.4 I have gone through the facts of the case and written submission filed by the appellant. It is observed that the Hon'ble Supreme Court in the case of CIT v/s Ghanshyam (HUF) 315 ITR 1 has held that interest paid on the excess amount, u/s 28 of 1894 Act, depends upon a claim by the person whose land is acquired whereas interest u/s 34 is 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 interest u/s 34. The relevant extract from the decision of the Hon'ble Apex Court in Ghanshyam(HUF) supra is quoted as under:- 54. Section 45(5) read as a whole [including clause (c)] not only deals with reworking as urged on behalf of the assessee but also with the change in the full value of the consideration (computation) and since the enhanced compensation/ consideration (including interest under Section 28 of the 1894 Act) becomes payable/paid under the 1894 Act at different stages, the receipt of such enhanced compensation/consideration is to be taxed in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered this issue in the cases of Manjeet Singh (HUF) karta Manjeet Singh vs Union of India and Ors. CWP No.15506 of 2013 dated 14.01.2014 (2016) 237 taxmann 116 and Sunder Lai and Anr. Vs Union of India CWP No.2014 of 2015 vide order dated 21.09.2015 and held that interest received u/s 28 of the Land Acquisition Act is in the nature of interest and is taxable but recently the issue was once again decided by the Hon'ble Supreme Court vide its order dated 15.09.2017 in the case of Union of India vs Hari Singh and Ors. In Civil Appeal No.15041 of 2017. In this decision, the Hon'ble Supreme Court held as under :- While determining as to whether the compensation paid was for agricultural land or not, the AOs will keep in mind the provisions of section 28 of the Land Acquisition Act and the law laid down by this court in Commissioner of Income Tax, Faridabad v. Ghanshyam (HUF) (2009 (8) SCC 412) in order to ascertain whether the interest given under the said provisions amounts to compensation or not. 6.8 The Jurisdictional ITAT, Chandigarh in its decision of 17.07.2018 in Som Nath Vs. ITO, ITA No.552/Chd/2016 discussing Hon'ble Punjab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) have been reiterated by the Hon 'ble Supreme Court in the case of Govindbhai Mamaiya (Supra) observing as under: In so far as the second question is concerned, that is also covered by another judgment of this Court in Commissioner of Income Tax, Faridabad Vs. Ghanshyam (HUF) report in (2009) 8 SCC 412, 6 albeit, in favour of the Revenue. In that case, the court drew distinction between the interest earned under Section 28 of the Land Acquisition Act and the interest which is under Section 34 of the said Act. The Court clarified that whereas compensation given to the assessee of the land acquired would be income, the enhanced compensation/consideration becomes income by virtue of Section 45(5)(b) of the Income Tax Act. The question was whether it will cover interest and if so, what would be the year of taxability. The position in this respect is explained in paras 49 and 50 of the judgment which make the following reading: 49. As discussed hereinabove, Section 23(1-A) provided for additional amount. It takes care of the increase in the value at the rate of 12% per annum. Similarly, under Section 23(2) of the 1894 Act there is a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid down in the case of Ghanshyam (HUF) (supra), which we find has been further reiterated in the case of Union of India Vs. Hari Singh others in Civil Appeal No. 1504 of 2017 dated 15.09.2017, as under: (2) While determining as to whether the compensation paid was for agricultural land or not, the Assessing Officer(s) will keep in mind the provisions of Section 28 of the Land Acquisition Act and the law laid down by this Court in 'Commissioner of Income Tax, Faridabad V. Ghanshyam (HUF) ' [2009 (8) SCC 412] in order to ascertain whether the interest given under the said provision amounts to compensation or not. 9.1 The said decision as rightly pointed out by the Ld. Counsel for assessee have been rendered by the Ron 'ble Apex Court subsequent to the decision passed by the Hon 'ble Jurisdictional High Court in the case of Manjeet Singh (HUF) (supra). Therefore, in view of the same, the proposition laid down in Ghanshyam, HUF (supra) remains and which having been laid down by the Hon'ble Apex Court is the law of the land has to be followed by all lower authorities. In view of the above, we hold that the interest received ..... X X X X Extracts X X X X X X X X Extracts X X X X
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