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TMI Blog2020 (6) TMI 697X X X X Extracts X X X X X X X X Extracts X X X X ..... eing 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. Further the issue under consideration regarding the taxability of interest on enhanced compensation is a debatable issue and do not constitute a mistake apparent on record. In view of the limited and restricted powers of rectification u/s 154 or u/s 254 as the case may be, it cannot be said that any mistake apparent on record had occurred in the order of the Tribunal. In view of the above discussion, these appeals of the assessee are hereby allowed. - ITA No. 8808/Del/2019 - - - Dated:- 19-6-2020 - Ms. Suchitra Kamble, Judicial Member And Dr. B. R. R. Kumar, Accountant Member For the Assessee : Sh. Gautam Jain, Adv. For the Revenue : Sh. Rakesh Kr. Gupta, Sr. DR ORDER PER DR. B.R.R. KUMAR, ACCOUNTANT MEMBER: The present appeal has been filed by the assessee against the order of ld. CIT (A)-42, New Delhi. 2. Following grounds have been raised by the assessee: 1. That the learned Commissioner of Income Tax (Appeals)-42, New Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,02,13,161/-. The assessee claimed the entire enhanced compensation inclusive of interest as residual part of compulsory acquisition of agricultural land and claimed it as exempted u/s 10(37). However, the AO did not accept the contention of the assessee and held that the interest income of ₹ 8,02,13,160/- as taxable income under the head income from other sources u/s 56(2 )(viii) of the Act. The ld. CIT (A), relying on the order of the Hon ble Supreme Court in the case of Bikram Singh others Vs Land Acquisition Collector 224 ITR 551 and wherein it was held that interest received on compensation/enhanced compensation u/s 28 and 34 of the Land Acquisition Act are revenue receipts. The ratio of the judgment relied upon by the ld. CIT (A) is as under: The contention that the definition of 'interest' in section 2 (28 A) is confined only to money-lending business between debtor and the creditor and when interest is paid under provisions of the Land Acquisition Act, it is only a payment in consideration of loss of enjoyment of the possession by the owner and it is not by way of any charge on compensation determined under section 23 (1) of the Land Acquisition Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 (SC) ( dated 4.9.2014 ) CIT vs. Chet Ram ( HUF) in C. A. No. 13053/2017 (dated 12.9.2017) UOI vs. Hari Singh and ors. In C.A. No. 15041/2017 (dated 15.9.2017) ITO v. Muktanandgiri Maheshgiri in C.A. No. 18475/2017 ( dated 10.11.2017 ) Punjab Haryana Risal Singh Vs Union of India 321 ITR 251 (P H) HUDA vs Mandir Nar Singh Puri Others in CR No. 7953 of 2013 dated 24.12.2013 Ajay Kumar Vs State of Haryana Others CR No. 3236 of 2014 dated 08.05.2014 Haryana State Industrial Development Corporation Ltd. Vs Savitri and Another The New India Assurance Co. Ltd. Vs Savitri Devi and Another in CR No. 6784 /2016 dated 04.04.2018 CIT Vs Vaibhav Choudhary in ITA No. 160/2015 dated 14.07.2015 CIT Vs Nishant Choudhary in ITA No. 437/2014 dated 14.07.2015 Delhi High Court Surjit Kumar Chetal Vs CIT 86 Taxmann.cm 121 dated 11.09.2017 Gujarat High Court Movaliya Bhikhubhai Balabhai Vs ITO 388 ITR 343 Income Tax Appellate Tribunal- Chandigarh Bench ITO Vs Pawan Giri in ITA No. 405/Chd/2013 dated 02.08.2013 Baldev Singh Vs ITO in ITA No. 313/Chd/2015 dated 02.02.2016 ITO Vs Sh. Nachha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome f i led by the assessee for assessment year 2009-10, the Assessing Officer observed that w.e.f. assessment year 2010-11 the interest received on enhanced compensation was taxable in the year of receipt as per the provisions of sect ion 145A( b) of the Act. However, prior to assessment year 2010-11 interest received on compensation/enhanced compensation was taxable on proportionate basis for the each year in view of the decision of the Hon'ble Supreme Court rendered in the case of Rama Bai Vs. CIT dated 8.11.1989 reported in 181 ITR 400 ( SC). The Assessing Officer, therefore, reopened the assessment proceedings of the assessees and applied the ratio of the decision of the Hon'ble Supreme Court in the case of Rama Bai (supra) and held that the interest received by the assessees on the enhanced compensation was to be proportionately al located to different assessment years as having accrued year after year from the date of delivery of possession of the lands till the date of such order. The Assessing Officer observed that the lands of the assessees were acquired in the year 2005, whereas the interest on the enhanced compensation had been received in the year 2008. He, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interest of the additional award was taxable under u/s 56 (2) (viii) r. w.s.57(iv) of the Act. 9. The Ld.CIT(Appeals) considering the aforesaid decisions and also the decision of the Hon' ble Punjab Haryana High Court in the case of Sunder Lal Another Vs. Union of India Others in CWP No.20014 of 2015, order dated 21.9.2015 and also in the case of CIT Vs. Bir Singh (HUF) in ITA No.209 of 2004, etc. held that in the light of the above decisions, the mistake apparent on record had occurred in his order while allowing the appeal of the assessees while relying upon the decision of the Hon'ble Supreme Court in the case of Ghanshyam (HUF) (supra). He, therefore, vide the impugned order passed u/s 154 of the Act held that the interest received by the assessee on enhanced compensation on account of acquisi t ion of land was taxable as income from other sources . He, therefore, confirmed the additions made by the Assessing Officer passed in the reopened assessment proceedings carried out u/ s 147 r.w.s. 143(3) of the Act. 10. Now the assessee has come up in appeal before us agitating the above orders passed by the CIT(Appeals) u/s 154 of the Act. 11. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he interest awarded u/s 28 of the Land Acquisition Act on enhanced compensation is to be treated as part of the enhanced compensation and will not be taxable separately as interest income under the Head income from other sources ? 14. We find that both these issues are covered by the aforesaid decision of the Hon'ble Supreme Court in the case of Ghanshyam (HUF) (supra) holding the same to be in the nature of compensation itself. The Court also deal t with the other aspect namely, the year of tax and answered this quest ion by holding that it has to be tested on receipt basis, which means it would be taxed in the year in which i t is received. The said findings given in the case of Ghanshyam (HUF) (supra) 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) reported 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nhanced compensation under Section 28 of 1894 Act is taxable, the Court dealt with the other aspect namely, the year of tax and answered this question by holding that it has to be tested on receipt basis, which means it would be taxed in the year in which it is received. It would mean that converse position i.e. spread over of this interest on accrual basis is not permissible. 15. The Ld. counsel for assessee has further brought our at tent ion the latest decision of the Hon'ble Supreme Court in the case of CIT Vs. Chet Ram ( HUF) dated 12.9.2017 in Civil Appeal No.13053 /2017 wherein also the Hon' ble Supreme Court has again reiterated the proposition laid 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 Civi l Appeal No. 1504 of 2017 dated 15.9.2017, 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 ) SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. It depends upon the claim, unlike interest under section 34 which depends on undue delay in making the award. It is true that interest is not compensation. It is equally true that section 45(5) of the 1961 Act, refers to compensation. But as discussed hereinabove, we have to go by the provisions of the 1894 Act, which awards interest both as an accretion in the value of the lands acquired and interest for undue delay. Interest under section 28 unlike interest under section 34 is an accretion to the value, hence it is a part of enhanced compensation or consideration which is not the case with interest under section 34 of the 1894 Act. So also additional amount under section 23 (1A) and solatium under section 23(2) of the 1961 Act forms part of enhanced compensation under section 45 (5)(b ) of the 1961 Act. In fact, what we have stated hereinabove is reinforced by the newly inserted clause (c ) in section 45(5 ) by the Finance Act, 2003 with effect from 1 -4 -2004. The order in the case of Manjit Singh (HUF) has been considered in the case of Ghanshyam (HUF). The order in the case Hari Singh Others in CA No.1504/2017 dated 15.09.2007 held While determining ..... X X X X Extracts X X X X X X X X Extracts X X X X
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