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TMI Blog2022 (3) TMI 1031X X X X Extracts X X X X X X X X Extracts X X X X ..... ation in assessment year 2010-11 and 2011-12 at normal rate (which is 10%) whereas deduction should have been made @ 20% as the deductor had not been able to prove that PAN of each deductee was taken at the time of payment. In response to show cause notice, the assessee furnished explanation which was not acceptable to the Ld. AO who observed that the assessee failed to deduct tax at source as per the provisions of section 194A of the Act and raised demand of Rs. 23,99,524/- and Rs. 34,99,95,274/- for the assessment year 2010-11 and 2011-12 respectively under section 201(1) and 201(1A) of the Act. 2.1 During proceedings for assessment year 2012-13 on 17.1.2014 the assessee filed a letter stating that in view of judgment dated 18.7.2013 of the Hon'ble Punjab & Haryana High Court in the case of Jagmal Singh vs. State of Haryana (Civil Revision No. 7740 of 2012) the proceedings be dropped as in that case it has been held that no TDS is required to be deducted on the interest payments which fall under section 28 of Land Acquisition Act, 1894 ("LA Act"), being a part of compensation only. The Ld. AO replied back to the assessee on 17.2.2014 stating, inter alia, that the decision in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose like water treatment, roads, plants etc. 4. The farmers were awarded compensation as per the provisions, rules and regulations of the HUDA Act. 5. Being aggrieved by the amount of compensation, the farmers went to court for getting the enhance compensation. 6. On enhancement of compensation the farmers got interest also as per the provisions of Section 28 of the Land Acquisition Act. 7. This interest has been held to be a part of compensation itself by Hon'ble jurisdiction Punjab & Haryana High Court in the case of Jagmal Singh & other Vs State of Haryana. Date of decision 18th July, 2013 and by the Hon'ble Supreme Court in CIT Vs Ghanshyam 2009 (8) SCC 412 And it has been held that interest under section 28 of the Act is an accretion to the value and hence it is a part of enhance compensation. 8. Therefore provisions of section 194LA is applicable to us on which tax cannot be deducted in respect of compensation/ enhance compensation payable on account of compulsory acquisition of agriculture land (whether land is situated in urban area or rural area) - Mysore Urban Development Authority Vs ITO (2008) 175 Taxman 307 (kar). 9. The provisions of section 194A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 52,18,90,623/- for F.Y. 2012-13 is liable to be deleted." However, the Ld. CIT(A) dismissed the appeals of the assessee following his order for the preceding two years. 4. Aggrieved, the assessee is before us. 5. At the very outset, the Ld. AR drew our attention to the additional common grounds taken by the assessee before the Tribunal for all the three assessment years which are as below. "2. On the facts and circumstances of the case, the Ld. Assessing Officer was not justified on facts and in law in raising a demand ignoring the proposition laid down in the case of the Hon'ble Apex Court subsequent to the decision passed by the Hon'ble Jurisdictional High Court in the case of Manjeet Singh (HUF) which had dealt with the decisions of the Hon'ble Apex Court in Ghanshyam, HUF (2009) 182 Taxman 368. Therefore, in view of the same, the proposition laid down in Ghanshyam, HUF remains and which having been laid down by the Hon'ble Apex Court is the law of the land and has to be followed by all lower authorities. Accordingly, the interest received by the appellant during the impugned year on the compulsory acquisition of its land under section 28 of the Land Acquisition Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igarh). 6. That having regard to the facts and circumstances of the case, the Ld. CIT(A) has erred in law and on facts as he did not consider the AR letter as a grounds of appeal merely on the basis that in the original grounds of appeal, no specific ground seeking leave for filing additional ground was taken by the appellant. 7. That having regard to the facts and circumstances of the case, the Ld. CIT(A) has erred in law and on facts in framing the appeal order without giving an adequate opportunity of being heard and by making incorrect observations and by not observing the principles of natural justice." 5.1 The Ld. AR submitted that the other grounds would become infructuous once the additional grounds are decided in favour of the assessee. He requested for admission of the additional grounds which was objected to by the Ld. DR. 6. We have gone through the contents of the additional grounds filed by the assessee in the Tribunal. We are of the view that the additional grounds involve legal issues and therefore, we have admitted them following the judgment of the Hon'ble Supreme Court in National Thermal Power Co. Limited vs. CIT 228 ITR 383 (SC) wherein the Hon'ble Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and owners on enhanced compensation awarded by the court is not in the nature of income from other sources under section 56 of the Act. Consequently, the TDS provisions of section 194A will not be attracted. 7.2 It has also been urged in the additional grounds that interest on enhanced compensation under section 28 of LA Act, being an integral part of consideration is exempt from capital gains tax under section 10(37) of the Act. We agree. Agricultural land situate in any area referred to in item (a) or item (b) of section 2(14)(iii) of the Act do not fall within the ambit of agricultural land and thus constitute 'capital asset' under section 2(14) of the Act. Compulsory acquisition of capital asset under any law is 'transfer' under section 2(47)(iii) of the Act. Accordingly, any profit or gain arising from transfer of such a capital asset is exigible to capital gains tax under section 45 of the Act in the previous year in which the transfer took place. However, capital gains arising from transfer of agricultural land situate in any area referred to in item (a) or item (b) of section 2(14)(iii) by way of compulsory acquisition under any law is exempt from tax under section 10(37) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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