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TMI Blog2023 (2) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore, we hold that the interest granted by the reference Court u/s. 28 of the Land Acquisition Act from the date of possession of land till the date of judgment of High Court is an accretion of the value of the land acquired, not chargeable to tax. Thus, we reject the arguments that the principle laid down in the context of motor accident claims is not applicable to the present facts of the case. Therefore, respectfully following the decision of Hon ble Jurisdictional High Court of Bombay in the case of Rupesh Rashmikant Shah [ 2019 (8) TMI 518 - BOMBAY HIGH COURT] we hold the interest received u/s. 28 of the Land Acquisition Act would not fall within the ambit of the expression interest as envisaged u/s. 145A(b) of the Act, further, hold that the amendment by way of substitution of section 145A by Finance (No. 2) Act, 2009 w.e.f. 01-04-2010 and amendment by way of insertion of clause (iii) in section 56(2) by Finance Act, 2009 would have no applicability to the facts of the present case and in view of the same the order of CIT(A) in confirming the order of AO is not justified. Thus, ground Nos. 1 and 2 raised by the assessee are allowed. - ITA No. 1805/PUN/2017 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,543/- (50% of Rs.1,52,73,087/-) as chargeable to tax which is evident from the computation made by the AO vide para 6 of his order passed u/s. 144 r.w.s. 147 of the Act. 4. We note that the AO concluded the reassessment to his best judgment u/s. 144 of the Act and admittedly, there was no representation on behalf of the assessee, but however, considering the copies of bank statements, 7/12 extracts, the AO determined the total income of the assessee at Rs.76,36,540/- as against Nil income. We note that the AO observed that the assessee received enhanced compensation of Rs.21,22,110/- and interest on such compensation of Rs.48,25,620/- vide para 3 of the assessment order, whereas, in the computation at para 6 of the assessment order, the AO stated that the assessee received interest on compensation to a sum of Rs.1,52,73,087/-. The figure of such interest admittedly is not matching with the figures of amounts mentioned by the AO in para 3 of the assessment order. The AO concluded the reassessment without there being any concrete details in respect of compensation, enhanced compensation, interest u/s. 28 and 34 of the Land Acquisition Act. It is also not forthcoming the exact de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra) the CIT(A) ought to have worked out the date of acquisition, award compensation and interest thereon etc. leading to addition made by the AO. It is pertinent to note that no detail whatsoever are neither referred nor discussed by the AO and the CIT(A) in their orders, in our opinion, the addition made by the AO u/s. 56(2)(iii) of the Act as confirmed by the CIT(A) is not maintainable in the absence of relevant facts leading to such addition. 6. The ld. AR and ld. DR adopted the same arguments made in ITA No. 532/PUN/2017 for A.Y. 2013-14. 7. Heard both the parties and perused the material available on record. In the present case there is no dispute with regard to taxability of interest u/s. 34 of the Land Acquisition Act as the assessee himself offered the same for taxation. The only issue emanates for our consideration is as to whether the interest u/s. 28 of the Land Acquisition Act is taxable or not being part and parcel of compensation. We note that, after the preliminary survey u/s. 3A of the Land Acquisition Act by the Government, to determine whether the land in any locality is needed, or is likely to be needed for any public purpose, issues preliminary notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Ors. (supra) by three Judges Bench of Hon ble Supreme Court was not considered by the two Judges Bench of Hon ble Supreme Court in the case of Ghanshyam (HUF) (supra). The Tribunal further observed that there was no conflict of law laid down in the said decisions of Hon ble Supreme Court as both the judgments held the payment of interest on delayed payment of compensation u/s. 34 of the Land Acquisition Act is chargeable to tax. Further, also observed that two Judges Bench in the case of Ghanshyam (HUF) (supra) is clearly marked the distinction between the interest received u/s. 23(1A) and 23(2) r.w.s. 28 of the L.A. Act vis- -vis interest on delayed payment of compensation u/s. 34 of the L.A. Act, by holding so remanded the issue to the file of AO for examination of facts of the case and determine the nature of interest received by the assessee under the provisions of Land Acquisition Act de-novo. 9. Vide order dated 11-09-2019, the Co-ordinate Bench of this Tribunal in the batch of case of Shri Satish Wamanrao Honerao and Others held the interest received u/s. 28 of the Land Acquisition Act is part of compensation not chargeable to tax by placing reliance in the case of G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Ghanshyam (HUF) (supra) held the amount paid u/s. 28 of the Land Acquisition Act forms part of the compensation which partakes the character of compensation. 15. Vide order dated 08-08-2019, the Division Bench i.e. two Judges Bench of Hon ble High Court of Bombay in the case of Rupesh Rashmikant Shah reported in 417 ITR 169 (Bom), while dealing with a question under Motor Vehicles Act, held interest awarded in the motor accident claim cases from the date of the claim petition till the passing of the award or in case of appeal, till the judgment of the High Court in such appeal, could not be exigible to tax, not being an income vide para 57. The Hon ble High Court, since the question involved complex issues, requested a senior counsel as amicus curie. The said amicus curie opined the taxability of the interest would depend on the nature and the purpose for grant of interest. If it is held that the interest is compensatory in nature and forms part of the compensation, the same may not be exigible to tax. Further, none of the provisions under Sections 194A(3)(ix), 145A(b) and 56(2)(viii) make such interest chargeable to tax if it is otherwise not taxable vide para 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealing the issues relating to interest u/s. 28 and 34 of the Land Acquisition Act. 17. Vide order dated 15-09-2017, two Judges Bench of Hon ble Supreme Court in the case of Hari Singh (supra) held, 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 in the case of Ghanshyam (HUF) (supra) to ascertain whether interest given under the said provisions amounts to compensation or not. 18. Vide order dated 12-09-1996, three Judges Bench of Hon ble Supreme Court in the case of Bikram Singh Ors. (supra) observed that the interest received as income on delayed payment of compensation determined u/s. 28 and 34 of the Land Acquisition Act is a revenue receipt and is exigible to tax. 19. Having referred to the various case laws placed reliance by the ld.AR and ld. DR, as discussed by us in the above referred paragraphs of this order, we find the Hon ble Jurisdictional High Court of Bombay in the case of Rupesh Rashmikant Shah (supra) discussed the issue in detail with reference to effect of substitution of section 145A with ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is clear from the judgment of Hon ble Jurisdictional High Court that no interest could be brought to tax from the date of claim petition till the judgment of High Court. Applying the same principle to the present facts of the case that the interest granted u/s. 28 of Land Acquisition Act on enhanced compensation/compensation by the reference court u/s. 18 of Land Acquisition Act, from the date of possession of land and till the judgment of High Court, is part of compensation, could not be taxed in view of amendments by substitution of section 145A read with clause (iii) of section 56(2) of the Act. 20. In the present case, the AO simply proceeded on the premise that the amendments to provisions u/s. 145A which bears the heading method of accounting in certain cases, section 145A(b) provides that notwithstanding anything to the contrary contained in section 145, interest received by an assessee on compensation or on enhanced compensation shall be deemed to be the income of the year in which it is received read with section 56(2)(viii) of the Act which provides income by way of interest on compensation or on enhanced compensation referred to in sub-section (1) of section 145B of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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