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TMI Blog2024 (4) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... e into being only in the year 2010, the conclusions drawn from the decision in Ghanshyam [ 2009 (7) TMI 12 - SUPREME COURT] which was passed in the year 2009, are unsustainable in the facts of the present case. Much reliance has been placed by the ITAT upon the decision of the Hon ble Supreme Court in the case of CIT v. Govindbhai Mamaiya [ 2014 (9) TMI 587 - SUPREME COURT] which relies upon the case of Ghanshyam (supra) to hold that the interest on enhanced compensation received under Section 28 of the Act of 1894 is exigible to tax on receipt basis. However, a deeper analysis of the decision in Govindbhai Mamaiya (supra) would show that it does not deal with any issue pertaining to the change in the taxability, put in place through the concerned amendment of 2010. Therefore, the said decision lacks any applicability in the facts and circumstances of the present case. Notably, a three-Judges Bench of the Hon ble Supreme Court in the case of Sham Lal Narula (Dr.) [ 1964 (4) TMI 10 - SUPREME COURT] while considering the interest under Section 28 of the Act of 1894 to be analogous to the interest under Section 34 of the Act, took the view that the same did not form part of compensati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the concurrent view of the AO and the Commissioner of Income Tax (Appeals) [ CIT(A) ] which held that after amendment of Section 56 of the Act vide Finance (No. 2) Act, 2009 (w.e.f. 01.04.2010), no benefit can be derived by the respondent-assessee from the decision of the Hon ble Supreme Court in the case of CIT v. Ghanshyam (HUF) [(2009) 315 ITR 1 (SC)]? 5. The facts of the case would show that the respondent-assessee had filed its Income Tax Return [ ITR ] on 05.08.2016, declaring the income to the tune of Rs. 3,08,920/-. The said ITR filed by the respondent-assessee was selected for scrutiny and a notice dated 24.04.2017 was served upon him under Section 143(2) of the Act. Subsequently, another notice under Section 142(1) of the Act was issued, calling upon the respondent-assessee to furnish the relevant information as asked for. The reply to the said notice was duly submitted by the respondent-assessee. 6. Upon perusal of the aforesaid reply and the material which was placed on record, the AO found that the respondent-assessee had claimed an exemption on the receipt of income amounting to Rs. 26,93,84,780/- on the basis of the following grounds:- i. Compensation on compulsory a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra), the ITAT drew an equivalence between the interest received under Section 28 of the 1894 Act and the enhanced compensation. It was further held that since the interest amounts to accretion to the value of compensation, therefore, the same must be treated as a part of compensation. 12. It is in the aforesaid context that the Revenue has preferred the instant appeal against the order of the ITAT. 13. Learned counsel appearing on behalf of the Revenue submitted that the ITAT has erroneously rejected the concomitant findings of the AO and the CIT(A) that the issue at hand is purely driven by Section 56 of the Act. He contended that the decision relied upon by the ITAT in the case of Ghanshyam (supra) cannot be treated to be an authority to delete the additions made in the income of the respondent-assessee as the said decision was passed before the amendment came in the year 2010. He, therefore, submitted that the addition made by the AO does not suffer from any infirmity as the same was based upon the extant provisions of Section 56(2)(viii) of the Act which came into effect subsequent to the amendment in question. 14. Learned counsel has relied upon the decisions of the High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation is not paid or deposited on or before taking possession of the land, the Collector shall pay the amount awarded with interest thereon at the rate of nine per centum per annum from the time of so taking possession until it shall have been so paid or deposited. Provided that if such compensation or any part thereof is not paid or deposited within a period of one year from the date on which possession is taken, interest at the rate of fifteen per centum per annum shall be payable from the date of expiry of the said period of one year on the amount of compensation or part thereof which has not been paid or deposited before the date of such expiry. 20. A reading of Section 28 of the Act of 1894 indicates that the said provision comes into play in cases where the Court finds that some higher compensation ought to have been provided by the Collector. In such situations, the Court may direct for payment of an interest on the excess awarded amount. Whereas, Section 34 of the Act of 1894 stipulates that the Collector shall award interest on the compensation at the rate of 9% per annum from the date of taking possession. It further lays down the condition that in case of non-payment des ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (24) of Section 2 shall be deemed to be the income of the previous year in which it is received, if not charged to income-tax in any earlier previous year.] 24. A conjoint reading of the aforementioned provisions i.e., Sections 56(2)(viii) and 145-B of the Act vividly stipulate that the income received by way of interest on compensation or on enhanced compensation shall be chargeable to tax under the head income from other sources . Therefore, since the position with respect to the imposition of tax on interest on compensation or enhanced compensation, as it exists today, came into being only in the year 2010, the conclusions drawn from the decision in Ghanshyam (supra), which was passed in the year 2009, are unsustainable in the facts of the present case. 25. Further, much reliance has been placed by the ITAT upon the decision of the Hon ble Supreme Court in the case of CIT v. Govindbhai Mamaiya [(2014) 16 SCC 449], which relies upon the case of Ghanshyam (supra) to hold that the interest on enhanced compensation received under Section 28 of the Act of 1894 is exigible to tax on receipt basis. However, a deeper analysis of the decision in Govindbhai Mamaiya (supra) would sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 for the delayed payment of the compensation amount and, therefore, is a revenue receipt liable to tax under the Income Tax Act. 9. This position of law has been consistently reiterated by this Court in the case of T.N.K. Govindaraju Chetty v. CIT [(1967) 66 ITR 465 : AIR 1968 SC 129] , Rama Bai v. CIT [1990 Supp SCC 699 : (1990) 181 ITR 400] and K.S. Krishna Rao v. CIT [(1990) 181 ITR 408 (SC)]. Thus by a catena of judicial pronouncements, it is settled law that the interest received on delayed payment of the compensation is a revenue receipt exigible to income tax. It is true that in amending the definition of interest in Section 2(28-A), interest was defined to mean interest payable in any manner in respect of any money borrowed or debt incurred including a deposit, claim or other similar right or obligation and includes any service, fee or other charges in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No question of law, much less, substantial question of law arise in these appeals. 23. Accordingly, finding no merit in the appeals, the same are hereby dismissed. [Emphasis supplied] 29. Considering the foregoing discussion, we affirm the concurrent findings of the AO and CIT(A) and find that the view taken by the ITAT is unsustainable, as the same is based on an incorrect appreciation of law. The 2010 amendment was a conscious departure by the Legislature from the earlier position and the said departure holds good law, as on date. There is no question with respect to the vires of the amendment before us or regarding any ambiguity in the language of the amendment. The only concern is regarding the enunciation of the applicable law and we hold the same to unequivocally mean that interest, whether on compensation or on enhanced compensation, shall be considered as income from other sources and shall be exigible to income tax. 30. We, accordingly, answer the substantial question of law which has arisen in the instant appeal in affirmative and in favour of the Revenue. We, thus, hold that the ITAT has erred in relying upon the decision of Ghanshyam (supra), ignoring the changes broug ..... X X X X Extracts X X X X X X X X Extracts X X X X
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