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TMI Blog2024 (12) TMI 704X X X X Extracts X X X X X X X X Extracts X X X X ..... exempt u/s 10(37) of the Income Tax Act cannot be called as plausible view . Thus, we find no merit in the grounds of Appeal of the Assessee, accordingly, we are of the opinion that the Ld. CIT(A) has committed no error in setting aside the assessment order and directed the A.O. to frame fresh assessment in accordance with law. Appeal of the Assessee is dismissed. - Shri S Rifaur Rahmn, Accountant Member And Shri Yogesh Kumar US, Judicial Member For the Assessee : Shri Suresh K. Gupta, CA For the Department : Shri Dayainder Singh Sidhu,CIT( DR) ORDER PER YOGESH KUMAR U.S., JUDICIAL MEMBER: The Assessee preferred the captioned appeal by challenging the order of the Ld. Principal Commissioner of Income Tax(Appeals) ( Ld. PCIT for short ) dated 01.03.2024, wherein the Ld. CIT(A) held the Assessment Order dated 15/09/2021 as erroneous insofar as prejudicial to the interest of the Revenue and by setting aside the same under Section 263 of the Act, directed Assessing Officer to pass a fresh assessment order after giving due opportunity of being heard to the Assessee. 2. The brief facts of the case are that the case was selected for complete scrutiny for the purposes of verifying the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision Further Chandigarh Bench of ITAT in case of Sh Bharat Bhushan Ors vs Pr CIT Hisar in 597-602/CHD/2018 dated 11.01.2019 held that learned Principal Commissioner of Income Tax has erroneously relied on the judgment of jurisdictional Punjab and Haryana High Court in the case of Manjit Singh v. UOI CWP No. 15506/2013 dated 14.1.2014 and overlooking the following judgments of Apex Court: i. CIT vs. Ghanshyam (HUF) 315 ITR 1 (SC) (dated 16.7.2009); ii. CIT vs. Govindbhai Mamaiya 367 ITR 4 98(SC) (dated 4.9.2014; iii. CIT vs. Chet Ram (HUF) C.A. No, 13053/2017 (dated 12.9.2017); iv. UOI and ORS vs. Hari Singh and ORS C.A. No. 15041/2017 (SC); v. ITO Rajkot vs. Muktanandgiri Maheshgiri C.A. No. 18475/2017. 5. Per contra, the Department's Representative submitted that the contention of the Assessee has been wrongly accepted by the A.O. and the interest received u/s 28 of the Land Acquisition Act was wrongly allowed as exempt u/s 10(37) of the Income Tax Act whereas it was chargeable to tax under the head Income from other sources . The Judgments supra relied upon by the Assessee have been rendered in respect of Assessment Years prior to introduction of Section 56(2)(viii), 57(iv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O. to make fresh assessment? 9. The very same question regarding as to whether interest on enhanced compensation partakes the character of Income from Other Sources u/s 56(2)(viii) of the Act or not has been decided by the Jurisdictional High Court in the case of Principal Commissioner of Income Tax-10 Vs. Inderjit Singh Sodhi (HUF) in ITA No. 769/2023 and CM APPL 65057/2023 vide order dated 08/04/2024. The Hon ble Jurisdictional High Court held that interest, whether on compensation or enhanced compensation shall be considered as income from other sources and shall be taxable accordingly. The Jurisdictional High Court has also held that the Tribunal has erred in relying on the decision in CIT Vs. Ghanshyam (HUF) (2009) 315 ITR 1 (S.C) by taking into consideration of Finance(No.2) Act, 2009, which came into effect in the year 2010. The relevant portion of the Judgment of the Hon'ble High Court of Delhi is reproduced as under:- 18. The solitary question which arises for our consideration in the present appeal is whether the interest on enhanced compensation received by the respondent-assessee partakes the character of income from other sources under Section 56(2)(viii) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the Hon ble Supreme Court in the case of Ghanshyam (supra) and the relevant paragraph of the said decision reads as under:- 35. To sum up, interest is different from compensation. However, interest paid on the excess amount under Section 28 of the 1894 Act depends upon a claim by the person whose land is acquired whereas interest under Section 34 is for the delay in making payment. This vital difference needs to be kept in mind in deciding this matter. Interest under Section 28 is part of the amount of compensation whereas interest under Section 34 is only for delay in making payment after the compensation amount is determined. Interest under Section 28 is a part of enhanced value of the land which is not the case in the matter of payment of interest under Section 34. 22. However, vide Finance (No.2) Act, 2009 (with effect from 01.10.2010), Clause (viii) of sub-Section 2 to Section 56 of the Act was inserted and the same is extracted hereunder as:- 56. Income from other sources.-- *** (2) In particular and without prejudice to the generality of the provisions of sub-section (1), the following incomes shall be chargeable to income tax under the head Income from other sources ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 compensation. The relevant extract of the said decision is culled out as under:- 9. --- As we have pointed out, earlier, as soon as the Collector has taken possession of the land either before or after the award the title absolutely vests in the Government and thereafter the owner of the land so acquired ceases to have any title or right of possession to the land acquired. Under the award he gets compensation for both the rights. Therefore, the interest awarded under Section 28 of the Act, just like under Section 34 thereof, cannot be a compensation or damages for the loss of the right to retain possession but only compensation payable by the State for keeping back the amount payable to the owner. --- [Emphasis supplied] 17:00:34 27. The decision in Sham Lal Narula (supra) was subsequently followed by the Hon ble Supreme Court in the case of Bikram Singh v. Land Acquisition Collector [(1997) 10 SCC 243], wherein, it was held that interest under Section 28 of the Act of 1894 was in the nature of a revenue receipt and hence, the same was considered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to hereinbefore. [Emphasis supplied] 28. In the case of Puneet Singh (supra), the High Court of Punjab and Haryana, while enunciating the effect of Section 145A(b) and Section 56(2)(viii) of the Act, has held as under:- 19. The cumulative effect of section 145A(b) and section 56(2)(viii) would be that any interest received on compensation or on enhanced compensation shall be taxable under the head Income from other sources in the year of receipt. 20. However, by section 27 of the 2009 Act, a new clause (iv) in section 57 has been inserted with effect from April 1, 2010 which lays down that in the case of income of the nature referred to in section 56(2)(viii), a deduction of a sum equal to 50 per cent. of such income would be allowable thereunder and no deduction would be allowed under any other clause of section 57. The said provision reads thus: 57. Deductions.--The income chargeable under the head 'Income from other sources' shall be computed after making the following deductions, namely : . .. (iv) in the case of income of the nature referred to in clause (viii) of sub-section (2) of section 56, a deduction of a sum equal to fifty per cent. of such income and no ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of. 10. The submission of the Ld. Assessee's Representative was that the Judgment of Ghanshyam (HUF) (supra) is still a valid law and it does not change the character of interest received on enhanced compensation on the agriculture land acquired by the Land Acquisition Authority and also relied on the various orders and Judgments. 11. We have gone through the Judgments and orders relied by the Ld. Assessee's Representative and it is found that those Judgments/Orders have been rendered either prior to the Judgment of the Jurisdictional High court in the case of Inderjit Singh Sodhi (HUF) (supra) or those Judgments/Orders relied by the Assessee have not considered the ratio laid down by the Jurisdictional High Court in the case of Inderjit Singh Sodhi (HUF) (supra). Thus, we find no merit in the said argument of the Ld. Assessee's Representative. 12. The Assessee's Representative has also submitted that the A.O. has taken plausible view in considering the interest on the enhanced compensation as not taxable by relying on the Judgment of the Hon'ble Supreme Court in the case of Ghanshyam (HUF) (supra), therefore, the Ld. PCIT committed error in setting aside the As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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