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Income Tax Appellate Tribunal, DELHI BENCH ‘B’ : NEW DELHI
Date of Hearing : 14.03.2023 Date of Order : 17.03.2023
ORDER
PER SHAMIM YAHYA, ACCOUNTANT MEMBER :
This appeal by the Revenue and cross objection by the assessee arises out of the order of ld. CIT (Appeals), Hisar dated 10.06.2020 pertaining to Assessment Year 2012-13.
The Revenue has taken the following grounds of appeal :- ./2020 CO No.164/Del/2022 “1. On the facts & circumstances of the case, the Ld. CIT(Appeals) has erred in law in deleting the addition in view of decision pronounced by Jurisdictional Hon'ble High Court in the case of Manjeet Singh, HUF Vs CIT of CWP No. 15506 of 2013 dated 14.01.2014 , Naresh Kumar Jain and others Vs State of Haryana and others of CWP No. 14728 of 2017 dated 12/07/2017 and Puneet Singh Vs Commissioner of Income Tax, Kamal in ITA- 132-2018 (O&M) dated 19.11.2018. The Hon'ble Punjab and Haryana High Court has clearly stated that interest received u/s 28 of Land Acquisition Act , 1894 is taxable u/s 56(2)(viii) r.w.s. 57(iv) and 145A of the Income Tax Act.
2. On the facts and circumstances of the case, the Ld.CIT(Appeals) has erred in law by treating the interest received u/s 28 of the Land Acquisition Act, 1894 as Non-taxable. Hon'ble Apex Court in the case of Manjeet Singh HUF Vs. CIT has already upheld the decision of Hon'ble Punjab and Haryana by dismissing the SLP filed against the High Court Decision the interest received u/s 28 and 34 of Land Acquisition Act, 1894 are taxable.”
In this case, Assessing Officer noticed that the assessee has claimed that he is an agriculturist and owning approx. 80 acres of land.
AO further gathered that assessee has received interest in enhanced compensation of land of Rs.1,22,55,550/- on 14.06.2011 and Rs.2,14,04,697/- on 22.03.2012. AO issued show-cause notice as to why as per amended provisions of Income-tax Act interest be not taxed as income from other sources after allowing a deduction of 50% of such income in the year of receipt. AO proceeded to reject all the assessee’s submissions and taxed the said amount as assessee’s income from other sources.
Upon assessee’s appeal, ld. CIT (A) considered the issue and found that the issue is already settled by the Hon’ble Apex Court in the case of received under section 28 of the LAC Act would not fall within the ambit of the expression “interest”. After elaborate discussion and referring several case laws, ld. CIT (A) allowed the assessee’s appeal. Ld. CIT (A)’s order in this regard is gainfully referred to as under :-
“6.1 In the light of the law laid down by the Hon'ble Supreme Court in the case of Ghanshyam (HUF), the interest received under section 28 of the Act of 1894 would not fall within the ambit of the expression "interest" as envisaged under section 14SA(b) of the LT. Act, inasmuch as, the Apex Court in the above decision has held that interest under section 28 of the Act of 1894 is not in the nature of interest but is an accretion to the compensation and, therefore, forms part of the compensation. At this stage it may be apt to quote the following part of the decision of the Supreme Court in Ghanshyam (HUF):
"54. Section 45(5) read as a whole [including clause (c)]not only deals with reworking as urged on behalf of the assessee but also with the change in the full value of the consideration (computation) and since the enhanced compensation/consideration (including interest under Section 28 of the 1894 Act) becomes payable/paid under the 1894 Act at different stages, the receipt of such enhanced compensation/ consideration is to be taxed in the year of receipt subject to adjustment, if any, under Section 155(16) of the 1961 Act, later on. Hence, the year in which enhanced compensation is received is the year of taxability. Consequently, even in cases where pending appeal, the court/tribunal/ authority before which appeal is pending, permits the claimant to withdraw against security or otherwise the enhanced compensation (which is in dispute), the same is liable to be taxed under Section 45(5) of the 1961 Act. This is the scheme of Section 45(5) and Section 155(16) of the 1961 Act. We may clarify that even before the insertion of Section 45(5)(c) and Section 155(16) w.e.f 1-4-2004, the receipt of enhanced compensation under Section 45(5)(b) was taxable in the year of receipt which is only reinforced by insertion of clause (c) because the right to receive payment under the 1894 Act is not in doubt.
It is important to note that compensation, including enhanced compensation/ consideration under the 1894 Act, is based on the full value of property as on the date of notification under Section 4 of that Act. When the court/tribunal directs payment of enhanced compensation under Section 23(1-A), or Section 23(2) or under Section 28 of the 1894 Act it is on the basis that award of the Collector or the court, under reference, has not compensated the owner for the full value of the property as on date of notification.”
Thus, it is clear that the Supreme Court after considering the scheme of section 45(5) of the LT. Act has categorically held that payment made under section 28 of the Act of 1894 is enhanced compensation, as a necessary corollary, therefore, the contention that payment made under section 28 of the Act of 1894 is interest as envisaged under section 145A of the LT. Act and has to be treated as income from other sources, is unjustified and against the law laid down by the Apex Court.
6.2 In case of Union of India Vs Hari Singh & others, civil appeal no. 15041 -2017 dated 15.09.2017, Hon'ble Supreme Court of India has held that "while determining as to whether the compensation paid was for agricultura1land or not, the AO(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 (9) SCC 412] in order to ascertain whether the interest given under the said provision amounts to compensation or not".
6.3 In a recent judgment, Hon'ble ITAT Delhi in the cases of Rameshwar Vs ITO Ward-3 (4) Gurgaon and others, in A.Y. 2013-14, has referred to the decision of Ld. CIT (Appeals-1) Gurgaon whereby he had confirmed the action of the AO in treating the compensation received as interest of the assessee's and not considering it as part of compensation received u/s 28 of the Land Acquisition Act, 1894. It was treated as taxable under the head 'income from other sources' u/s 56 (2) (viii) of the Act after allowing deduction @ 50% u/s 57 (iv) of the Act. It was argued by the Sr. D.R. that it was not clear 'whether the interest was in the nature of compensation or not'. The court held that the appeals were to be restored to the AO with the direction to determine whether the interest paid amounting to compensation or not and follow the judgment of Hon'ble Apex Court in case of CIT vs Ghanshyam HUF
6.4 In the case of Jagmal Singh through LH vs ITO Ward-2 (2) Gurgaon, Hon'ble ITAT Delhi 'D + SMC' Bench in its order dated 20.09.2018 has relied on the decision of Hon'ble Bangalore Tribunal in case of ITO vs Shri Vasavaraja M Khudari Kannu & 1750 - Bangalore - 2017 dated 01.06.2018. In its decision the Hon'ble Bangalore Tribunal had relied on the decision of Hon'ble Gujarat High Court in case of M.B. Ballabhai 70 Taxmann.com 45, 2016 as the same was applicable to the facts of this case. In its decision Hon'ble Gujrat High Court had followed the decision of Hon'ble Supreme Court in the case of CIT vs Ghanshyam HUF, 2009, 182 Taxmann 368, wherein it was held that interest ujs 28 of LAC Act, 1894 is part of compensation amount whereas interest u/s 34 is only for delay in making payment after the compensation is determined. Interest u/s 28 is the part of enhanced value of land which is not the case in the matter of interest u/ s 34. Thus it was held by Hon'ble Gujrat High Court that in the light of the law laid down by the Supreme court in case of Ghanshyam HUF the interest received vi] s 28 of the LAC Act would not fall within the ambit of expression 'interest' as envisaged u/s 145A (B) of the Act as the Supreme Court has held that interest received u/s 28 of the LAC Act is not in the nature of interest but an accretion to the compensation and forms part of compensation. Hon'ble Gujrat High Court has repelled the argument that the decision of Ghanshyam HUF was rendered in 2009 and there was an amendment in Finance Act w.e.f. 1st April 2010 in section 145A. It is discussed in this order that the CBDT circular no. 5/2010 dated 03.06.2010, in para 46.1 has clarify the purpose of this amendment and that it was in the context of the decision of Hon'ble Supreme court in case of Smt. Rama Bai vs CIT, 1990, 84 CTR 164 where it was held that arrears of interest computed on delay or enhanced compensation shall be taxable on accrual basis. Further in para 46.3 it is mentioned that income by way of interest received on compensation or enhanced compensation referred to in clause (b) of section 145A shall be assessed as income from other sources. Thus the substitution of section 145A by Finance Act, 2009 was not in connection with the decision of Supreme Court in Ghanshyam HUF case. Therefore when one reads the words 'interest received on compensation or enhanced compensation in section 145A, the same have to be constitute in the manner interpreted by Supreme Court in Ghanshyam HUF case. Thus the Hon'ble Delhi Tribunal following the ratio laid down by the Apex Court and Bangalore Tribunal has given relief to the assessee.
6 ITA No.1539/Del./2020 CO No.164/Del/2022 6.5 In another recent decision of Hon'ble ITAT Chandigarh in case of Sh. Satbir vs ITO Ward-I, Jind and several others, Hon'ble Tribunal has given a ruling in favour of assessee on the issue of taxability of interest on enhanced compensation. The decisions of jurisdictional High Court in the cases of Manjit Singh HUF, Karta Manjit Singh vs Union of India and others in civil appeal no. 15506 of 2013 dated 14.01.2014, Jagmal and another vs State of Haryana and another, Sunder Lal and another vs Union of India, civil appeal no. 20014 of 2015 order dated 21.09.2015 and CIT vs Bir Singh HUF in of 2004 were discussed and it was held that they are covered by the decisions of Hon'ble Supreme Court in the cases of Ghanshyam HUF, CIT vs Chet Ram HUF (civil appeal no. 1353/2017), Union of India vs Hari Singh and others (civil appeal no. 1504 of 2017). The decisions of Hon'ble Supreme Court in the cases of Chet Ram HUF and Hari Singh and others are dated 12.09.2017 and 15.09.2017 respectively and have been passed after the decision of jurisdictional court of Manjit Singh HUF. Hon'ble Supreme Court has held that interest received by the assessee on compulsory acquisition of land u/s 28 of the LA Act is in the nature of compensation and not interest which is taxable under the head 'income from other sources' u/s 56 of the Act. The compensation being exempt u/s 10 (37) of the Act is not disputed. Thus Hon'ble ITAT Chandigarh followed the decisions of Hon'ble Supreme Court and ruled in favour of the assessee on this issue.
6.6 The facts of the instant case are same as that of the cases discussed above where the jurisdictional ITAT Delhi, ITAT Bangalore, Hon'ble Gujrat High Court and Hon'ble Supreme Court have discussed the matter and decided it in favour of the assessee. Therefore, respectfully following the decision of Hon'ble Supreme Court in case of Union of India Vs Hari Singh & others, civil appeal no. 15041 -2017 dated 15.09.2017, and CIT vs Ghanshyam HUF, 2009, 182 Taxmann 368, jurisdictional Hon'ble ITAT Delhi's decision in cases of Jagmal Singh through LH vs ITO Ward- 2 (2) Gurgaon, Hon'ble ITAT Delhi 'D + SMC' Bench in its order dated 20.09.2018 and Rameshwar Vs ITO Ward-3 (4) Gurgaon and others, in A.Y. 2013-14,the appeal of the assessee is allowed and it is held that Rs.3,36,60,247/-, received as interest under section 28 of Land Acquisition Act, 1894 forms part of enhanced compensation received on acquisition of agricultural land. Thus, the addition made by the AO on this account is hereby deleted.” both the parties and perused the records.
Ld. Counsel of the assessee reiterated that he would rely upon the order of ld. CIT (A) and also the case laws relied upon therein. Ld. Counsel further submitted that there are other series of case laws which has been decided in favour of the assessee and he gave the following chart :-
(i) Decision of ITAT, New Delhi D+SMC Bench in the case of Jagmal Singh vs.ITO passed in (ASY 2013-14) order dated 20.09.2018; (ii) Decision of ITAT, New Delhi ‘E’ Bench in the case of Shri Nitya Nand vs. ITO, ITA No.6508/Del/2016 order dated 30.01.2020; (iii) Decision of ITAT, New Delhi, SMC Bench in the case of ITO, Ward 1 (5), Gurgaon, Haryana vs. Gordhan, S/o Sh. Jaswant Singh, ITA No.3996/Del/2018 date of order 15.01.2019; (iv) Decision of ITAT, New Delhi ‘F’ Bench in the case of Smt. Sushma Gupta, C/o Vijay Kumar vs. Income Tax Officer, Ward 1 (3), Faridabad, ITA No.1823/Del/2016 date of order 31.01.2019; (v) Decision of ITAT, New Delhi ‘A’ Bench in the case of Shri Mahinder (Individual) vs. ITO, Ward II (4), Faridabad, ITA No.6344/Del/2015 date of order 28.10.2020; (vi) Decision of ITAT, Bangalore, ‘B’ Bench in the case of ITO vs. Shri Vinayak Hari Palled, ITA No.05/2017 date of order 12.10.2018 (Bang.); (vii) Decision of ITAT, Bangalore, ‘A’ Bench in the case of ITO vs. Shri Basavaraj M Kundan Kumar, ITA Nos.1747 & 1750/2017 date of order 01.06.2018 (Bang.); (viii) Shri Yashpal Singh vs. ITO, ITA No.755/2013 date of order 18.03.2014;
(x) Decision of ITAT, New Delhi ‘G’ Bench in the case of Shri Baldev Singh vs. ITO, date of order 08.03.2019 (Del.);
(xi) Decision of ITAT, Chandigarh, ‘A’ Bench in the case of ITO vs. Shri Dhanender Kumar HUF, dated of order 30.09.2019 (Chd.);
(xii) Decision of ITAT, New Delhi, Bench in the case of Shri Ummed Singh & Ors. Vs. ITO, date of order 30.01.2020 (Del.);
(xiii) Decision of ITAT, New Delhi, ‘E’ Bench in the case of Mahesh Kumar Gupta vs. DCIT, date of order 16.10.2019 (Del.);
(xiv) Decision of ITAT, New Delhi, ‘F’ Bench in the case of Pranav Saran vs. ACIT (ITAT Delhi) Appeal No. date of order 04.05.2022;
(xv) Decision of ITAT, New Delhi, ‘D’ Bench in the case of Land Acquisition Office vs. DCIT (TDS), Gurgaon, 40 & 41/Del/2021 date of order dt.22.03.2022;
(xvi) Decision of ITAT, New Delhi, ‘SMC’ Bench in the case of Kamla Devi vs. ITO, Ward 5, Hisar, date of order 21.09.2022;
(xvii) Shri Umang Sitani vs. ITO, Ward 31 (4), New Delhi, AY 2013-14 dated 28.06.2022; and (xviii) ITO, Ward 1, Hisar vs. Girish Kumar, date of order 06.07.2022.
Per contra, ld. DR could not point out any deficiency in the order of the ld. CIT (A). any infirmity in the well-reasoned order of the ld. CIT (A) and uphold the same.
In the result, the Revenue’s appeal stands dismissed.
Assessee’s cross objection is only supportive to the order of ld. CIT (A). Since we have already upheld the order of ld. CIT (A), the cross objection becomes infructuous and the same is dismissed as infructuous. Order pronounced in the open court on this 17th day of March, 2023.