PUNEET SINGH vs. CIT,KARNAL

ITA/132/2018HC Punjab & HaryanaPHHC01118970201819 November 2018Author: MR. JUSTICE R.C. KATHURIA (RETD.),MR. JUSTICE HARINDER SINGH SIDHU16 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that there was no illegality or perversity in the concurrent findings of the Assessing Officer, CIT(A), and the Tribunal. The Tribunal had relied on a decision of the High Court in Manjeet Singh (HUF) where it was held that interest received under Section 28 of the Land Acquisition Act, 1894, is not exempt and is taxable under the head 'income from other sources' in the year of receipt. This was further reinforced by the amendments made by the Finance (No.2) Act, 2009, effective from April 1, 2010, which amended Section 145A to provide that interest received on compensation or enhanced compensation shall be deemed to be income of the year in which it is received, and inserted Clause (viii) in Section 56(2) to make such income chargeable under the head 'Income from other sources'. Section 57(iv) allows a deduction of 50% of such income. The Court found no substantial question of law arising from the appeals and accordingly dismissed them.

What were the facts?

The assessee, Puneet Singh, is appealing against an order of the Income Tax Appellate Tribunal (ITAT) for the assessment year 2010-11. The dispute concerns the taxability of interest received on land acquisition compensation. The assessee's land was acquired in 2002, and enhanced compensation with interest was awarded in 2009. The Land Acquisition Officer issued Form 16A for interest of ₹14,71,162/- for the financial year ending March 31, 2010, with TDS deducted. The assessee filed a return claiming refund. Reassessment proceedings were initiated, and the Assessing Officer added 50% of the interest income (₹5,65,280/-) as taxable under Section 56(2)(viii) read with Section 57(iv) of the Income Tax Act, 1961. The CIT(A) and the ITAT upheld this addition. The assessee has filed appeals before the High Court.

What were the issues?

1. Whether the amount of interest on land acquisition compensation, allowed bifurcation and spread over from the date of acquisition to the date of payment, is taxable pursuant to Section 145A(b) read with Section 5 of the Income Tax Act, 1961, effective from April 1, 2010? 2. Whether interest received on compensation/enhanced compensation awarded by the Court on a reference under Section 18 of the Land Acquisition Act, 1894, should be spread over annually from the date of possession till the court's order, as per Rama Bai vs. CIT and K.S. Krishna Rao vs. CIT? 3. Whether the landowner is barred from claiming the benefit of the 'Nil Rate Slab' for income for respective years when the period involved is 8 years from acquisition to compensation receipt, considering the amendment to Section 56(2)(viii) by the Finance Act, 2009, effective from April 1, 2010? 4. Whether a salaried person allowed to set off salary arrears can be denied a similar set-off for interest income on acquired land, especially if payment was made before the Finance Act, 2009 amendment? Assessee's Contentions: The assessee argued for the bifurcation and spread-over of interest income from the date of acquisition to the date of payment, citing precedents like Rama Bai and K.S. Krishna Rao. They also questioned the applicability of the 'Nil Rate Slab' and sought parity with set-off provisions for salary arrears. Revenue's Contentions: The revenue, as reflected in the lower authorities' orders, contended that interest received on enhanced compensation is taxable in the year of receipt under Section 145A(b) and Section 56(2)(viii) of the Act, with a 50% deduction allowable under Section 57(iv).

Which sections of the Income-tax Act were involved?

Section 260A,Section 145A,Section 5,Section 18,Section 56(2)(viii),Section 57(iv),Section 139(1),Section 143(1),Section 148,Section 23(1A),Section 28,Section 34

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ITA-132-2018 -1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA-132-2018 (O&M) Date of Decision: 19.11.2018 Puneet Singh ....Appellant. Versus Commissioner of Income Tax, Karnal ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. HON'BLE MRS. JUSTICE MANJARI NEHRU KAUL. PRESENT: Mr. Divya Suri, Advocate for the appellant. *** AJAY KUMAR MITTAL, J.

1.

This order shall dispose of a bunch of three appeals bearing ITA Nos.132, 163 and 165 of 2018 as according to learned counsel for the parties, identical questions of law and facts are involved therein. For brevity, the facts are being extracted from ITA-132-2018. 2. ITA-132-2018 has been preferred by the assessee under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 11.10.2017 (Annexure A-12) passed by the Income Tax Appellate Tribunal, Delhi 'SMC' Bench, New Delhi (hereinafter referred to as “the Tribunal”) in ITA No. 1388/DEL/2017, for the assessment year 2010-11, claiming the following substantial questions of law:- I. Whether under the facts and circumstances of the case, is the amount of interest on land acquisition compensation allowed bifurcation and spread over GURBACHA

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