CIT, FARIDABAD vs. JAI BHAGWAN PALWAL FARIDABAD

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ITA/330/2009HC Punjab & HaryanaPHHC01084427200910 March 2010Author: MR. JUSTICE M.M. KUMAR,MR. JUSTICE JITENDRA CHAUHAN3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the matter was covered by the Supreme Court's judgment in Commissioner of Income-Tax v. Ghanshyam (2009) 315 ITR 1 (SC), which was in favour of the Revenue. Consequently, the High Court set aside the order passed by the ITAT, which was based on the High Court's earlier judgment in Chandi Ram & ors. v. CIT. The High Court remanded the matter back to the ITAT for a fresh decision on the issues that had not been decided by the Tribunal due to its reliance on the Chandi Ram's case. The operative direction was to dispose of the appeal accordingly and for parties to appear before the CIT(A) on 5.4.2010. No specific finding was given on the substantial questions of law themselves, as the matter was remitted.

What were the facts?

This case involves an appeal by the Revenue (Commissioner of Income Tax, Faridabad) against an order dated 3.10.2008 passed by the Income Tax Appellate Tribunal (ITAT), Delhi Bench 'D'. The appeal pertains to assessment year 2002-03. The Revenue challenges the ITAT's decision regarding the taxation of capital gains and interest on enhanced compensation when the matter was sub judice. The High Court noted that the issue was covered by the Supreme Court's judgment in Commissioner of Income-Tax v. Ghanshyam. Consequently, the High Court set aside the ITAT's order, which was based on a previous High Court judgment in Chandi Ram & ors. v. CIT, and remanded the matter back to the ITAT for a fresh decision on other undecided issues.

What were the issues?

The Tribunal had to decide the following substantial questions of law raised by the Revenue: 1. Whether the ITAT was correct in holding that capital gains cannot be charged on the basis of the year of receipt of enhanced compensation if the matter is sub judice. 2. Whether, in law, it remains an open question that compensation and/or enhanced compensation would be taxable only when it attained finality, irrespective of remedial provisions introduced from 1.4.2004 (Section 45(5)(c) and Section 155(16)), and whether there is no doubt that subsequent reductions would be assessed accordingly. 3. Whether the ITAT was correct in holding that if litigation regarding the quantum of additional compensation was pending and had not attained finality, interest on enhanced compensation would not accrue and could only be taxed upon final settlement. 4. Whether, in law, it is an open question that interest and/or enhanced interest would be taxable only when it attained finality, irrespective of Section 154, and whether there is no doubt that subsequent increases or reductions would be rectified accordingly. The Revenue argued that the ITAT erred in its findings on these issues. The judgment does not record specific arguments from the assessee's side, other than implicitly agreeing that the matter was covered by the Supreme Court's decision in CIT v. Ghanshyam.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 45,Section 155,Section 154

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.

Date of Decision: March 10, 2010 The Commissioner of Income Tax, Faridabad .......Appellant Versus Shri Jai Bhagwan .......Respondent CORAM:- HON'BLE MR.JUSTICE M. M. KUMAR HON'BLE MR.JUSTICE JITENDRA CHAUHAN Present: Ms.Urvashi Dhugga, Advocate for the appellant. Mr.SK Mukhi, Advocate for the respondent. Notes: 1) To be referred to the reporters or not? 2) Whether the judgment should be reported in the Digest? --- M. M. KUMAR, J. This is revenue's appeal filed under Section 260-A of the Income Tax Act, 1961 (for brevity 'the Act') challenging order dated 3.10.2008 passed by the Income Tax Appellate Tribunal, Delhi Bench 'D', New Delhi in ITA No.2186/DEL/2008, in respect of assessment year 2002-

03.

The appellant-revenue has sought to raise the following substantial questions of law for determination of this Court:

“1. Whether, on the facts and circumstances of the case, the Ld.ITAT is right in holding that the capital gain cannot be charged on the basis of year of receipt of the enhanced compensation, if the matter is subjudice?

2.

Whether in law it is still an open question that the compensation and/or enhanced compensation would be taxable only when it attained finality irrespective of the remedial provisions introduced in the Act from 1.4.2004 by insertion of sub clause (c) of sub section (5) of section 45 read with sub- section (16) of section 155 and there is no more doubt that if the compensation and/or enhanced compensation is subsequently reduced, it would be assessed accordingly under these provisions?

3.

Whether, on the facts and circumstances of the case, the Ld.ITAT was right in holding that if the litigation regarding quantum of additional compensation was pending before a Court and had not attained finality, interest on enhanced compensation would not accrue and could be subjected to tax only when the issue of enhanced compensation is finally settled?

4.

Whether in law it is an open question that the interest and/or enhanced interest would be taxable only when it attained finality irrespective of the remedial provisions of section 154 and when there is no doubt that if the interest is reduced or increased, it would be rectified accordingly under these provisions.” It has not been disputed before us that the matter is covered by a judgment of Hon'ble the Supreme Court rendered in the case titled as Commissioner of Income-Tax v. Ghanshyam, (2009) 315 ITR 1 (SC) against the assessee and in favour of the Revenue. Accordingly, order passed by the Tribunal based on the judgment of this Court rendered in the case titled as Chandi Ram & ors. v. CIT 217 CTR 113 is hereby set aside and the matter is remanded back for decision afresh on the other issue as the Tribunal has not decided those issues on account of the applicability of the judgment of this Court in Chandi Ram's case (supra). Disposed of accordingly. Parties through their counsel are directed to appear before the CIT (A) on 5.4.2010. ( M. M. KUMAR )

JUDGE

( JITENDRA CHAUHAN ) March 10, 2010

JUDGE SRM

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