COMMISSIONER OF INCOME TAX vs. PANDIT SHANTI SARUP

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ITA/275/2008HC Punjab & HaryanaPHHC01080249200803 July 2008Author: MR. JUSTICE SATISH KUMAR MITTAL,MR JUSTICE RAKESH KUMAR GARG3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the issues raised in the appeals were squarely covered by its own previous decision in the case of The Commissioner of Income tax, Faridabad versus Shri Hardwari Lal, decided on 26.3.2008. In that judgment, following the Apex Court and its own prior rulings, the Court concluded that interest on enhanced compensation would not accrue until the issue of enhanced compensation was finally decided. Upon finality, the accrued interest was to be spread over on an annual basis from the date of possession delivery until the date of the court's order. The Court found no illegality in the impugned ITAT order and no substantial question of law surviving for consideration. Consequently, all the appeals filed by the Revenue were dismissed. No issue was expressly left undecided.

What were the facts?

The Revenue has filed seven appeals under Section 260-A of the Income Tax Act, 1961, against an order dated 30.4.2007 passed by the Income Tax Appellate Tribunal (ITAT). The ITAT had consolidated and disposed of eight appeals pertaining to assessment years 1987-88 to 1994-95. The appeals before the High Court concern assessment years 1987-88 to 1993-94. The core issue revolves around the taxability of interest on enhanced compensation. The Revenue is challenging the ITAT's view that such interest is taxable only after the dispute relating to it attains finality.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT is right in holding that interest on enhanced compensation will not accrue and not be liable to tax till the time the dispute relating to interest payable on enhanced compensation is pending before a Court of law and has not attained finality? (Question of law) 2. Whether, on the facts and circumstances of the case, the ITAT is right in holding the interest on enhanced compensation to be taxed on accrual basis only after the finality of litigation regarding enhanced compensation or interest, in contradiction with the judgment of this Court following the judgment of the Apex Court in the case of CIT Vs. Rama Bai (181 ITR 400)? (Question of law) Assessee's contentions: Not recorded. Revenue's contentions: The Revenue argued that the ITAT erred in its findings on the taxability of interest on enhanced compensation, particularly concerning the accrual basis and the timing of tax liability, and that the ITAT's decision contradicted established judicial precedents.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A.s No. 275 to 281 of 2008 DATE OF DECISION : 03.07.2008 Commissioner of Income Tax, Hisar .... APPELLANT Versus Pandit Shanti Sarup ..... RESPONDENT CORAM :- HON'BLE MR. JUSTICE SATISH KUMAR MITTAL HON'BLE MR. JUSTICE RAKESH KUMAR GARG

Present: Mr. Sanjeev Kaushik, Advocate, for the appellant-revenue.

* * * SATISH KUMAR MITTAL , J. ( Oral ) The revenue has filed these 7 appeals under Section 260-A of the Income Tax Act, 1961, pertaining to 7 different assessment years i.e. from 1987-88 to 1993-94, challenging the order dated 30.4.2007, passed by the Income Tax Appellate Tribunal, Chandigarh Bench `B' Chandigarh, whereby vide a consolidated order, 8 appeals pertaining to 8 different assessment years i.e. from 1987-88 to 1994-95 have been disposed of. In all these appeals, the following substantial questions of law have been raised for consideration of this Court : “(i) Whether on the facts and in the circumstances of the case, the ITAT is right in holding that interest on enhanced -2- compensation will not accrue and not be liable to tax till the time the dispute relating to interest payable on enhanced compensation is pending before a Court of law and not attained finality ? (ii) Singh, respectively) ? On the basis of similar facts, these very questions have already been considered by this Court in ITA No. 490 of 2007, title as `The Commissioner of Income tax, Faridabad versus Shri Hardwari Lal', decided on 26.3.2008, and it has been concluded as under :- “11. Thus, in view of the above discussed judgements of the Hon'ble Apex Court and this Court, the interest on enhanced compensation would not accrue till the issue of enhanced compensation is finally decided and thereafter on attaining the finality of determination of enhanced compensation by the Court, the interest accrued to the assessee has to be spread over -3- on an annual basis right from the date of delivery of possession till the date of the order of the court on the time basis.” The issues raised in these appeals are squarely covered by the aforesaid decision and this fact has not been disputed by the learned counsel for the appellant. In view of the above, we do not find any illegality in the impugned order of the Tribunal and no substantial question of law survives for our consideration. Accordingly, all these appeals are dismissed.

( SATISH KUMAR MITTAL ) JUDGE July 03, 2008 ( RAKESH KUMAR GARG ) ndj JUDGE

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