THE COMMISSIONER OF INCOME TAX, COCHIN vs. SHRI. K.A.JOSEPH, KURIKAYIL(H),VYTTILA,

On going through the orders of the Income Tax authorities including the Tribunal, we find that the agricultural lands of the respondents were acquired in 1990 for construction of a LPG bottling plant for Indian Oil Corporation. Compensation awarded and increased by courts enjoy exemption as no capital gain is payable for the compensation received on acquisition of agricultural land outside the Municipal limits. However, department is entitled to levy tax on 2 interest on the compensation amount which according to settled position based on judgment of the Supreme Court is assessable on an year to year basis, on accrual basis. Reassessments initiated under Section 147 were time barred under Section 149 because by the time the High Court pronounced judgment granting enhanced compensation and interest thereon, time for reopening assessments provided under Section 149 was over. However, the Assessing Officer reopened the assessments by invoking the exception clause on limitation contained under Section 150(1) of the Income Tax Act. Even though reassessments are based on Section 150(1) of the Act, the first appellate authority as well as the Tribunal held that reassessments were still time barred because according to them, time barred assessments cannot be reopened under Section 150(1) of the Act. Standing Counsel contended that scope of Section 150(1) is to exclude application of Section 149 for cases falling under Section 150(1) of the Act and so much so, the finding of the lower authorities are unsustainable. Even though we find force in this contention, we are of the view that we need not consider the issue in these appeals where the tax involved in 3 individual cases is fairly low. In fact, under the CBDT norms appeals even to the Tribunal is provided only when the tax effect is above Rs.2 lakhs. In most of these cases we find the tax on interest payable for each year is much below the limit of Rs.2 lakhs and the additional demands are attributable to interest demanded under Section 234A and 234B of the Act which will in any case be waived, even if the tax demand is sustained. Since the assessments are for periods 10 to 18 years back and in view of the low amount of tax involved and since all the respondents-assessees are individuals deprived of their small extents of agricultural lands in acquisition proceedings, we dismiss these appeals without going into the merits of the case, but by stating that the findings of the Tribunal or the first appellate authority need not be treated as binding on the department in any other matter. C.N.RAMACHANDRAN NAIR Judge V.K.MOHANAN Judge pms