THE COMMISSIONER OF INCOME TAX AAYAKAR BHAVAN AURANGABAD vs. M/S RAJURESHWAR AND ASSOCIATES

{1} ITA10.2014.odt IN THE HIGH COURT OF JUDICATURE OF BOMBAY BENCH AT AURANGABAD INCOME TAX APPEAL NO.10 OF 2014 The Commissioner of Income Tax Aayakar Bhavan, Near Holy Cross School, Cantonment, Aurangabad ..APPELLANT.. Versus M/s Rajureshwar and Associates 1/4245, Naigalli, Kadrabad Jalna.

..RESPONDENT WITH INCOME TAX APPEAL NO.12 OF 2014 The Commissioner of Income Tax Aayakar Bhavan, Near Holy Cross School, Cantonment, Aurangabad ..APPELLANT.. Versus M/s Rajureshwar and Associates 1/4245, Naigalli, Kadrabad Jalna.

..RESPONDENT --------------------------------------------------------------------------- In both matters: Mr.Alok M. Sharma, Sr. Standing Counsel for the appellant Mr.A.B.Kale, Advocate for respondent ---------------------------------------------------------------------------

CORAM : A.V.NIRGUDE &

V.L.ACHLIYA,JJ.

DATE : December 5th, 2014.

{2} ITA10.2014.odt ORAL ORDER [PER A.V.NIRGUDE, J.] : 1. Both these appeals challenge judgment and order passed by Income Tax Appellate Tribunal, Pune Bench 'A', Pune dismissing the appeals of the appellant. 2. The assesse firm entered into an agreement with Aurangabad Zilla Utpadak Sahakari Soot Girnee Maryadit, Garkheda, Aurangabad for purchase of their land. As per the agreement, the assessee has paid an amount of Rs.7,81,00,000/- to said society. However, the transaction could not materialise and the land was not handed over to assessee. Therefore, the assessee approached the High Court and thereafter to Supreme Court. Ultimately the matter was disposed of by the Supreme Court with a direction to liquidator of said society to refund the amount of Rs.7,81,00,000/- received from the assessee with simple interest at the rate of 11% p.a. for the period for which the amount remained with them, within a period of four months from the date of judgment. In compliance of the decision of the Supreme Court, the liquidator of said society refunded the amount of Rs.7,81,00,000/-. The liquidator also paid them Rs.1,83,35,436/- towards interest calculated at the rate of 11% p.a. The Assessing Officer in a proceeding initiated against the assessee treated the said income of interest as chargeable income received on deposit made by assessee with

{3} ITA10.2014.odt said society and directed the assessee to pay the income tax over the said amount. Being aggrieved by the said decision of the Assessing Officer, the assessee preferred appeal before the Commissioner of Income Tax (Appeals) Aurangabad. The appeals were allowed. Being aggrieved by the decision, the appellant had preferred appeal before Income Tax Appellate Tribunal, Pune Bench 'A', Pune. The Tribunal has dismissed the appeals. Being aggrieved by the same, the revenue department has filed these appeals challenging the decision of both the authorities below with contention that the interest received by the assessee being compensation, the same is liable for income tax. 3. We have heard Mr.Alok Sharma, learned counsel for appellant and perused the concurrent findings recorded by both the authorities below. We are of the view that no substantial question of law is involved in the matter. The amount received by the assessee cannot be treated as compensation for the sole reason that the amount which was paid to the assessee as interest over the amount directed to be refunded was due to the reason that the transaction was not materialised and the amount was retained by the said society for quite long period. The amount in question which was received by the assessee was not received as an income on any deposits made with the said society nor it was a compensation received on account of acquisition of any land. Therefore, Clause 8 of sub section 2 of Section 56 of Income Tax Act have no

{4} ITA10.2014.odt applicability in view of undisputed facts of the present case. The authorities below have discussed in detail on this aspect. We found no perversity in any of the findings on facts as well as law recorded by appellate authority as well as the tribunal. In a case based upon identical facts, in the matter of CIT Versus A. Gajapathy Naidu reported in (1964) 53 ITR 114, the Apex Court has clearly held that such income cannot be treated as income from other sources. 4. In view of this, there does not appear a substantial question of law arising in these appeals. Appeals stand dismissed.

V.L.ACHLIYA, J.

A.V.NIRGUDE, J. sgp