COMMISSIONER OF INCOME TAX vs. KALO DEVI

PDF · subscribers
ITA/11/2008HC Himachal PradeshHPHC01000282200809 December 2011Author: HONOURABLE MR. JUSTICE RAJIV SHARMA,HONRABLE MR. JUSTICE R.B. MISRA4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court disposed of all the appeals by stating that the substantial questions of law raised were no longer res integra. This was in view of the law laid down by the Hon'ble Supreme Court in the case of Commissioner of Income Tax versus Ghanshyam (HUF), (2009) 315 ITR 1(SC). The judgment does not elaborate on the specific findings of the ITAT or the reasoning of the High Court beyond referencing the Supreme Court's decision. Therefore, the specific findings on each issue, the detailed reasoning, and the ratio decidendi are not explicitly provided in this excerpt. The operative directions are to dispose of the appeals in line with the Supreme Court's ruling.

What were the facts?

These appeals involve multiple assessees (Shri Narain Dass (late), Sabir Dass, Shri Dhundi Ram, Smt. Krishna Devi, Shri Sita Ram, Shri Lachhu Ram, Shri Lumbru Ram, Shri Shyam Lal, and Shiva Nand) against the Commissioner of Income Tax, Shimla. The appeals arise from common questions of law and facts concerning the taxability of interest on enhanced compensation. The Income Tax Appellate Tribunal (ITAT) had previously ruled on these matters. The present proceedings are appeals filed by the Revenue before the High Court of Himachal Pradesh.

What were the issues?

The High Court was called upon to decide two common substantial questions of law: 1. Whether the ITAT erred in holding that interest comprised in enhanced compensation, received unconditionally, is not taxable until appeals against the award of enhanced compensation are finally decided by higher courts? This question turns on the interpretation of provisions related to the taxation of compensation and interest. 2. Whether the ITAT was correct in holding that interest on enhanced compensation actually received by the assessee was not taxable in the year of receipt because it had not yet accrued, despite the assessee not following any specific accounting method for such interest, thereby making it taxable on the basis of receipt under Section 5 read with Sections 145 and 45(5) of the Income Tax Act? Assessee's Contention: The judgment does not record specific contentions for the assessees. However, the framing of the questions implies the assessees likely argued that the interest was not taxable until final determination of the enhanced compensation appeals. Revenue's Contention: The Revenue likely argued that interest on enhanced compensation, once received, is taxable in the year of receipt, irrespective of pending appeals, especially if the assessee is not following a mercantile system of accounting for such income.

Which sections of the Income-tax Act were involved?

Section 5,Section 145,Section 45(5)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA ITAs No.47,48,49,50,54,55,56 of 2007 and 1,9 & 11 of 2008 Date of decision : December 9, 2011 ITA No.47/2007 Commissioner of Income Tax, Shimla …Appellant. Versus Shri Narain Dass (late) through Chinta Devi V&PO Jhakri, Tehsil Rampur Bushehr, District Shimla. …Respondent. ITA No.48/2007 Commissioner of Income Tax, Shimla …Appellant. Versus Sabir Dass, resident of V&PO Jhakri, Tehsil Rampur Bushehr, District Shimla. …Respondent. ITA No.49/2007 Commissioner of Income Tax, Shimla …Appellant. Versus Shri Dhundi Ram son of Shri Totu Ram, resident of V&PO Jhakri, Tehsil Rampur Bushehr, District Shimla. …Respondent. ITA No.50/2007 Commissioner of Income Tax, Shimla …Appellant. Versus Smt. Krishna Devi wifie of Shri J.R. Negi, Resident of V&PO Jhakri, Tehsil Rampur Bushehr, District Shimla. …Respondent. ITA No.54/2007 Commissioner of Income Tax, Shimla …Appellant. Versus Shri Sita Ram son of Shri Mulku, Resident of V&PO Jhakri, Tehsil Rampur Bushehr, District Shimla. …Respondent. …2… ITA No.55/2007 Commissioner of Income Tax, Shimla …Appellant. Versus Shri Lachhu Ram, resident of V&PO Jhakri, Tehsil Rampur Bushehr, District Shimla. …Respondent. ITA No.56/2007 Commissioner of Income Tax, Shimla …Appellant. Versus Shri Lumbru Ram c/o Shri Thoin Ram, resident of V&PO Jhakri, Tehsil Rampur Bushehr, District Shimla. …Respondent. ITA No.1/2008 Commissioner of Income Tax, Shimla …Appellant. Versus Shri Lumbru Ram c/o Shri Thoin Ram, resident of V&PO Jhakri, Tehsil Rampur Bushehr, District Shimla. …Respondent. ITA No.9/2008 Commissioner of Income Tax, Shimla …Appellant. Versus Shri Shyam Lal son of Shri Shiva Nand, resident of V&PO Jhakri, Tehsil Rampur Bushehr, District Shimla. …Respondent. ITA No.11/2008 Commissioner of Income Tax, Shimla …Appellant. Versus Shiva Nand, resident of V&PO Jhakri, Tehsil Rampur Bushehr, District Shimla. …Respondent. …3… Coram The Hon’ble Mr. Justice R.B. Misra, Judge. The Hon’ble Mr. Justice Rajiv Sharma, Judge. Whether approved for reporting?1 For the Appellants : Mr. Vishal Mohan, Advocate. For the Respondents : Mr. Vivek Thakur, Advocate. Rajiv Sharma, Judge Since common questions of law and facts are involved in all the appeals, the same were taken up together and are being disposed of by a common

judgment.

2.

Following common substantial questions of law were framed in all these appeals: i) Whether on the facts and in the circumstances of the case, the Hon’ble ITAT was correct in holding that the interest comprised in the amount of enhanced compensation received unconditionally to the assessee could not be taxed as income until the appeals if any, against the award of enhanced compensation were finally decided by the higher Courts?

ii) Whether the Hon’ble ITAT was correct in holding that the interest on enhanced compensation actually received by the assessee was not taxable in the year of receipt on the ground that such interest had not yet accrued, ignoring the fact that the assessee was not following any method of accounting for such interest

Whether reporters of the local papers may be allowed to see the judgment?

…4…

and hence, under Section 5 of the Income Tax Act, read with Section 145 and Section 45(5), such interest was taxable on the basis of receipt?

3.

It is jointly represented by the learned counsel appearing on behalf of the parties that the substantial questions of law raised in these appeals are no more res integra, in view of the law laid down by their Lordships of the Hon’ble Supreme Court in Commissioner of Income Tax versus Ghanshyam (HUF), (2009) 315 ITR 1(SC). Consequently, all the appeals are disposed of.

( R.B. Misra ), J.

December 9, 2011(sd)

( Rajiv Sharma ), J

More judgments on Section 5

All 847 judgments and leading authorities on Section 5 →

Recent GST High Court judgments

Search GST case law →