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Income Tax Appellate Tribunal, BANGALORE BENCH “ B ” : BANGALORE
Before: SHRI CHANDRA POOJARI & SMT. BEENA PILLAI
O R D E R PER SHRI CHANDRA POOJARI, A.M. : These appeals are filed by assessee and Revenue against different orders of Commissioner of Income Tax (Appeals), Davangere. The assessee has filed appeals for Assessment Years 2014-15 to 2017-18 and Revenue has filed for Assessment Years 2014-15 and 2015-16. Since common issues are involved in sake of convenience.
Common grounds (only change in figures) raised by assessee’s appeals are as follows :
“ The order of the Ld. Commissioner of Income Tax (Appeals) is arbitrary, opposed to law, facts and circumstances of the case.
2. The Ld. Assessing Officer and the Ld. CIT (A) has erred in ignoring the fact that the impugned lands in the present case are rural agricultural lands, as apparent from the available records, including the order of the Hon'ble Civil Court at Shimogga pursuant to reference made under section 18 of the Land acquisition Act, 1894. 3. The Ld. Assessing Officer and the Ld. CIT (A) ought to have observed that the impugned land being rural agricultural land, the entire compensation, including enhanced compensation and interest thereon under section 28 of the Land Acquisition Act, 1894, paid towards the acquisition is exempt from income tax under section 10(37) of the Income-tax Act. 4. The Ld. Assessing officer erred in treating the Assessee as an 'Assessee in default' under section 201 of the Income-tax Act for non- deduction of TDS on payments which are exempt under Income-tax Act. The Ld. CIT (A) has erred in confirming the order of the Ld. Assessing Officer. 5. Without prejudice to the above, the Ld. Assessing Officer has erred on facts and in law by not being able to distinguish between interest payments made in the nature of compensation as defined under section 45(5) and interest paid for delay in payment. 6. The Ld. Assessing Officer's contention that TDS has to be deducted on all interest payments, including those payments made under section 28 under The Land Acquisition Act, is contrary to the position of law as established by the Hon'ble Supreme court in the case of CIT V. Ghanshyam (HUF).”
The grounds raised in Revenue’s appeals are as follows :
“1. The learned CIT (Appeals) has erred in allowing relief on deduction of tax at source on interest payments made as a consequence of Court Order.
3 to 645/Bang/2020 & 1421 & 1422/Bang/2019 2. The learned CIT (Appeals) has erred in bifurcating the interest payments into the categories of the amounts for which “details are available” and those for which “details are not available” and allowing relief on “details available” even though there is no provision in the Income Tax Act for giving relief on same amount based on such bifurcations.”
The facts involved in these appeals are that the assessee is a State Government Department, Karnataka. The assessee acquires lands for development works of Govt. of Karnataka and compensation is paid to various land owners. The assessee has paid enhanced compensation to various land owners as per the orders of judicial courts and interest awarded to land owners by courts. The interest awarded by Courts are directly remitted to Civil Courts only as per the directions of the Civil Courts and the assessee did not pay the interest to awardees. The Assessing Officer conducted Survey u/s. 133A of the Income Tax Act, 1961 ('the Act') and found that TDS was not deducted on interest awarded to land owners and levied tax for short deduction or non-deduction of TDS and the Assessing Officer levied interest u/s. 201(1) and 201(1A) of the Act. On appeal, the CIT (Appeals) observed that the assessee is in default and the assessee is liable for deduction of TDS on interest component. The learned CIT (Appeals) observed that interest awarded u/s. 23(1A) & 23(2) r.w.s. 28 of the Land Acquisition Act is in the nature of solatium and integral part of compensation. Receipt of compensation awarded
4 to 645/Bang/2020 & 1421 & 1422/Bang/2019 under Land Acquisition Act is a Capital Receipt. Whereas, interest awarded u/s. 34 of the Land Acquisition Act is on account of delayed payment of compensation is a revenue receipt. The payment of interest u/s. 23(1A) and 23(2) of Land Acquisition Act and interest awarded u/s. 34 of the Land Acquisition Act are very different in nature. As per the available record, he classified the compensation as follows :
Considering the above, the CIT (Appeals) observed that the interest payment u/s. 28 of 1894 Act where the details available, no TDS to be made in respect of this interest. On this issue, the revenue is in appeal before us for the A.Ys 2014-15 & 2016-17. On the other hand, the assessee is in appeal before us with regard to treating the assessee in default for the land being rural agricultural land, the entire compensation and interest thereon u/s. 28 of Land Acquisition Act paid towards the acquisition which is exempt from Income Tax u/s. 10(37) of Income Tax Act.
5 to 645/Bang/2020 & 1421 & 1422/Bang/2019 5. At the time of hearing, the learned Authorised Representative filed petition dt.28.10.2020 for additional evidence submitting as follows :
5.1 The learned Authorised Representative prayed for admission of additional evidences in the form of Court Order from Principle (SR.DN) Civil Judge, Shimoga and Senior Civil Judge, Harihar. With regard to bifurcation of interest computation u/s. 28 of the Land Acquisition Act, 1894, he prayed that the issue may be remitted to the file of Assessing Officer for consideration afresh. On the other hand, the ld. DR submitted that the additional evidence may be admitted, however, the issue may be remitted to Assessing Officer for fresh consideration.
We have heard both the parties and perused the material on record. These additional evidences were not made available at the time of framing the order to the Assessing Officer by the assessee. These Court orders are relevant for deciding the issue. The assessee has also not produced these court orders while framing of passing of orders u/s. 201(1) and 201(1A) of the Act. These additional evidences are admitted for adjudication since the CIT (Appeals) had no occasion to consider these additional evidences and we are inclined to remit the matter to the file of CIT (Appeals) for fresh consideration and adjudication in the light of Court Orders after affording an opportunity to the assessee and calling Remand Report from the
In the result, the appeals of the assessee as well as Revenue are allowed for statistical purposes.
Pronounced in the open court on the date mentioned on the caption page.