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Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC’, NEW DELHI
Before: SH. H.S. SIDHU
ORDER PER H.S. SIDHU, JM This appeal is filed by the Revenue against the Order dated 12.1.2018 passed by the Ld. CIT(A)-1, Gurgaon relating to assessment year 2014-15 on the following grounds:- i. The CIT(A) has erred on facts and in law in deleting the addition of Rs. 79,48,706/- made by the AO on account of interest income received on enhanced compensation, as the Department has filed proposal for Review Petition against the decision of the Hon’ble Supreme Court of India, New Delhi passed in WP(C) No. 590 of 2016 and 405 of 2017 order dated 15.09.2017 in the case of Brahmparkash & Rajender Singh and Anr (Combined order in Civil Appeal No. 15041 of 2017 titled as Union of India and others vs. Hari Singh and others.) ii. That the appellant craves for the permission to add, delete or amend grounds of appeal before or at the time of hearing of appeal.
2. The brief facts of the case are that assessee has filed the return of income on 15.11.2014 declaring an income of Rs. 10,91,840/- and agricultural income of Rs. 91,320/- and the same was processed u/s. 143(1) of the Income Tax Act, 1961 (in short “Act”). Later on the case of the assessee was selected for scrutiny. Notice u/s. 143(2) of the I.T. Act, 1961 dated 30.8.2015 was issued. Notice u/s. 142(1) of the Act alongwith questionnaire was issued on 4.4.2016 and in response to the same the AR of the assessee attended the proceedings and filed the details/documents. AO observed that assessee had received compensation during the year under consideration amounting to Rs. 79,48,706/-. The AO further noted that in the return filed by the assessee, the assessee had not shown any income under the head capital gain. The AO asked the assessee to explain why no income had been shown under the head capital gain. The assessee submitted that he had received enhanced compensation under the Land Acquisition Act and the same was exempt under section 10(37) of the Act. The assessee further submitted that HSIIDC had wrongly deducted TDS on this enhanced compensation under section 194LA. The AO considered the 2 assessee’s submission but was not satisfied. The AO further pointed out that the assessee had not furnished a copy of the ownership of the land, Girdawari and other relevant documents, which prove that the land in acquisition is not a capital asset. The AO referred to the provisions of Section 194LA and Section 2(14) of the Income Tax Act and held that the land in question was a capital asset and the income arising on account of compensation received on this land was taxable as capital gains. The AO accordingly added the amount of Rs. 79,48,706/- under the head capital gains and assessed the income of the assessee at Rs. 1,06,90,550/- u/s. 143(3) of the Act vide order dated 29.4.2016. Against the assessment order, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 12.1.2018 has allowed the appeal of the assessee.
Aggrieved with the impugned order, Revenue is in appeal before the Tribunal.
Ld. DR relied upon the order of the Assessing Officer and stated that since the Department has filed proposal for Review Petition against the decision of the Hon’ble Supreme Court of India, New Delhi passed in WP(C) No. 590 of 2016 and 405 of 2017 order dated 15.09.2017 in the case of Brahmparkash & Rajender Singh and Anr (Combined order in Civil Appeal No. 15041 of 2017 titled as Union of India and others vs. Hari Singh and others.), hence, the appeal of the Revenue may be allowed.
He also filed the copy of the ITAT, Delhi, D+SMC Bench order dated 20.9.2018 in the case of Jagmal Singh vs. ITO passed in (AY 2013-14) and stated that the issue in the present is squarely covered by the aforesaid decision dated 20.9.2018 of the Tribunal.
On the other hand, Ld. Counsel for the assessee relied upon the order of the Ld. CIT(A) and stated that Ld. CIT(A) has passed a well reasoned order by placing the reliance of various decisions applicable on the issue in dispute.
I have heard both the parties and perused the records especially the impugned order.
5.1 I note that the issue in dispute in the present appeal is squarely also covered by the ITAT, Delhi, D+SMC Bench order dated 20.9.2018 in the case of Jagmal Singh vs. ITO passed in (AY 2013-14).
5.2 It is noted that Ld. DR has stated that Department filed proposal for Review Petition against the decision of the Hon’ble Supreme Court of India, New Delhi passed in WP(C) No. 590 of 2016 and 405 of 2017 order dated 15.09.2017 in the case of Brahmparkash & Rajender Singh and Anr (Combined order in Civil Appeal No. 15041 of 2017 titled as Union of India and others vs. Hari Singh and others.), which has not yet been decided by the Hon’ble Supreme Court of India, hence, this plea of the Ld. DR is not acceptable.
5.3 I further find that Ld. CIT(A) has elaborately discussed the issue in dispute vide para no. 5.5 to 5.17 at page no. 9 to 12 of the impugned order. For the sake of clarity, we are reproducing herewith the relevant findings of the Ld. CIT(A) as under:-
5.5 I have carefully considered the rival submissions, it is evident from the facts on record the submissions of the appellant and the report of the Assessing Officer that the appellant had received enhanced compensation and interest on enhanced compensation under section 28 of the Land Acquisition Act. The interest amount received under section 28 of the Land Acquisition Act is Rs. 79,48,706/- on which TDS was deducted by the HSIIDC and which has been taxed by the Assessing Officer under the head capital gains. As discussed above, as the amount received by the appellant of Rs. 79,48,706/- represents interest under section 28 of the Land Acquisition Act. It now needs to be examined whether the said interest is taxable under the provisions of the Income Tax Act.
5.6 The issue whether the interest paid under the provisions of section 28 of LA Act. is part of the enhanced compensation or is it taxable as interest income has been a debatable issue and has been considered by number of judicial authorities.
5.7 The Hon'ble Supreme Court in the case of CIT V/s Ghansham (HUF)
315 ITR 1 held that interest paid on the excess amount, u/s 28 of 1894 Act., depends upon a claim by the person whose land is acquired whereas interest u/s 34 is for delay in making payment. Interest u/s 28 is a part of enhanced value of land which is not the case in the matter of payment of interest u/s 34.
5.8 The Hon'ble Punjab & Haryana High Court considered this issue in the case of Manjeet Singh (HUF) Karta Manjeet Singh V/s Union of India and Ors. CWP No. 15506 of 2013 dated 14/01/2014 (2016) 237 Taxmann 116. The Hon'ble Jurisdictional High Court considered the issue whether the interest u/s 28 of the 1894 Act. is taxable u/s 56 of the IT Act. as income from other sources. In this case the Hon'ble High Court referred to the decision of the Hon'ble Supreme Court in the case of CIT V/s Ghanshyam (Supra).
The Hon'ble High Court also referred to a number of other decisions of the Hon'ble Supreme Court and held that the interest received u/s 28 of the Land Acquisition Act is in the nature of interest and is taxable.
5.9 The Hon’ble Supreme Court dismissed the SLP filed in the case of Manjeet Singh (HUF) Karta Manjeet Singh Vs. Union of India & Ors. CWP No. 15506 of 2013(as discussed in para 3.8 above) by way of Special Leave to Appeal (C No. 34642 of 2014 vide order dated 18.12. 2014 with the following order:-
“Heard Ld. Counsel for the petitioner and perused the relevant material. We do not find any legal and valid grounds for interference. The Special Leave Petitions are dismissed. ”
5.10 The Hon’ble Punjab & Haryana High Court considered all the aforesaid cases, in the case of Sunder Lai & Anr. Vs. Union of India in CWP No. 2014 of 2015. In this order dated 21.09.2015 the Hon’ble Jurisdictional High Court held that the interest received u/s 28 of the Land Acquisition Act is in the nature of interest and is taxable.
5.11 Further, on this issue, the Hon’ble Punjab & Haryana High Court has recalled the earlier decision in the case of Jagmal Singh and Ors. Vs. State of Haryana & Anr. vide its order dated 02.02.2016 in RA-CR No. 46 CII of 2014 in CR No. 7740 of 2012.
5.12 The Hon’ble High Court while recalling this order held as under:-
“1. The applications for review is sought by the Union of India on the plea that the orders passed by this Court in the absence of any representation of Union, failed to take note of an amendment in the Income Tax Act. The said provision made interest component assessed on additional amount on land acquisition awards under Section 28 of the Land Acquisition Act as taxable. The amendment through Section 145-A (b) took effect from April 2010. I have relied on a judgment of the Supreme Court in Commissioner of Income- tax, Faridabad Versus Ghanshyam (HUF) Civil Appeal No. 4401 of2009 decided on 16.7.2009 reported in 2009 (9) JT 445 to hold that the interest awarded on enhanced compensation is not taxable. The effect of the judgment has been statutorily abrogated by virtue of the amendment.
The award of the Collector itself has been passed subsequent to the amendment on November 10, 2010. A Division Bench of this Court in Iiari Kishan Versus Union of India 2014 (2) PLR 662 and another judgment in Attar Singh and others Versus State of Haryana and others, CWP No. 10125 of 2015 dated 3.9.2015 have reiterated the position of taxability on enhanced compensation under the Land Acquisition Act on the basis of the amendment and the fact of inapplicability of Ghanshy ant's case (supra), after the amendment to the statute. The decisions already rendered by the Court were parentally wrong, failing to note of the statutory amendment and its effect on the awards in the two decisions, referred to above.
The orders already passed are recalled and the review applications are allowed holding that interest on the additional award is taxable under income tax and liable to be deducted at the time of deposit”
5.13 From the aforesaid decision, it is evident that after the amendment of the Income Tax Act by way of insertion of Section 56(2)(viii) and Section 57(l)(v) by Finance Act 2009 w.e.f 01.04.2010, the issue whether the interest received on enhanced compensation was taxable as income from other sources has been finally settled. In these circumstances the decisions of the Hon’ble Supreme Court in the case of CIT vs. Ghanshyam (HUF) (Supra) and CIT Rajkot Vs. Govindbhai Mamaiya are not applicable in the appellant’s case.
5.14 The decisions of the Hon’ble Punjab & Haryana High Court in the case of Sunderlal and Anr. Dated 21.09.2015 (Supra) and in the case of Jagmal Sing & Ors. (Supra) being the latest decisions on this issue and these decision having considered the decision of the Hon’ble Supreme Court in the case of CIT vs. Ghanshyam (Supra) and also considering the fact that the Hon’ble Supreme Court has dismissed the SLP filed in the case of Manjit Singh (HUF) (Supra), it is held that the interest received u/s 28 of the Land Acquisition Act is not exempt under the act as it 10 could not partake the character of compensation for acquisition of agricultural land. It is held that the interest received on enhanced compensation in the appellant's case is liable to tax under the head income from other sources.
5.15 It may also be relevant to mention here that the Hon’ble Jurisdictional ITAT, Delhi Bench has upheld similar additions made in the following cases:- i. Mahinder Singh V/s ITO in ITA No. 5533/Del./2016 dated 09/06/2017 ii. Ajay Gupta V/s ITO in ITA No. 5937/Del./2016 dated 07/06/2017. iii) Babu Lai V/s ITO in ITA No. 6614/DeI./2016 dated 07/06/2017 5.16 Recently, the issue has once again been considered by the Hon’ble Supreme Court vide its order dated 15/09/2017 in the case of Union of India V/s Hari Singh and Ors. in Civil Appeal No. 15041 of 2017. In this decision, the Hon’ble Supreme Court held as under:-
“While determining as to whether the compensation paid was for agricultural land or not, the AOs will keep in mind the provisions of section 28 of the Land Acquisition Act and the law laid down by this court in commissioner of Income Tax, Faridabad V. Ghanshyam (HUF) (2009 (8)
SCC 412) in order to ascertain whether the interest given under the said provisions amounts to compensation or not. ”
5.17 The appellant has relied upon this decision to claim that the interest received is not taxable.
Respectfully following the decision of the Hon'ble supreme court in the case of Union of India V/s Hari Singh and Ors. in Civil Appeal No. 15041 of 2017, which is the latest decision on the issue, the addition made by the AO s deleted.”
5.4 After perusing the aforesaid findings of the Ld. CIT(A) as well as the decision dated 20.9.2018 referred above, I am of the considered view that there is no infirmity in the aforesaid finding of the Ld. CIT(A), hence, I uphold the same and accordingly reject the ground raised by the Revenue.
In the result, the Appeal of the Revenue is dismissed.