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Income Tax Appellate Tribunal, SMC BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM
आदेश / ORDER आदेश आदेश आदेश
PER D. KARUNAKARA RAO, AM :
There are 3 appeals under consideration filed by 3 different
assessees namely (1) Ramchandra N. Barure; (2) Harishchandra N.
Barure; and (3) Sanjay B. Barure involving common A.Y. 2012-13. They
are filed against the separate orders of CIT(A)-2, Aurangabad, commonly
dated 01-05-2017.
In these appeals, the facts, additions, arguments, submissions of
the assessee, decision of AO/CIT(A) are identical. Therefore, all these
appeals are clubbed and adjudicated in this composite order. However,
we shall first proceed to take up the appeal in respect of Ramchandra N.
Barure for want of facts and arguments as a standard one.
ITA No.1724/PUN/2017 – Mr. Ramchandra N. Barure A.Y. 2012-13
Briefly stated relevant facts of the assessee and the issues include
that the assessee is an individual and filed the return of income on
21-11-2016 declaring total income of Rs.5,83,305/-. Before this AO
issued notice u/s.148 of the Act on 14-10-2015 for opining the cash
deposits in the bank accounts in Latur as concealed income of the
assessee for the year under consideration. During the re-assessment
proceedings, the assessee did not appear and however, he filed written
submissions. Considering the said submissions, the re-assessment
proceedings was completed determining the total income at
Rs.41,55,425/-. AO made addition of Rs.40,97,120/- ( i.e.50% of the
interest and the land compensation received by the assessee. In the
process, AO invoked the provisions of section 56(2)(viii) and 56(2)(vi) of
3 ITA Nos. 1724 to 1726/PUN/2017 Ramchandra N. Barure, Harishchandra N. Barure and Sanjay N. Barure
the Act. During the re-assessment proceedings, it is the case of the
assessee that the same is not taxable receipt and the interest received
by the assessee u/s.28 of Land Acquisition Act is nothing but part of
the enhanced value of the land exempt from tax and relied on various
judgments. Rejecting the same, the AO treated the amount of
Rs.81,24,240/- received by the assessee as interest of land acquisition
payment. AO examined the provisions which provides for taxation of
said income by way of interest received on compensation or enhanced
compensation. These amended provisions of section 56(2)(viii) of the
Act and the provisions of section 145A(b) are brought into statute w.e.f.
01-04-2010 by the Finance (No.2) Act, 2009. AO also analysed the
provisions of section 23(1A), 28 and 34 of Land Acquisition Act, 1984
and held that these amounts are chargeable to income tax. AO also
analysed the Hon’ble Supreme Court judgment in the case of CIT Vs.
Ghanshyam Das (HUF) 224 CTR 522, Manjet Singh (HUF) Karta
Manjeet Singh Vs. Union of India 65 taxman.com 160, Sunderlal and
another Vs. UOI and others vide CWP No.2014 of 2015, dated 21-09-
2015 and eventually held as under :
“12. Decision :
Viewed in this context, in section 56(2)(viii) of the Act, the aim, scope and object of the income chargeable to tax under the head “income from other sources” is clearly mentioned. The words are clear and unambiguous and if there is nothing in the Act detracting from the width of the said terms, it is clear that, the interest received on enhanced compensation is taxable u/s.56(2)(viii) of the Act. As the assessee has not offered the interest of Rs.81,94,240/- for taxation and the same is added to his total income, subject to the deduction of 50% as provided u/s.57(iv) of the Act. Further, as he has concealed the particulars of his income and also not filed the return of income deliberately to evade the tax, penal proceedings u/s.274 r.w.s.271(1)(c) are initiated separately. 13. Subject to these remarks, the total income is computed as under : Income returned Rs.58,305 Interest on land compensations Rs.81,94,240 Less : Deduction @50% Rs.40,97,120 Taxable interest u/s.56(2)(viii) Rs.40,97,120
4 ITA Nos. 1724 to 1726/PUN/2017 Ramchandra N. Barure, Harishchandra N. Barure and Sanjay N. Barure
---------------------- Total income Rs.41,55,425/- ---------------------- From the above, it is evident that this is a case of the assessee
where the amount of Rs.81,94,240/- received by the assessee
constitutes “interest on the compensation or enhanced compensation”
taxable u/s.56(2)(viii) of the Act.
Similarly, AO made addition of Rs.35,84,468/- in the case of
Mr.Harishchandra N. Barure and Rs.26,19,000/- in the case of Mr.
Sanjay B. Barure (50% of the interest and the land compensation).
Aggrieved with the same, assessee filed an appeal before the
CIT(A). Assessee argued before him stating that assessee received sum
of Rs.71,68,936/- against the total amount of Rs.2,86,75,746/- and not
Rs.81,94,240/-. Giving break up for said sum of Rs.71,68,936/-,
assessee submitted that the compensation amount out of that works
out to Rs.19,69,307/- only and the interest segments amount works
out to Rs.51,99,629/-. Assessee also relied on various judgments in the
context of section 28 of the Land Acquisition Act and submitted that the
order of the AO requires rectification. However, assessee argued before
the CIT(A) about the meaning of solatium payment, interest amount on
excess compensation and compensation etc. and stated for deletion of
the addition made by the AO. On considering the assessee’s
submissions and case laws relied upon by the assessee, the CIT(A)
confirmed the order of AO and the invoking of the provisions of section
56(2)(viii) of the Act in respect of amount of interest on compensation
received by the assessee u/s.28 of the Land Acquisition Act. Relevant
lines from the contents of Para No.13 of the order of CIT(A) are extracted
here as under :
5 ITA Nos. 1724 to 1726/PUN/2017 Ramchandra N. Barure, Harishchandra N. Barure and Sanjay N. Barure
“13. In view of the decisions of the Hon’ble Apex Court in Bikram Singh case (supra) wherein it has been held that the interest received on the delayed payment of the compensation determined u/s.28 to 31 of the Land Acquisition Act is income, and a taxable event, Manjeet Singh (HUF) case which has been approved by the Hon’ble Supreme Court and Balasaheb Raosaheb Bidwe and others (supra) cited above, I hold that there is no infirmity in the order passed by the Assessing Officer, whereby compensation received u/s.28 of the L.A. Act was brought to tax in terms of section 56(2)(viii) of the I.T. Act. However, it appears that there is a difference in the amount treated as interest received by the assessee in the assessment order and as stated by the assessee in the course of appellate proceedings. In assessment order, the assessing officer has treated the amount of Rs.81,94,240/- as the quantum of interest received whereas the assessee states that he had received only an amount of Rs.51,99,629/- as interest. Therefore, I direct the assessing officer to verify the facts and bring the correct amount of interest to tax as per my decision.”
From the above, it is evident that the CIT(A) confirmed the
addition, in principle, and however, directed the AO to adopt the correct
figure and facts and confirm the taxation of interest income under the
provisions of section 56(2)(viii) of the Act. In the process, the CIT(A)
relied heavily on the Apex Court judgment in the case of Bikram Singh
Vs. Land Acquisition Collector 224 ITR 551 for the proposition that
interest received on the delayed payment of compensation determined
u/s.28 or 31 of the Land Acquisition Act constitutes taxable income.
He also mentioned the said judgment, the Apex Court confirmed the
other judgments delivered in the context of Manjet Singh (HUF) Karta
Manjeet Singh Vs. Union of India and Balasaheb Raosaheb Bidwe and
others Vs. State of Maharashtra.
Aggrieved with the same, assessee filed the present appeal before
us with the following grounds :
“On facts and in law & without prejudice to each other :
The Ld. AO erred in treating the amount of Rs.81,94,240/- received by me u/s.28 of Land Acquisition Act, 1984, as interest instead of part and parcel of consideration.
6 ITA Nos. 1724 to 1726/PUN/2017 Ramchandra N. Barure, Harishchandra N. Barure and Sanjay N. Barure
1.1 As the prime asset does not fall under the category of capital asset, the Ld. AO (as well as Ld.CIT(a)) ought not to have levied tax on amount received by me u/s.28 of Land Acquisition Act, 1984.
The Ld. AO erred (Ld.CIT(A) erred in confirming) in taxing the income which was effectively not received by the assessee.
The assessee craves the liberty to add, alter or amend any of the grounds of appeal or to take fresh ground of appeal at the time of hearing.”
As evident from the above, the solitary argument of the assessee
is that the sum of Rs.81,94,240/- does not constitute interest income in
its entirety and the same constitutes consideration and the same is in
the nature of capital asset. In this regard, Ld. Counsel filed the
following written submissions :
I. Rely of Pune ITAT decision in case of Dnyanoba Shajirao Jadhav V (2018) 169 ITD 291 (Pune) (Trib.)
In this decision, Hon. Pune Tribunal, had considered all the relevant decisions of Apex court and other high courts on the subject including landmark decision of Bikram Singh & Ors. Vs. Land Acquisition Collector & Ors , Commissioner of Income Tax. Vs. Ghanshyam (HUF) «2009) 26 DTR (SC) 129) and decided the issue as under -
The Commissioner of Income Tax (Appeals) while confirming the order of Assessing Officer has observed that the case of assessee is covered by the decision of Hon'ble Apex Court in the case of Bikram Singh & Ors. Vs. Land Acquisition Collector & Ors. (supra) as the said judgment is delivered by Larger Bench and prevails over the decision rendered in the case of Commissioner of Income Tax Vs. Ghanshyam (HUF) (supra) which is though subsequent in time but is rendered by Division Bench. We do not concur with the findings of Commissioner of Income Tax (Appeals) to make the addition. Undisputedly, while rendering the decision in the case of Commissioner of Income Tax Vs. Ghanshyam (HUF) (supra) the judgment of Larger Bench in the case of Bikram Singh & Ors. Vs. Land Acquisition Collector & Ors. (supra) was not considered. However, we find that there is no conflict of law laid down in both the cases. The Hon'ble Supreme Court in the case of Commissioner of Income Tax Vs. Ghanshyam (HUF) (supra) has clearly marked the distinction between the interest received u/s. 23(1A) and 23(2) r.w.s. 28 of the L.A. Act vis-a-vis interest on delayed payment of compensation u/s. 34 of the L.A. Act. The Larger Bench of Hon'ble Supreme Court of India in the case of Bikram Singh & Ors. Vs. Land Acquisition Collector & Ors. (supra) has held that the interest received u/s. 34 of the Act on delayed payment of compensation is a revenue receipt and is eligible to tax. Both the judgments rendered b the Hon'ble Apex court have held that payment of interest on delayed payment of compensation u/s.34 of the L.A. Act are liable to tax under the provisionis of Income Tax Act.
Therefore, in view of Binding decision of Hon. Pune Tribunal, we pray your honor to delete the addition made by the Ld. AO.”
7 ITA Nos. 1724 to 1726/PUN/2017 Ramchandra N. Barure, Harishchandra N. Barure and Sanjay N. Barure
From the above, it is evident that the assessee did not chose to
appear before the Tribunal but merely relied on the decision of Pune
Bench of the Tribunal in the case of Dnyanoba Shajirao Jadhav Vs. ITO
(supra) which is relevant for the following proposition :
“interest awarded u/s.28 of the Land Acquisition Act is in the nature of solatium and an integral part of compensation and receipt of said compensation is a capital receipt whereas, interest awarded u/s.34 of Land Acquisition Act is on account of delayed payment of compensation and is receive receipt exigible to tax.”
Therefore, any assessee could have received either u/s.28 of u/s.34 of
the Land Acquisition Act, 1984.
Ld. DR for the Revenue submitted that the interest u/s.28 is
taxable under section 56 of the I.T. Act and prayed for confirming the
orders of AO/CIT(A). Ld. DR relied on the following judgments :
Manjet Singh (HUF) Karta Manjeet Singh Vs. Union of India 65 taxman.com 160 (Punjab & Haryana 2. CIT Vs. Chet Ram (HUF) – Civil Appeal No.13053/2017, dated 12-09-2017 3. Shivajirao S/o. Dnyanoba Ghanwat and others Vs. The State of Maharashtra and others - Writ Petition No.5402 of 2013 and others dated 27-08-2013
6.1 Referring to the judgment of Hon’ble Supreme Court in the case of
CIT Vs. Chet Ram (HUF) (supra) he submitted that in the said
judgment, the Hon’ble Apex court after dealing with the judgment
delivered in the context of CIT Vs. Ghanshyam (HUF) held as under :
“Respectfully following the above decision, we allow these civil appeals, set aside the orders of the High Court as also the Income Tax Appellate Tribunal and hold that the respondents are liable to tax on the enhanced amount of compensation and interest received by them during the year in question.”
I have heard the Ld. DR for the Revenue and the written
submissions filed by the assessee on this issue of taxability of interest
income. Considering the fact that the assessee has not appeared before
8 ITA Nos. 1724 to 1726/PUN/2017 Ramchandra N. Barure, Harishchandra N. Barure and Sanjay N. Barure
the Tribunal, there is no way to know the basic facts relating to the
interest received by the assessee if the same is received u/s.28 or 34 of
the Land Acquisition Act, 1984. As such, there are no facts as to what
is the interest amount, what is the compensation or enhanced
compensation etc. Assessee never filed the copies of the relevant orders
directing the payments. No details of various sections of Land
Acquisition Act (supra) are available before me. The orders of
AO/CIT(A) are silent on these details/facts. For want of facts, I am of
the opinion that this issue requires to revisit the file of AO for fresh
adjudication after considering not only the order of Pune Bench of the
Tribunal in the case of Dnyanoba Shajirao Jadhav Vs. ITO (supra) but
also the Hon’ble Supreme Court judgment in the case of CIT Vs. Chet
Ram (HUF) (supra) and any other law in force. Accordingly, the grounds
raised by the assessee are allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical
purposes.
ITA Nos. 1725 and 1726/PUN/2017 – Mr. Harishchandra N. Barure and Mr. Sanjay N. Barure -A.Y.2012-13
The facts, issues, decision of AO/CIT(A), assessee’s submissions
and the arguments of Ld. DR in the above appeals are same. Since the
issue is remanded to the file of AO in the case of Mr. Ramchandra N.
Barure, I am of the opinion that the grounds in these two appeals being
identical in principle should also be remanded to the file of AO.
Accordingly, the grounds raised by the assessees in their appeals are
allowed for statistical purposes.
In the result, both the appeals of the assessees are allowed for
statistical purposes.
9 ITA Nos. 1724 to 1726/PUN/2017 Ramchandra N. Barure, Harishchandra N. Barure and Sanjay N. Barure
To sum up, all the appeals of the assessees are allowed for
statistical purposes.
Order pronounced on this 03rd day of October, 2018.
Sd/- (D.KARUNAKARA RAO) लेखा सद� / ACCOUNTANT MEMBER पुणे / Pune; �दनांक Dated : 03rd October, 2018. Satish
आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to : अ�ेिषत
अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. आयकर आयु�(अपील) / The CIT(A)-2, Aurangabad 3. आयकर आयु� / The Pr.CIT-2, Aurangabad 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “SMC” / 5. DR ‘SMC’, ITAT, Pune; गाड� फाईल / Guard file. 6.
आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER,स आदेशानुसार
स�यािपत �ित //True Copy// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune