JYOTI JAYANTRAO INDURKAR,,LATUR vs. INCOME TAX OFFICER,, LATUR

आदेश / ORDER

PER SUSHMA CHOWLA, JM

The appeal filed by the assessee is against the order of Commissioner of Income Tax (Appeals)-2, Aurangabad dated 17.11.2016 relating to assessment year 2012-13 against order passed under section 143(3) of the Income Tax Act, 1961 ( in short ‘the Act’).

2 ITA No.291/PUN/2017 A.Y.2012-13

“1. The learned CIT(A)-2 Aurangabad has erred both on facts and in law in confirming addition of Rs.35,15,954/- u/s 56 (2)(viii) of Income Tax Act ignoring legal position that said Interest received U / s 28 of Land Acquisition Act is part of enhanced compensation and thereby exempt u/s.10(37) of IT Act. Hence, the impugned addition may please be deleted. 2. The learned CIT(A) has erred in not following the law laid down by Hon Supreme Court in Ghanshyam HUF 315 ITR 1 and Govindbahi Mamaiya 367 ITR 498 that the Interest received U/s.28 of Land Acquisition Act is part & parcel of enhanced compensation. 3. Appellant prays for just and equitable relief. 4. Appellant prays for cancellation/reduction of Interest charged u/s. 234B. 5. Appellant prays to add, alter, amend, clarify, modify, take Additional Ground/ s and/ or withdraw the Ground/s during Appellate Proceeding.”

received under Land Acquisition Act.

enhanced compensation on the land at Harangul which is compulsorily acquired

for MIDC, Latur by the Government. The assessee gave details of the

compensation/enhance compensation totaling Rs.97,68,423/- and the same is

tabulated at page 4 of the assessment order. However, in the computation of

income, the assessee had not offered the interest of Rs.70,37,907/- for taxation

under section 56(2)(viii) of the Act. The assessee was asked to furnish details of

compensation and interest received. The assessee furnished the order of Joint

Civil Judge (S.D), Latur dated 31.12.2009. As per the said order, the assessee

had received enhanced compensation @ Rs.20/- per Sq. ft after deduction 25%

towards development and interest @9% per annum for the first year and

thereafter, @15% of the per annum. The para 6 of the assessment order is

reproduced as under : “the amount payable to the claimant, shall carry interest

3 ITA No.291/PUN/2017 A.Y.2012-13

@9% per annum for the first year and thereafter 15% per annum from the date

of notification i.e. 04/03/1993 till realization of entire amount in favour of

claimant.” The Assessing Officer, thus, observed that the assessee had earned

the amount as interest only. In reply, the assessee claimed that said interest

was received under section 28 of the Land Acquisition Act, 1894 and the interest

under section 28 of the Land Acquisition Act is not taxable in view of the

Judgment of the Hon'ble Supreme Court in the case of CIT Rajkot Vs.

Govindbhai Mamaiya, which was delivered on 04.09.2014 (2014 STPL 599 SC).

The Assessing Officer took note of the amended section 56(2) w.e.f. 01.04.2010

and also to section 145A of the Act and held that the interest received on

compensation or enhanced compensation, was taxable in the year of receipt

only. He then referred to the Circular No.05/2010 dated 03.06.2010 wherein the

provisions for taxation of interest received on delayed compensation or

enhanced compensation was clarified. The Assessing Officer also observed

that the deduction of 50% of the interest under section 57 was provided by

inserting clause (iv) to section 57 of the Act. The assessee stressed that the

interest received under section 28 of the Land Acquisition Act, 1894 was not

taxable in view of the judgment of Hon'ble Supreme Court of India in the case of

CIT Vs. Ghanshyam (HUF) (SC), reported as 315 ITR 1 and other decisions.

The Assessing Officer held that the said interest should be taxable in the hands

of the assessee and after allowing deduction under section 57(iv) of the Act,

added sum of Rs.35,18,954/- in the hands of the assessee.

ratio laid down by the Hon'ble Supreme Court in the case of Bikram Singh &

Others Vs. The Land Acquisition Collector, 224 ITR 551 (SC). He also observed

that the decision given in CIT Vs. Ghanshyam (HUF) (supra.) had not

considered by the earlier Larger Bench Judgment.

4 ITA No.291/PUN/2017 A.Y.2012-13

Civil Judge (S.D), Latur, copy of which is placed in the paper book would clearly

prove the case of the assessee that the interest in additional compensation was

under section 28 of the Land Acquisition Act and not under 34 of the Land

Acquisition Act. He further pointed out that Pune Bench of the Tribunal in the

case of Dnyanoba Shajirao Jadhav Vs. ITO, in ITA No.168/PUN/2016 order dated 29th January, 2018 has decided similar issue and held that the interest

received under section 28 of the Land Acquisition Act was capital receipt and

the interest received under section 34 was revenue receipt and exigible to tax.

Authorities below.

Representatives, the issue which arises in the present appeal is with regard to

the taxability of compensation received by the assessee which has been taxed

in the hands of the assessee under section 56(2)(viii) of the Act on which

deduction of 50% has been allowed under section 57(iv) of the Act. The case of

the assessee before Authorities below and even before us is that the assessee

had received interest under section 28 of the Land Acquisition Act. The Pune

Bench of the Tribunal in the case of Dnyanoba Shajirao Jadhav Vs. ITO (supra.)

has already deliberated upon the issue and has also taken note of the

provisions of Land Acquisition Act and the decision of the Hon'ble Apex Court in

the case of CIT Vs. Ghanshyam (HUF) (supra.) wherein it has been laid down

that in case interest is received under section 28 of the Land Acquisition Act,

then said interest was not taxable in the hands of the assessee. However, in

case the interest is received under section 34 of the Act then the said interest is

5 ITA No.291/PUN/2017 A.Y.2012-13

taxable in the hands of the assessee. The Tribunal had also taken note of the

order of CIT(A) in the said case by relying on the decision of Hon'ble Supreme

Court in the case of Bikram Singh (supra.). The Tribunal has held as under:

“10. 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-à-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 exigible to tax. Both the judgments rendered by the Hon'ble Apex Court have held that payment of interest on delayed ITA No.168/PUN/2016, A.Y. 2011-12 payment of compensation u/s. 34 of the L.A. Act are liable to tax under the provisions of Income Tax Act.”

to the file of Assessing Officer to determine whether interest received was under

provisions of section 28 or section 34 of the Land Acquisition Act.

the plea of the assessee is that interest received on enhanced compensation is

not taxable as the said interest was received under section 28 of the Land

Acquisition Act. The said aspect is not clear from the perusal of the record and it

is deemed fit to restore the issue back to the file of Assessing Officer for the

limited purpose of verifying the claim of the assessee. In case the interest is

received under section 28 of the Land Acquisition Act, then same is not taxable

in the hands of the assessee and in case, the interest is received under section

6 ITA No.291/PUN/2017 A.Y.2012-13

34 of the Land Acquisition Act, the same is taxable in the hands of the assessee. The assessee is directed to furnish complete details before the Assessing Officer and the Assessing Officer shall decide the issue after affording reasonable opportunity of hearing to the assessee. Accordingly, grounds of appeal raised by the assessee are allowed for statistical purposes.

Order pronounced on 31st day of August, 2018.

Sd/- (SUSHMA CHOWLA) �या�यक सद�य/JUDICIAL MEMBER

पुणे / Pune; �दनांक / Dated : 31st August, 2018. SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :

अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT (Appeals)-2, Aurangabad. 4. The Pr. CIT-2, Aurangabad. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक-सद�य” ब�च, 5. पुणे / DR, ITAT, “SMC” Bench, Pune. गाड� फ़ाइल / Guard File. 6.

// True Copy // आदेशानुसार / BY ORDER,

�नजी स�चव /Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.