SH. JAGPAL SINGH,,GHAZIABAD vs. ITO, NEW DELHI

The only issue raised in this appeal is against the taxation of Rs.27,57,137/- under the head ‘Capital gains’ on account of receipt of enhanced compensation etc.

Briefly stated, the facts of the case are that the assessee during the year under consideration received enhanced compensation, additional compensation, solatium and interest thereon, all amounting to Rs.37,24,171/- in compliance of the judgment of the District Judge, Meerut. Applying the judgment of the Hon'ble Apex Court in CIT vs. Ghanshyam HUF (2009) 315 ITR 1 (SC), the Assessing Officer treated the said amount as liable for capital gains tax. The assessee raised claim for deduction u/s 54F. The same was allowed and income under the head ‘Capital gain’ was computed at Rs.27,57,137/-. The ld. CIT(A) echoed the assessment order despite the assessee’s request for giving proper treatment to interest, which was part of compensation. This was done so by the ld. CIT(A) on the ground that the copy of the order of the District Judge, Meerut, was not legible. The assessee is aggrieved against this.

Having heard both the sides and perused the relevant material on record, it is observed that the Hon'ble Supreme Court in Ghanshyam HUF (supra) has held that the additional amount and solatium are part of compensation along with the interest u/s 28. However, interest u/s 34 has been treated as different from part of compensation. The ld. AR has now placed on record a legible copy of the order of the District Judge and its typed version as well. Since the necessary material is now available on record, it is deemed fit to send the matter back to the file of Assessing Officer for deciding the issue in conformity with the judgment in the case of Ghanshyam HUF (supra). Needless to say, a reasonable opportunity of hearing shall be given to the assessee in such fresh proceedings.

In the result, the appeal is allowed for statistical purposes.