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

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ITA 4988/DEL/2016Status: DisposedITAT Delhi21 December 2017AY 2004-054 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the Supreme Court in Ghanshyam HUF held that additional compensation and solatium are part of compensation, but interest under Section 34 is treated differently. Since a legible copy of the District Judge's order was now available, the matter was remanded to the Assessing Officer for fresh adjudication.

What were the facts?

The assessee received enhanced compensation, solatium, and interest amounting to Rs.37,24,171/-. The Assessing Officer treated this as capital gains, allowing a deduction under Section 54F, resulting in a taxable capital gain of Rs.27,57,137/-. The CIT(A) upheld the assessment, deeming the District Judge's order illegible.

What were the issues?

Whether interest received as part of compensation is taxable as capital gains, and the proper treatment of different components of compensation based on Supreme Court judgments.

Which sections of the Income-tax Act were involved?

Section 54F

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Income Tax Appellate Tribunal, DELHI BENCHES : SMC : NEW DELHI

Before: SHRI R.S. SYAL

For Appellant: Shri Somil Agarwal &, Shri Lakshya, Advocates, Shri Amit Jain, Sr. DR
Hearing: 21.12.2017Pronounced: 21.12.2017

ORDER This appeal by the assessee arises out of the order passed by the CIT(A) on 31.08.2016 in relation to the assessment year 2004-05.

2.

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.

3.

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.

4.

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.

5.

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

Order Pronounced in the open Court on 21.12.2017.

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