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आदेश/Order
PER N.K. SAINI, VICE PRESIDENT
This is an appeal by the assessee against the order dt. 26/08/2021 of the Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi.
Following grounds have been raised in this appeal:
That the order of Ld.. CIT (A) is against the law and facts of the case.
The learned CIT(A) erred in confirming action of Learned A.O passing the order u/s. 250 as AO has passed order after more than time prescribed u/s 153(2) . The notice u/s 148 was issued on 17.05.2018 and order must be passed by 30.09.2019. It is submitted that the order ought to have been passed within statutory period and failing which order passed is time barred and hence bad in law and void ab initio. It is submitted that in the facts and circumstances of the case, the order passed by the Income Tax Officer requires to be quashed. It be so done.
That It has been held by Hon'ble Supreme Court in case of CIT v/s Ghanshyam Dass HUF that interest awarded u/s 28 of the Land Acquisition Act is a capital receipt. Hon'ble Apex Court in the case of CIT Vs Ghanshyam HUF (2009) 315 ITR 1 has held that Interest awarded u/s 28 of Land Acquisition Act, 1894 is nothing but an accretion to the value of compensation and hence it is part and parcel of compensation. Thus taxability of such interest is of Capital nature and should be included to Consideration received for the purpose of computation of capital gain u/s 45 of Income Tax Act, 1961.Hence, addition made of Rs 16,01,945/- be deleted and tax demand of Rs. 764040 is wrong. 4. That This issue has been further decided by the Hon'ble Apex Court in case of Union of India Vs. Hari Singh (Civil Appeal No. 15041/2017 order dated 15th September 2017) wherein it is held that While determining as to whether the compensation paid was for agricultural land or not, the assessing officer will keep in mind the provisions of Section 28 of the Land Acquisition Act and the law laid down by this Court in CIT Vs Ghanshyam HUF [ 2009) (8) SCC 412 ] in order to ascertain whether the interest given under the said provisions amount to compensation or not. There is no adverse finding of Apex Court after that, and decision of Apex Court is rule of law and binding on all lower authorities.
That the appellant craves leave to add or amend the Grounds of appeal before the appeal is finally heard and disposed off.
Facts of the case in brief are that the A.O. received an information that the assessee received interest on enhanced compensation amounting to Rs. 32,03,891/- during the F.Y. relevant to the Assessment Year under consideration which was taxable after allowing deduction of 50% under section 57(iv) of the Income Tax Act, 1961 (for short the ‘Act’), which comes to Rs. 16,01,945/-. The A.O. thereafter issued notice under section 148 of the Act. In response the assessee filed the return of income on 27/09/2019 declaring an income of Rs. 5,81,900/- and claimed exempt income of Rs. 82,99,404/- in which enhanced compensation was Rs. 50,95,513/- and interest on enhanced compensation was Rs. 32,03,891/-. The A.O. was of the view that the interest under section 28 of the Land Acquisition Act was not interest which partakes the character of compensation. He therefore treated the said interest as taxable and added to the income of the assessee.
Being aggrieved the assessee carried the matter to the Ld. CIT(A) who sustained the addition by observing in para 6.1 of the impugned order as under:
6.1 After considering the submission of the appellant, I do not find any reason to interfere with the findings of the Ld. AO. In Para 4.8 the Ld. AO has also placed reliance on the Hon'ble Jurisdictional High Court of Punjab & Haryana in the case of Manjeet Singh (HUF) Karta Manjeet Singh Vs. Union of India & Others in CWP No. 155506 of 2014, Puneet Singh Vs. Commission of Income Tax, Karnal In ITA 132- 2018 (O & M) vide judgement dated 19.11.2018 &Naresh Kumar Jain & Others Vs. State of Haryana & Others reported as (2017) 188 PLR 193 has held that the interest component on enhanced compensation under section 28 is liable to be taxed u/s. 56 of the IT Act, 1961. In view of the above, no interference is called for with the addition made by the Ld. AO and addition is hereby confirmed.
Now the assessee is in appeal.
The Ld. Counsel for the Assessee furnished the written submissions which read as under:
Re: Sawarn Singh S/o Sh. Niranjan Singh
Ref: ITA NO. 264/CHD/2021 arising from the Order dated 26.08.2021 of National Faceless Appeal Centre (NFAC)
Date Fixed for Hearing: 30.11.2021
Most respectfully, we submit as under:
The present appeal is the second appeal arising from the dismissal of First Appeal by National Faceless Appeal Centre (NFAC) Order dated 26.08.2021.
In this case the assessee has already submitted the Paper Book.
The assessee seeks permission to withdraw second ground of appeal and to add additional grounds of appeal
i) On the facts and circumstances of the case the order passed by the learned CIT(A) is bad both in the eyes of law and on facts.
ii) On the facts and circumstances of the case the learned CIT(A) has erred both on facts and in law in sustaining the addition on account of interest of enhanced compensation to the extent of interest of Rs. 16,01,945/-.
iii) On the facts and circumstance of the case the learned CIT(A) has erred both on facts and in law in confirming the addition, rejecting the contention of the assessee that the amount having been received by Sawarn Singh u/s 28 of the Land Acquisition Act, the same is not taxable.
iv) On the facts and circumstance of the case the learned CIT(A) has erred both on facts and in law in confirming the addition, misinterpreting the various judicial pronouncements given by Hon'ble Supreme Court and various High Courts.
v) On the facts and circumstances of the case the learned CIT(A) has erred both on facts and in law in confirming the addition rejecting the contention of the assessee that the interest received on compulsory acquisition is specifically exempt under section 96 of "The Right to Fair Compensation and Transparency in Land Acquisition Rehabilitation & Resettlement Act, 2013.
On Page no. 18 of Paper book in Appeal No. ITA/264/2021 assessee has submitted response to Notice id 100036467939 on 22nd July 2021 that on similar grounds interest u/s 28 is excluded from income by Jurisdictional ITAT in Appeal No. ITA/63 & 64/2020 on order dated 17.05.2021. We also belong to the same category. Please delete the additions. Relevant orders are enclosed for reference. CIT Appeals has not considered our submissions.
AO has not provided computation sheet of Demand and has included interest of 234 B in demand. There is a provision of TDS in respect of payment of interest. If any tax was due then tax should have been deducted by the payer. Payer is assessee in default and department can easily recover it from deductor HUDA. In any case if it is taxable then assessee should be asked to pay only tax amount and interest should be recovered from payer.
My relative Ujjagar Singh got interest in crores for same land compensation and case is decided in his favour. Only because his case was decided by Panchkula Authorities in 2018-19 and my case is decided against me as it is decided in 2019-20. Copy of his judgment and D form is enclosed as proof. When everything is same then please do not discriminate on the basis of date of decision.
Compilation of Latest Judgment given by ITAT Chandigarh regarding similar cases decided in 2021 are enclosed.
Prayer
It, is therefore, prayed that the additions made by AO and confirmed by National Faceless Appeal Centre (NFAC) be deleted.
Sd/- CA Neelam Dhiman
Counsel of the Assessee
It was further submitted that the issue under consideration is squarely covered by the decision of the ITAT, Chandigarh Bench “A”, Chandigarh in ITA No. 63 & 64/Chd/2020 in the case of ITO, Ward-1, Panchkula Vs. Smt. Chawli
Devi, Vill-Ramgarh, Panchkula order dt. 17/05/2021, copy of the said order was furnished which is placed on record.
In her rival submissions the Ld. Sr. DR strongly supported the impugned order passed by the Ld. CIT(A) and reiterated the observation made in the impugned order.
We have considered the submissions of both the parties and perused the material available on the record. After considering the submissions of both the parties, it is noticed that a similar issue has already been adjudicated by the ITAT, Chandigarh Bench “A”, Chandigarh vide order dt. 17/05/2021 in the aforesaid referred to case of ITO Vs. Smt. Chawli Devi (supra) wherein the relevant findings have been given in para 7 which read as under:
After considering the submissions of both the parties and the material placed on record, it is noticed that a similar issue having identical facts has already been decided by the ITAT Chandigarh Bench ‘A’ Chandigarh in the case of ITO Vs Shri Lakshmi Chander Gupta (HUF) in ITA No. 68/Chd/2020 vide order dated 23/12/2020 wherein the relevant finding have been given in para 7 to 9 of the order which read as under:
“7. We have heard the rival submissions of the par ties and perused the material on record including the cases relied upon by the parties. As pointed out by the Ld. Counsel the Ld. CIT(A) has decided the issue involved in this appeal in favour of the assessee by following the ratio laid down by the Hon'ble Supreme Court in the case of CIT vs. Ghanshyam 'HUF'(supra) and the decisions of the coordinate Benches of the Tribunal in the cases of Som Nath vs.ITO, ITA No. 552/Chd./2016 and in a group case of Surinder Kumar and others in ITA N.539 to 543/Chd/2016, ITA No.547 to 551/chd/2016, ITA No. 368/2014, ITA No. 948/Chd/2016 and ITA No.949/Chd/2016.The Ld. CIT(A) has further reproduced the findings of the order of the coordinate Bench. The findings of the coordinate Bench in the group case discussed above read as under: "7. The core ground involved in these appeals is regarding the taxability of interest received on enhanced compensation u/s 28 of the Land Acquisition Act, 1894. Now, there are two questions involved in these appeals, first issue is, regarding the year of taxability of the interest income whether it has to taxed in the year of receipt in the light of the decision of the Hon'ble Supreme Court in the case of Ghanshyam (HUF) (supra) or is to be taxed on the basis of apportionment for each year from the date of acquisition of lands till the receipt of the compensation in the light of the decision of the Hon'ble Supreme Court in the
case of Rama Bai (supra); the second issue involved is as to whether the interest awarded u/s 28 of the Land Acquisition Act on enhanced compensation is to be treated as part of the enhanced compensation and will not be taxable separately as interest income under the Head 'income from other sources'? 8. We find that both these issues are covered by the aforesaid decision of the Hon'ble Supreme Court in the case of Ghanshyam (HUF) (supra) holding the same to be in the nature of compensation itself. The Court also dealt with the other aspect namely, the" year of tax and answered this question by holding that it has to be tested on receipt basis, which means it would be taxed in the year in which it is received. The said findings given in the case of Ghanshyam (HUF) (supra) have been reiterated by the Hon'ble Supreme Court in the case of Govindbhai Mamaiya (supra) observing as under: "In so far as the second question is concerned, that is also covered by another judgment of this Court in Commissioner of Income Tax, Faridabad vs. Ghanshyam (HUF) reported in (2009) 8 SCC 412, 6 albeit, in favour of the Revenue. In that case, the court drew distinction between the "interest" earned under Section 28 of the Land Acquisition Act and the "interest" which is under Section 34 of the said Act. The Court clarified that whereas compensation given to the assessee of the land acquired would be 'income', the enhanced compensation/consideration becomes income by virtue of Section 45(5)(b) of the Income Tax Act. The question was whether it will cover "interest" and if so, what would be the year of taxability. The position in this respect is explained in paras 49 and 50 of the judgment which make the following reading: "49. As discussed hereinabove. Section 23(1-A) provides for additional amount. It takes care of the increase in the value at the rate of 12% per annum. Similarly, under Section 23(2) of the 1894 Act there is a provision for solatium which also represents part of the enhanced compensation. Similarly, Section 28 empowers the court in its discretion to award interest on the excess amount of compensation over and above what is awarded by the Collector. It includes additional amount under Section 23(1-A) and solatium under Section 23(2) of the said Act. Section 28 of the 1894 Act applies only in respect of the excess amount determined by the court after reference under Section 18 of the 1894 Act. It depends upon the claim, unlike interest under section 34 which depends on undue delay in making the award. 50. It is true that "interest" is not compensation. It is equally true that Section 45(5) of the 1961 Act refers to compensation. But as discussed hereinabove, we have to go by the provisions of the 1894 Act which awards "interest" both as an accretion in the value of the lands acquired and interest for undue delay. Interest under Section 28 unlike interest under Section 34 is an accretion to the value, hence it is a part of enhanced compensation or consideration which is not the case with interest under Section 34 of the 1894 Act. So also additional amount under Section 23 (J-A) and solatium under Section 23(2) of the 1961 Act forms part of enhanced compensation under Section 45(5)(b) of the 1961 Act. " 8. It is clear from the above that whereas interest under Section 34 is not treated as a part of income subject to tax, the interest earned under Section 28, which is on enhanced compensation, is treated as a accretion to the value and therefore, part of the enhanced compensation or consideration making it
exigible to tax. After holding that interest on enhanced compensation under Section 28 of 1894 Act is taxable, the court dealt with the other aspect namely, the year of tax and answered this question by holding that it has to be tested on receipt basis, which means it would be taxed in the year in which it is received. It would mean that converse position i.e. spread over of this interest on accrual basis is not permissible.” 9. The Ld. counsels for assessee has further brought our attention the latest decision of the Hon'ble Supreme Court in the case of CIT Vs. Chet Ram (HUF) dated 12.9.2017 in Civil Appeal No. 13053/2017 wherein also the Hon'ble Supreme Court has again reiterated the proposition laid down in the case of Ghanshyam (HUF) (supra), which we find has been further reiterated in the case of Union of India vs. Hari Singh & others in Civil Appeal No. 1504 of 2017 dated 15.9.2017, as under: 9 "(2) While determining as to whether the compensation paid was for agricultural land or not, the Assessing Officer(s) 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 provision amounts to compensation or not. " 9.1 The said decision as rightly pointed out by the Ld. counsel for assessee have been rendered by the Hon'ble Apex Court subsequent to the decision passed by the Hon'ble Jurisdictional High Court in the case of Manjeet Singh(HUF) (supra) which had dealt, with the decisions of the Hon'ble Apex Court in Ghanshyam, HUF (supra). Therefore, in view of the same, the proposition laid down in Ghanshyam, HUF (supra) remains and which having been laid down by the Hon'ble Apex Court is the law of the land and has to be followed by all lower authorities. In view of the above, we hold that the interest received by the assessee during the impugned year on the compulsory acquisition of its land u/s 28 of the Land Acquisition Act, is in the nature of compensation and not interest which is taxable under the head income from other sources u/s 56 of the Act as held by the authorities below. The compensation being exempt u/s 10(37) of the Act is not disputed. In view of the same the order passed by the CIT(Appeals) upholding the addition made by the AO on account of interest on enhanced compensation is, not sustainable. The ratio of the order laid down vide order dt. 09/07/2018 in a group of cases in ITA No. 1413 to 1437/CHD/2016 would apply mutatismutandis to the core issue of taxability of interest received on enhanced compensation. 10. In view of the above discussion, these appeals of the assessees are hereby allowed. " 8. As pointed out by the Ld. Counsel for the assessee, the Ld. CIT(A) has decided the issue involved in this case in favour of the assessee by following the ratio laid down by the Hon'ble Supreme Court as well as the decisions of the Coordinate Benches. We further notice that the coordinate Bench has decided the identical issue in favour of the assessee after considering the judgments relied upon by the Ld DR.
The Ld. DR did not bring to our notice any case law contrary to the findings of the Coordinate Bench in the cases referred above to substantiate the contention of the revenue. In our considered view, the findings of the Ld. CIT(A) are based on the ratio laid down by the Hon'ble Supreme Court in the case of Ganshyam HUF (supra) and the decisions of the Coordinate Benches discussed above. We therefore, do not find any reason to interfere with the findings of the Ld. CIT (A). Hence, respectfully following the decisions of the coordinate Benches, discussed above, we uphold the order passed by the Ld. CIT(A) and dismiss the appeal of the Revenue.” So respectfully following the order dated 23/12/2020 of the ITAT Chandigarh Bench ‘A’ Chandigarh referred to above, we do not see any merit in this appeal of the department and therefore, do not see any valid ground to interfere with the findings given by the ld. CIT(A). So respectfully following the aforesaid referred to order dt. 17/05/2021 the impugned addition made by the A.O. and sustained by the Ld. CIT(A) is deleted.
In the result, appeal of the assessee is allowed.
(Order pronounced in the open Court on 24/02/2022 )
Sd/- Sd/-
सुधांशु �ीवा�तव एन.के.सैनी, (SUDHANSHU SRIVASTAVA) ( N.K. SAINI) �या�यक सद�य/ JUDICIAL MEMBER उपा�य� / VICE PRESIDENT AG Date: 24/02/2022
आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to :
अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File