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Income Tax Appellate Tribunal, DELHI BENCH SMC NEW DELHI
Before: SHRI B.P. JAIN
सुनवाई क� तार�ख/Date of Hearing : 24/04/2017 घोषणा क� तार�ख /Date of Pronouncement: 26/04/2017 ORDER
These four appeals of the assessee arise from the common order of learned CIT(A), Meerut dated 3.12.2015 for the Assessment Year 1998-99, 1990-91, 1992-93 and 1993-94. The assessee has raised the following grounds of appeal.
“1. That the AO had no valid jurisdiction u/s 147 read with section 148 of the Act and consequently the issuance of notice u/s. 148 of the Income Tax Act on 23/06/2011 is bad in law and in consequence thereof the re-assessment so framed on 04/03/2013 is arbitrary, unjust and bad in law.
2. That The order of ADJ dated 11/05/1992 fixing the additional compensation which was received on 01/01/1990 was well within the time limit prescribe under the then provision of section 149 of the Act and consequently the notice u/s. 148 issued on 23/06/2011, after the expiry of time limit prescribed under the then provision of section 149 barred by limitation and consequently the re-assessment so framed on such invalid notice u/s 148 dated 23/06/2011 is also invalid and bad in law.
That in the absence of court order passed after the expiry of time u/s 149 of the Act, the reliance of Assessing Officer of section 150 to justify
ITAs No.584 to 587/Del/2017 2 the initiation of proceeding u/s 147/ 148 by way of issue of notice u/s 148 dated 23/06/2011 is arbitrary, unjust and bad in law and consequently the reassessment so framed is bad in law. 4.That without prejudice to the ground taken above the issuance of notice u/s 148 dated 23/06/2011 is beyond the reasonable time and consequently the assumption of jurisdiction u/s 147/148 beyond the reasonable period is against the basic tenets of law and consequently the re-assessment so framed on 04/03/2013 in furtherance of such invalid notice is bad in law.
5.That is no reason to believe as contemplated u/s 147/148 of the Act hence, the notice u/s 148 dated 23/06/2011 is bad in law and the re-assessment so framed in furtherance of such invalid notice is also bad in law. 6.That the interest received u/s 28 of the Land Acquisition Act form part of additional compensation as held by Supreme Court in the case of CIT ITR Ghanshaym (HUF) 315 1 and consequently VIs there is no income assessed in the year under appeal and accordingly the issuance of notice u/s 148 dated 23/06/2011 and reassessment so framed in furtherance thereto is also invalid.
7.That without prejudice to the ground 1 to 7 above the notice u/s 148 has been issued without complying the prerequisite condition contemplated u/s. 151 of the Act and consequently the re- assessment so framed in furtherance of such invalid notice is bad in law.
8.That the assessee denied his liability to pay interest u/s. 234A and 234B of the Act at Rs. 4,94,620/-.
That the total income of Rs.4,08,375/- and the income tax demand created thereon at Rs.6,38,405/ - which includes the interest charged u/s.234A & 2348 at Rs.4,94,620/- is arbitrary, unjust and at any rate very excessive.”
As regards the legal grounds, the brief facts of the case are that the assessee lady in this case owned 27255 Sq. Yards of land on Nangla Tehsil, Meerut which was acquired by State Government in the year 1997. The State Government awarded compensation which included solatium, interest etc. to the amount of Rs.21,26,757/- on 01.01.1990. The ADJ Meerut enhanced compensation and the assessee further received Rs.67,27,575- on 16.08.1993 and interest of Rs.55,31,900/- for the period from the date of acquisition of land to the date of payment. The sum of Rs.1,22,56743/- (Rs.
ITAs No.584 to 587/Del/2017 3 67,24,575/- + Rs.55,31,900/-) was received without any security and guarantee. The amount of additional compensation and interest thereon was finally determined by the order of the Supreme Court on 30.04.1997. In the case of Ashwini Dhingra V. CCIT and another reported in 276 ITR 98 held that the interest on delayed payment of additional compensation is assessable on accrual basis. As regards limitation issue notice u/s.148 , the Honble Supreme Court in the case of K.M. Sharma v. ITO (2002) 254 ITR 72 held that interest on delayed payment of additional compensation assessable on accrual basis. It was held that amendment made in section 150(1) is operative fro, 1.4.1989. As such there is no bar of limitation to take action u/s. 148 for assessment years 1989-90 to 1993-94 to assessee accrued interest of the delayed payment of enhanced compensation. Assessing officer initiated the proceedings u/s.147/148 of the Act and the Notice u/s. 148, was duly served on assessee. In compliance to the notice u/s. 148 of the Act, assessee filed return of income on 16.06.2006 declaring NIL income. Notice u/s.143(2) was issued on 24.04.2007.
3. Learned CIT(A) confirmed the action of the Assessing Officer with regard to the reopening of the assessment.
I have heard the rival contentions and perused the facts of the case. As argued by the learned counsel for the assessee is that Land Acquisition Officer initially awarded compensation of the land acquired at the rate of Rs.501- per square yard. The total payment of Rs.21,26,757/- paid by authorities as per detail given below: Compensation of land Rs.13,61,280/- 30% Solatium Rs.4,08,375/- Interest u/s.34 of the LA Act Rs.3,57,132/- Total Rs.21,26,787/-
ITAs No.584 to 587/Del/2017 4 On a reference under section 18 of the Land Acquisition Act (LA Act) filed by the assessee, the Additional District Judge, Meerut (ADJ) awarded compensation at the enhanced rate of Rs.240/- per square yard and in consequence the order of the ADJ enhancing compensation was received on 16th August, 1993 without any security and guarantee as under: Additional enhanced compensation Rs.67,24,575/- Interest u/s.28 of the Act for the period from the date of acquisition till August, 1993 Rs.55,31,989/- Total : Rs.1,22,56,473/- The Meerut Development Authority (MDA), for whom stipulated land was acquired by the Land Acquisition Officer, Meerut, filed an appeal before the Hon'ble Allahabad High Court. The Hon'ble Allahabad High Court allowed the appeal of MDA in part and determined the market value of land acquired at the rate of Rs.75/- per square yard. The appellant and other claimants had further preferred appeal in the Hon'ble Supreme Court against the judgment of Allahabad High Court. The Hon'ble Apex Court allowed the claimants including the appellant's appeal in part and determined the market value of land finally at the rate of Rs.175/- per square yard in addition to solatium and interest was also granted. After the judgment of Hon'ble Supreme Court dated 30th April 1997, the additional compensation, solatium and interest had been recalculated by the Land Acquisition Authorities as under:
Additional enhanced compensation Rs.47,64,375/- Add: Interest on above u/s.28 of LA Act Rs.25,97,449/- Solatium Rs.17,25,987/- Total Rs.70,21,511/- The Assessing Officer had issued notices u/s 148 of the Income-tax Act, 1961 (the IT Act) for the Assessment Years 1989-90,1990-91,1992-93 and 1993-94 availing the benefit of limitation of Section 150(1) of the IT Act after twenty years on the basis of K.M. Sharma vs. ITO in 254 ITR 772 (SC) and also on the basis of judgment of Ashwani Dhingra vs. Chief CIT (All) wherein the court had held that the interest received on delayed payment of additional compensation is assessable on accrual basis. In the case of NRK Ramkumar vs. ITO in 249 ITR 385 = 106 Taxman 81, the Hon'ble Madras High Court, while considering the provision of Section 147 of the IT Act, held that the words "the Assessing Officer shouldhave reason to believe" as contained in the provision of Section 147 of the IT Act, should be read with reference to the other provisions of the Act under which the income is chargeable to tax and accordingly the Assessing Officer before taking any action u/s 147/148 of the IT Act should satisfy himself whether such income is chargeable to tax, before holding that the Assessing Officer has reason to believe that any income of the assessee chargeable to tax has escaped assessment for any assessment year. Therefore, in the instant case before initiation of the proceedings u/s 147/148 of the IT Act, the Assessing Officer should have satisfied himself whether the interest as received by the assessee on account of the order of the court in terms of Section 28 of the LA Act is chargeable to tax as inferred by the Assessing Officer under the law or not. It was also argued that the Allahabad High Court judgment in the case of Ashwani Dhingra was pronounced by the Allahabad High Court on 31st August 2004. In the judgment, the Hon'ble Allahabad High court did not examine the nature of interest awarded by the courts u/s.28 of the LA Act in the case of enhanced
ITAs No.584 to 587/Del/2016 6 compensation but he simply said that because the interest has to be granted from the date of acquisition, hence the interest as received by an assessee accrued year after year and would be spread over accordingly. However, later on the Hon'ble Supreme Court in the case of CIT vs. Ghanshyam (HUF) in 315 ITR 1 has not only examined the nature of interest, as awarded by the court U/S 28 of the LA Act at the time of enhancing the compensation, but has also examined the difference between the interest granted u/s.34 of the LA Act as well as the interest awarded by the courts u/s.28 of the LA Act. Thereafter the Hon'ble Supreme Court had also examined the interest granted by the courts u/s. 28 of the LA Act with reference to the provision of Section 45(5) of the IT Act which deals with the taxation of additional compensation in the year of its receipt. The Hon'ble Supreme Court found that the interest awarded by the court u/s.28 of the LA Act is different from the interest granted u/s.34 of the LA Act. The Hon'ble Court held that the interest u/s.28 of the LA Act is the discretion of the court to award interest on the claim made by the person concerned, whereas the interest U/S 34 of the LA Act is a statutory interest provided under the Act and has be granted by the Land Acquisition Officer/ Collector on account of delayed payment of the award he made. The Hon'ble Supreme Court further held that keeping into consideration the nature of interest granted by the courts u/s. 28 of the LA Act at the time of enhancing compensation is basically in the nature of compensation and is part of the additional compensation as contemplated u/s. 45(5) of the IT Act and has to be taxed in the year of its receipt as provided u/s.45(5) of the IT Act. In the case of Ghanshyam (HUF), the said assessee was claiming that the interest u/s 28 of the LA Act as received at the time of additional compensation has to be spread over to various years, whereas the Revenue was of the view that whole of the interest has to be taxed in the year of its receipt and such contention of the Revenue has been accepted
ITAs No.584 to 587/Del/2016 7 by the Hon’ble Supreme Court. Later on, the Hon'ble Supreme Court followed the judgment of Ghanshyam (HUF) in CIT vs. Govind Bhai Mamaiya in 367 ITR 498. The Hon'ble Delhi High Court in the case of CIT vs. Sharda Kochhar in [2014] 49 Taxmann.com 120 has also followed the Supreme Court judgment in the case of Ghanshyam (HUF) and held that the interest as received by an assessee u/s.28 of the LA Act has to be assessed in the year of its receipt u/s 45(5) of the IT Act and will not be spread over to various years. In such position of the law as laid down by the Hon'ble Supreme Court in the case of Ghanshyam (HUF), the very basis of initiation of proceedings u/s 147/148 of the IT Act does not survive because in the years under appeal the Assessing Officer has simply taxed the proportionate interest received u/s. 28 of the LA Act which is not permissible under the law in view of the Supreme Court judgment in the case of Ghanshyam (HUF) and accordingly the proceedings as initiated by the Assessing Officer by way of issuance of notice u/s.147/148 of the IT Act are directed be quashed. Since the assessee succeeds on legal grounds, therefore, the grounds on merit are of academic in nature and do not require adjudication. Accordingly appeal of the assessee is allowed.
Since the issue in all the appeals is identical, and therefore, order hereinabove applies identical in all the appeals mentioned hereinabove.
In the result, the appeals of the assessee in all the years are allowed. Order pronounced in the open court on this day 26th April, 2017