PARAMMAL KADEEJA,RANDATHANI vs. INCOME TAX OFFICER (WARD 1), TIRUR

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ITA 673/COCH/2023Status: DisposedITAT Cochin23 October 2024AY 2015-16Bench: Shri Satbeer Singh Godara (Judicial Member), Shri Amarjit Singh (Accountant Member)3 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal noted divergent High Court views on the taxability of such interest income. Following the principle of favoring the taxpayer in such situations, the Tribunal decided in favor of the assessee.

What were the facts?

The assessee appealed against the CIT(A)'s order regarding the taxability of enhanced compensation and interest received for acquired agricultural land. The lower authorities had bifurcated the compensation and interest, treating a portion as taxable.

What were the issues?

The primary issue was whether interest received on enhanced compensation for acquired agricultural land is taxable under the Income Tax Act, especially when the compensation itself is exempt.

Which sections of the Income-tax Act were involved?

Section 56(2)(viii),Section 57(vi),Section 144(b)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(4)Show list

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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN

Before: Shri Satbeer Singh Godara & Shri Amarjit Singh

For Respondent: Smt. V. Swarnalatha, Sr. D.R
Hearing: 22.08.2024Pronounced: 23.10.2024

O R D E R Per Bench

This assessee’s appeal for A.Y. 2015-16 arises against the National Faceless Appeal Centre, Delhi [CIT(A)]’s DIN & Order No. ITBA/NFAC/S/250/2023- 24/1054703256(1) dated 28.07.2023 in proceedings u/s. 250 of the Income Tax Act, 1961 (the Act).

Case called twice. None appears at assessee’s behest. We accordingly proceed exparte.

2.

The assessee pleads the following substantive grounds in the instant appeal: - “1. The appellate order No. ITBA/NFAC/S/250/2023-24/1054703256(1) dated 28.07.2023 of the learned CIT(As) is opposed to law facts and circumstances of the case.

Parammal Kadeeja 2. The learned CIT(As) has failed to note the fact that the enhanced compensation and interest for the 1st year at 9% and 15% for the period subsequent to that, forms part of the compensation which is totally exempt from tax since the land acquired is agricultural in nature.

3. The Id. CIT(A) has gone wrong in bifurcating compensation and enhanced compensation as also interest u/s 28 of the LA Act 1894 thereon into taxable and non- taxable under the Income tax Act.

4. The Id. CIT(A) should have found that where compensation itself is exempt subsequent receipts consequent thereto is also exempt under the IT Act.

5. The Id. CIT(A) has failed to appreciate the fact that the compensation awarded by the Court and subsequent order of the Collector granting interest u/ 28 at 9% for one year and at 15% for the subsequent payment are exempt from payment of Income Tax as the compensation itself is exempt from Income tax.

6. For these and such other grounds that may be urged at the time of hearing the entire addition may be deleted.”

3.

Suffice to say, the sole issue for adjudication in the given facts and circumstances of the case is that of taxability of assessee’s interest income u/s. 28 of the Land Acquisition Act, 1894 where the lower authorities have quoted section 56(2)(viii) r.w.s. 57(vi) r.w.s. 144(b) of the Act that the issue is no more res integra post facto the statutory amendments in the foregoing terms.

4.

Learned Sr. D.R. further quotes hon'ble Delhi high court’s decision in PCIT vs. Inderjit Singh Sodhi (HUF) [2024] 161 taxmann.com 301 (Del.) that the Revenue has succeeded before their lordships.

5.

We find in this backdrop that case law Rupesh Rashmikant Shah vs. Union of India [2019] 417 ITR 169 (Bom.); Movaliya Bhikhubhai Balabhai vs. ITO [2016] 388 ITR 343 (Guj.) have decided the very issue of taxability of such an income in assessee’s favour and against the department qua such interest income. That being the case wherein various high courts have taken divergent views and that no guidance coming from the hon'ble jurisdictional high court, we quote CIT vs. Vegetable

6.

This assessee’s appeal is allowed.

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