VILAS KISAN PATIL,URAN vs. ASSESSING OFFICER, ASSESSMENT UNIT, ITD, PANVEL
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Income Tax Appellate Tribunal, PUNE BENCHES “B” :: PUNE
Before: DR.DIPAK P. RIPOTE & SHRI VINAY BHAMORE
PER DR. DIPAK P. RIPOTE, AM: This appeal filed by the assessee directed against the order of ld.Commissioner of Income Tax(Appeals)[NFAC] u/sec.250 of the Income Tax Act, 1961; dated 29.08.2024 for the A.Y.2017-18. The Assessee has raised the following grounds of appeal :
“1. The Hon. CIT(A) erred in upholding addition of Rs.1,92,72,028/- made by ld. AO by relying upon the provisions of section 56(2)(viii) r.w.s 57(iv) r.w.s. 145A(b) of the I.T.Act, 1961, not appreciating that the said amount was interest granted u/s 28 of the Land Acquisition Act, 1894 and thus bore the character of enhanced compensation on acquisition of agricultural land situated at Village Panje, Tal.Uran, Dist. Raigd, Maharashtra and was therefore exempt from tax and the addition is required to be deleted.
The appellant craves leave to add, later, amend and/or vary the grounds of the appeal at any time before the decision of the appeal.” Submission of ld.AR :
Ld.AR for the Assessee filed a paper book containing 54 pages. Ld.AR filed a written submission. Ld.AR submitted that assessee had received Rs.3,85,44,057/- as Interest under section 28 of the Land Acquisition Act. Ld.AR submitted that said interest is not taxable as held by the Hon’ble Bombay High Court. Ld.AR filed copy of the Judgment. Ld.AR also relied on the following ITAT Pune Bench decisions as under : CIT-vs-Ghanshyam (HUF), 315 ITR 1 (SC)[2009]
Movaliya Bhikhubhai Balabhai-vs-ITO-TDS, 70 taxmann.com 45 (Gujarat) [2016]
Rupesh Rashmikant Shah-vs-Union of India, 108 taxmann.com 181 (Bombay) [2019]
Kusum Jayram Thakur Dhutum-vs-ITO, 162 taxmann.com 388 (Pune - Trib.) [2024]
Sanjay Bhimrao Patil-vs-ITO, 150 taxmann.com 153 (Pune - Trib.) [2023]
ITO-vs-Vinayak Hari Palled. 99 taxmann.com 90 (Bangalore - Trib.) [2018]
Jai Parkash-vs-Pr.CIT, 161 taxmann.com 735 (Delhi Trib.) [2024]
2 Submission of ld.DR :
Ld.Departmental Representative(ld.DR) for the Revenue relied on the order of the Assessing Officer and ld.CIT(A).
Findings & Analysis :
We have heard both the parties and perused the records. In this case, the Assessing Officer received information that assessee had received Interest on compensation or Interest on enhanced compensation of Rs.3,85,44,057/- as assessee’s land was acquired by State Government. Assessing Officer issued notice under section 148 of the Act. Assessee filed Return of Income for A.Y.2017-18 declaring total income of Rs.1,62,960/-. During the assessment proceedings, assessee submitted that land measuring 12,350 sq. Mtrs. Located at Village Panje, Tal Uran, Dist Raigad, Maharashtra was compulsorily acquired in 1986 vide notification under Section 4 of the Land Acquisition Act, 1894 dated 25/11/1986. The said land was agricultural land. The District Court of Alibaug have awarded the assessee additional compensation plus solatium @30% u/sec.23, additional benefit @12% per annum u/s.23(1)(A) and interest u/s.28 of the Land
3 Acquisition Act, 1884 of Rs.3,85,44,057/- on which TDS @ 10% is deducted.
1 Assessee claimed that amount as exempt income, however Assessing Officer taxed it as under : “The reply submission of the assessee was considered and thoroughly perused. Considering the above mentioned amendment provision introduced w.e.f. 01/04/2010, the claimed of exemption of interest on enhanced compensation of Rs.3,85,44,057/- in the ITR filed by the assessee for A.Y. 2017-18 was taxable to the extent of 50% of the total interest received in pursuance of the provisions of Section 56(2)(viii) read with section 57(iv) and Section 145A(b) of the Income Tax Act, 1961. Therefore, the total addition is calculated as below:”
2 Aggrieved by the assessment order, assessee filed appeal
before the ld.CIT(A). The Ld.CIT(A) confirmed the addition.
There is no dispute on the fact that assessee has received Interest
on enhanced compensation under section 28 of Land Acquisition
Act, of Rs.3,85,44,057/-. Assessee has claimed said income as exempt income. ITAT Pune Bench in the case of Sanjay Bhimrao
Patil Vs. ITO held as under :
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In the present case, the AO simply proceeded on the premise that the amendments to provisions u/s. 145A which bears the heading method of accounting in certain cases, section 145A(b) provides that notwithstanding anything to the contrary contained in section 145, interest received by an assessee on compensation or on enhanced compensation shall be deemed to be the income of the year in which it is received read with section 56(2)(viii) of the Act which provides income by way of interest on compensation or on enhanced compensation referred to in sub-section (1) of section 145B of the Act shall be chargeable to income tax under the head "Income from other sources". Therefore, we hold that the interest granted by the reference Court u/s. 28 of the Land Acquisition Act from the date of possession of land till the date of judgment of High Court is an accretion of the value of the land acquired. Thus, we reject the arguments of ld. DR, Shri M.G. Jasnani that the principle laid down by the Hon'ble Juri ictional High Court of Bombay in the context of motor accident claims is not applicable to the present facts of the case. Admittedly, the Learned Civil Judge, S.D., Ahmedpur at Udgir passed decree on 22-04-2008 in L.A.R. No. 2 of 2004, a reference court, granted enhanced amount of Rs. 71,84,186/- to the assessee which is evident from the execution petition filed to realize the decree amount which is on record, clearly shows the interest of Rs. 6,46,577/- on enhanced compensation amount of Rs. 71,84,186/-u/s. 28 of the Land Acquisition Act @ 9% from 17-06-1992 to 16-06-2000 (for one year). Further, interest of Rs. 92,29,639/- u/s. 28 of the Land Acquisition Act @ 15% from 17-06-2002 to 21-02-2009 (for 103 months). Therefore, respectfully following the decision of Hon'ble Juri ictional High Court of Bombay in the case of Rupesh Rashmikant Shah (supra), we hold the interest received u/s. 28 of the Land Acquisition Act would not fall within the ambit of the expression interest as envisaged u/s. 145A(b) of the Act, further, hold that the amendment by way of 5 substitution of section 145A by Finance (No. 2) Act, 2009 w.e.f. 1-04- 2010 and amendment by way of insertion of clause (iii) in section 56(2) by Finance Act, 2009 would have no applicability to the facts of the present case and in view of the same the order of CIT(A) in confirming order of AO is not justified. Thus, ground Nos. 1 and 2 raised by the assessee are allowed.
3 Similarly, ITAT Pune in Kusum Jayaram Thakur Vs. ITO held that Interest received u/sec.28 of Land Acquisition Act on enhanced compensation is not taxable under section 56(2) of the Act. The facts of the present case are identical to the above referred cases of ITAT Pune Bench. Therefore, respectfully following the ITAT Pune Bench decisions(supra), we hold that Interest received u/sec.28 of Land Acquisition Act on enhanced compensation is not taxable under section 56(2) of the Act. Accordingly, grounds of appeal raised by the assessee are allowed.
In the result, appeal of the assessee is allowed. Order pronounced in the open Court on 24th December, 2024. (VINAY BHAMORE) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; "दनांक / Dated : 24th Dec, 2024/ SGR*
6 आदेशक""ितिलिपअ"ेिषत / Copy of the Order forwarded to : अपीलाथ" / The Appellant.
""यथ" / The Respondent.
The CIT(A), concerned.
The Pr. CIT, concerned. िवभागीय"ितिनिध, आयकर अपीलीय अिधकरण, “बी” ब"च, 5. पुणे / DR, ITAT, “B” Bench, Pune. गाड"फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER, //// Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune.
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