SHRI KEWAL KRISHAN,FEROZEPUR vs. INCOME TAX OFFICER, WARD, ZIRA

At the outset, the counsel of the assessee had submitted that the appellant assessee has received a sum of Rs. 1,52,75,192/- as compensation on compulsory acquisition of his agricultural land at Village Talwandi Nipalan Tehsil Zira Distt. Ferozepur in Aug. 2015 which included 30% solatium under section 28(2) of the Land Acquisition Act, 1894 and 12% additional compensation from the date of notification (05.07.2013) to the date of award, i.e., 30.09.2014 of Rs.19,80,064/- u/s 23(1A) of the Land Acquisition Act, 1894. The appellant assessee has filed return of income on 30.09.2016 claiming the compensation of agriculture land of Rs.1,52,75,192/- as exempted income u/s 10(37) of the Income Tax Act, 1961 including additional 12% compensation amount of Rs.19,80,064/- during the course of assessment proceedings u/s 143(3) of the Income Tax Act. The AO has observed that the received interest on compensation amount and it is to be taken as income in the year in which it has been 3 Kewal Krishan v. ITO received, irrespective of the method of accounting followed by the assessee subject to deduction of 50% u/s 57(iv) of the Act of such interest income referred to in clause (viii) of the sub-section (2) of section 56 of the Income Tax Act. Accordingly, the AO has taxed 50% of the interest amount received which worked out to Rs.9,90,030/- and added the same to the return amount of the assessee.

In appeal, the ld. CIT(A) has confirmed the findings of the AO by observing as under:

The ld. counsel for the assessee submitted that the ld. CIT(A) has dismissed the appeal of the assessee and confirmed the addition without appreciating the facts of the case regarding acquisition of agricultural land under the Land Acquisition Act, 1894 and ignoring the various judgment of the Hon’ble Courts. The ld. counsel has submitted that under the Land Acquisition Act, 1894, it was additional compensation @ of 12% and not interest at 12% on the award received by the appellant as the Hon’ble Competent Authority of land acquisition has written as an additional

The ld. AR stands by the impugned order of the ld. CIT(A).

We have heard the rival contention and perused the material available on record. The basic question before us is whether the appellant assessee has received additional compensation or interest for the delayed period of disbursement of the award being paid under the provisions of the Land Acquisition Act, 1894 in the instances of the agricultural land acquisition by the Central Government through NHAI. The basic question is whether the amount of Rs.19,80,064/- received was interest or ‘additional compensation’ and it is to be determined in the light of the award dated 07.10.2014 with conjoint reading with the minutes of meeting of NHAI Executive committee who passed award in pursuance to the decision of Hon’ble Punjab & Haryana High Court, Chandigarh as discussed by the ld. CIT(A), in para 6 of the impugned order besides geographical location of the agricultural land based on revenue record being acquired through NHAI, subject to additional compensation in lieu of the award claimed by the appellant. The ld, counsel has filed a document of all the subject land acquired by the NHAI in Punjabi version (vernacular) which were required to be filed in translated English version. Since, he failed to file the 6 Kewal Krishan v. ITO translated copy of the Punjabi documents of the subject acquired land forming part of the land being acquired under the award dated 07.10.2014 and the nature of the amount particularly whether it was additional compensation or interest paid to the appellant assessee by the NHAI. In view of the matter, we are of the considered opinion that it is a fit case to be restored back to the file of the ld. AO to pass a denavo assessment order by deciding the issue afresh. The AO is directed to examine denomination of the amount whether it was interest or ‘additional compensation’, in the light of the award dated 07.10.2014 with conjoint reading with the minutes of meeting of NHAI Executive committee, in pursuance to the decision of Hon’ble Punjab & Haryana High Court, Chandigarh as above. Accordingly, the AO shall determine the claim of the appellant assessee, the land owner, entitlement to solatium at 30% and interest/additional compensation @ of 12% as claimed by the appellant assessee from the date of notification u/s 3A(1), i.e., 05.07.2013 to the date of announcement of award. The AO is further directed to examine the claim of exemption u/s 10(37) of the Act, after considering the documentary evidences, in the light of the Land Acquisition Award announced dated 07.10.2014, after grating adequate opportunity of being heard. No doubt, the assessee shall

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