Income Tax Appellate Tribunal - Chandigarh
Dr. (Mrs.) Devinder Kaur Sekhon vs Assistant Commissioner Of Income-Tax on 18 February, 1998
Equivalent citations: [1998]67ITD407(CHD)
ORDER
Saluja, J.M.
1. The assessee has filed these appeals against separate orders of CIT(A) on the common ground of interest levied under sections 234B and 234C of the Income-tax Act, 1961.
2. During the course of hearing, ld. counsel pointed out that interest under sections 234B and 234C had been waived in relation to assessment years 1986-87 to 1988-89, therefore, ITA Nos. 780 to 782 have become infructuous and are not pressed.
2A. In view of the foregoing factual position, the said three appeals are dismissed as infructuous.
3. The brief facts in relation to remaining appeals are that the assessee received an amount of Rs. 6,07,725 in the financial year 1992-93 as interest on enhanced compensation for agricultural land situated in village Sohana, Teh. Kharar, Distt. Ropar, acquired by the Land Acquisition Department. Assessments had been completed under section 143(1). In view of the decision of Hon'ble Supreme Court in the cases of Rama Bai v. CIT [1990] 181 ITR 400/[1981] 54 Taxman 496 and K. S. Krishna Rao v. CIT [1990] 181 ITR 408, the Assessing Officer held that the amount of Rs. 83,090 accrued to the assessee on account of the said interest during each year under consideration and the provisions of sections 234B and 234C became attracted and interest thereunder was leviable. Notices were issued under section 148 and interest on enhanced compensation brought to tax. Assessing Officer also proceeded to charge interest under sections 234B and 234C.
4. On first appeal, ld. counsel submitted that there was no duty cast on the assessee to pay advance tax under the provisions of sections 208 to 210 in relation to the amount of interest on enhanced compensation. He submitted that the assessee could not visualise either the grant of higher compensation or awarding of interest, therefore, the same could not have been included in her income for the purpose of paying advance tax, during the relevant accounting periods. He also submitted that the provisions of sections 234B and 234C were applicable only in the cases of the assessees who were liable to pay advance tax under section 208 and had failed to pay such advance tax. Ld. CIT(A), however, observed that the assessee had received additional compensation along with interest vide order dated 13-5-1992. She also observed that Hon'ble Supreme Court has held in the aforesaid cases - Rama Bai (supra) and K. S. Krishna Rao (supra) that "interest cannot be taken to have accrued on the date of the order of the court granting enhanced compensation but to be taken as having accrued year after year from the date of delivery of possession of the lands till the date of such order". She, therefore, held that once the interest income is taken as having been accrued in the years under consideration, the provisions of sections 208 to 210 as well as sections 234B and 234C became operative and the assessee was bound to pay advance tax, interest having accrued in the years under consideration. Since such advance tax has not been paid, interest under sections 234B and 234C was chargeable. She also referred to the decisions reported in Ranchi Club Ltd. v. CIT [1996] 217 ITR 72/85 Taxman 201(Pat.) relied upon by ld. counsel and observed that it was not relevant as it pertained to charging of interest under section 234A and not under sections 234B and 234C.
5. Ld. counsel mentioned in brief that the agricultural lands belonging to the assessee were acquired by the Government on 12-7-1984 and the compensation was awarded on 20-11-1985. He submitted that the assessee challenged the said award before High Court and the compensation was enhanced and interest was also awarded vide judgment dated 15-4-1991. He further submitted that the LAO quantified the amount of compensation and interest on 15-5-1992. He pointed out that both the parties went to the Supreme Court against the aforesaid decision of the High Court and said decision was confirmed vide order dated 9-8-1991. In the written submissions filed before us, ld. counsel has stressed that there was no infringement of the provisions of sections 208 to 210 and, therefore, the provisions of sections 234B and 234C were not applicable. He made a reference to the provisions of section 209, which lay down the procedure for determining the current income and submitted that it nowhere laid down that the income which had not arisen during the financial year could be included while estimating the current income. He submitted that under the provisions of sections 234B and 234C, interest was leviable only till the date of regular assessment and the expression 'regular assessment' as defined in section 2(40) would mean assessment made under section 143 or 144 and does not include the proceedings under section 147.
Reference is also made to the following decisions :-
Modi Industries Ltd. v. CIT [1995] 216 ITR 759/82 Taxmann 377 (SC), CIT v. Smt. Padam Kumari Surana [1994] 207 ITR 155/72 Taxman 350 (Raj.), CIT v. Mannalal Nirmal Kumar [1992] 198 ITR 566 (Raj.), G. Mageshwari v. Asstt. CIT [1993] 201 ITR 472/67 Taxman 497 (Ker.), CIT v. Triple Crown Agencies [1993] 204 ITR 377 (Gauhati), CIT v. Kapoor Chand Ram Chand [1995] 216 ITR 318/81 Taxman 495 (Raj.) and Metallurgical & Engg. Consultants India Ltd. v. CIT [1996] 218 ITR 499 (Pat.).
Apart from written submission placed in the form of paperbook, ld. counsel pleaded that the real controversy is as to whether there has been any infringement of the provisions of sections 208 to 210 so as to attract the provisions regarding levy of interest under sections 234B and 234C. He submitted that in spite of amendment by the Finance Act, 1995 in section 234B whether the proceedings for reassessment could be treated as proceedings for regular assessment in view of the case law mentioned in the written submissions, referred to above. In the alternative, ld. counsel submitted that no interest was chargeable till the date of quantification of the amount of additional compensation and interest by the LAO.
6. Ld. D.R. mainly relied on the order of CIT(A) and also referred to the written submissions filed by the revenue, wherein reference has been made to the aforesaid decisions in Rama Bai's case (supra) and K. S. Krishna Rao's case (supra). It has been stressed that in view of the aforesaid judgments, the provisions of sections 208 and 210 as also sections 234B and 234C became operative and the assessee was bound to pay advance tax since interest had accrued in the years under consideration. Ld. D.R. also submitted that the interest leviable under sections 234B and 234C was compensatory in nature and since the assessee had received additional compensation and interest thereon, the assessee was bound to compensate the Government by paying interest under the said provisions.
7. We have carefully considered the written submissions made by both the parties as also the submissions by way of arguments, have perused the orders of the departmental authorities and seen the case law cited. It is observed that while Hon'ble Supreme Court held in the case of Rama Bai (supra) that interest on enhanced compensation for land compulsorily acquired under the Land Acquisition Act, 1894, awarded by the court on a reference under section 18 of the said Act or on further appeal has to be taken to have accrued not on the date of the order of the court granting enhanced compensation but as having accrued year after year from the date of delivery of possession of the land till the date of such order, in the case of K. S. Krishna Rao (supra), it was held that interest on enhanced compensation cannot be taxed all in a lump sum as having accrued on the date on which the court passes the order for enhanced compensation : the interest has to be spread over on an annual basis right from the date of delivery of possession till the date of the order of the court on a time basis. Obviously, the intention in using the expression 'spread over on an annual basis' in the judgment emphasised that the income becomes taxable in the relevant year. The said intention cannot be stretched to an extent to hold that the assessee was under an obligation to show the component of income relevant for the assessment year under consideration as income having accrued 'pending the judgment' and thereby fastening a liability on the assessee to comply with the provisions of sections 208 to 210 and also charge interest under sections 234B and 234C for such stipulated failure to pay advance tax. It is obvious that the assessee could not have foreseen the amount of enhanced compensation as also the interest awardable in relation thereto during the years under consideration at the time of filing returns, which were ultimately processed under section 143(1). Thus, we feel that on the facts and circumstances of the case, there was no failure on the part of the assessee so as to attract the provisions of sections 234B and 234C of the Income-tax Act.
8. In view of our decision on this issue, we do not think it necessary to devolve on the other arguments taken before us as the said exercise is considered unnecessary.
9. In the result, I.T.A. Nos. 783 to 786/96 are allowed.