Income Tax Appellate Tribunal - Delhi
Daya Nand Tyagi & Sons (Huf), Ghaziabad vs Assessee on 16 August, 2011
INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'A': NEW DELHI
BEFORE SHRI S. V MEHROTRA, ACCOUNTANT MEMBER
AND
SHRI A. T. VARKEY, JUDICIAL MEMBER
ITA No. 4844/Del/2011(Assessment Year: 2006-07)
Brij Mohan & Sons The Income Tax Officer,
(HUF), C/o. V Kumar & Ward-1(2),
Co., CA, 1, Navyug Vs. CGO Complex,
Market, Ghaziabad Hapur Road,
AABH1796H Ghaziabad
(Appellant) (Respondent)
ITA No. 4845/Del/2011(Assessment Year: 2006-07)
Daya Nand Tyagi & Sons ITO,
(HUF), C/o V Kumar &Co., Ward-1(2),
CA,1, Navyug Market, Vs. CGO Complex, Hapur Road,
Ghaziabad Ghaziabad
AAAHD9924N
(Appellant) (Respondent)
ITA No. 4846/Del/2011(Assessment Year: 2006-07)
Brahma Nand & Sons ITO,
(HUF), C/O. V Kumar & Ward-1(2),
Co., CA,1, Navyg Market, Vs. CGO Complex, Hapur Road,
Ghaziabad Ghaziabad
AABHB1795E
(Appellant) (Respondent)
Appellant by : Shri . Ashish Singhal, CA
Respondent by: Smt Y. Kakkar, DR
ORDER
PER S. V MEHROTRA, AM
First we take up ITA No. 4844/Del/2011 for the Assessment year 2006-07.
The appeal has been filed by the Assessee against the order of the Ld. CIT(A), Ghaziabad, dated 16.08.2011.
Page No. 22. Brief facts of the case are that, in the relevant assessment year, the assessee derived income from plying of Bus and also enjoyed income from other sources. It had filed its return of income declaring total income of Rs. 46,390/- plus agricultural income of Rs. 40,000/-.
3. In the course of assessment proceeding the Assessing Officer noticed that the agricultural land of the assessee situated at Village & Post Office Prahlad, Ghaziabad was acquired by the Land Acquisition Officer (in short 'LAO') in 1987 and the compensation was granted vide order dated 27.02.1989. The assessee filed an appeal against the order of LAO for enhancing the compensation. The Addl. District Judge-II, Ghaziabad vide dated 29.03.2001 enhanced the compensation. The order of the ADJ was challenged by the UP Government in the Hon'ble Allahabad High court by way of appeal which according to the assessee is pending for disposal. The assessee further pointed out that Hon'ble Allahabad High Court granted stay on the judgement of the ADJ, Ghaziabad subject to the condition that 50% of the enhanced compensation may be deposited in the District Court and the assessee may be allowed to withdraw the amount after furnishing the relevant security for the amount withdrawn till the pendency of the matter. In pursuance to this order the assessee first received Rs. 30,22,906/- in the Financial Year 2002-03 as 50% of the enhanced compensation and interest. Further, the enhanced compensation and interest amount was re-calculated in the FY 2005-06 and the assessee received a sum of Rs. 15,12,039/- as enhanced interest on the additional compensation.
4. Before the Assessing Officer, the assessee placing reliance on the decision of Hon'ble Supreme court in the case of CIT, West Bengal Vs. M/s Hindustan Housing and Land Development Trust Ltd. (1986) reported in 161 ITR 524, contended that additional compensation or interest can not be assessed to tax unless dispute is finally settled. Thus, in the light of above decision of the Hon'ble Supreme Court, the assessee claimed that the additional amount of interest amounting to Rs. 15,12,039/- received in the FY 2005-06 was not taxable in the relevant Assessment Year. The Assessing Officer, however did not accept the assessee's contention in view of the provisions of section 45(5)(b) and included the same in total income.
Page No. 35. Before ld CIT(A), the assessee reiterated its submission that since the dispute was pending before Hon'ble Allahabad High Court, no income could accrue to assessee. The assessee further pointed out that the decision of the Hon'ble Supreme Court in the case of CIT Vs. Ghanshyam (HUF) (2009) 224 CTR (SC) 522 was not applicable in assessee's case because in the said judgment Hon'ble Supreme Court while dealing with the taxability of enhanced compensation, observed as under:-
"The capital gain on the additional compensation would be taxable in the year of receipt" It has also been held that interest u/s 28 of the Land Acquisition Act, 1894 unlike interest u/s 34 is an accretion to the value, hence it is part of the Compensation or consideration which is not the case with interest u/s 34, of the Land Acquisition Act, 1984.
6. The assessee clarified that this judgment was rendered with reference to the taxability of additional compensation and interest under section 28 of the land Acquisition Act and not with reference to the interest received under section 34 of the LA Act. The assessee submitted that in the present case the matter in dispute was about the taxability of interest u/s 34 of the Land Acquisition Act and not under section 28. Further, assessee submitted that even if it was decided that the interest received u/s 34 was taxable in the year of receipt, then the same should be spread over the period for which it had been calculated and must be assessed in the relevant Assessment Year. In this regard assessee relied on following decisions:-
i) Rama Bai Vs. CIT (1990) 84 CTD SC 164
ii) Bikkam Singh and others Vs. Land Acquisition Collector & ors. (1997) 139 CTR SC 475
7. The ld CIT(A) did not accept the assessee's claim of interest being received u/s 34 of the Land Acquisition Act observing that earlier, before Assessing Officer, assessee was claiming that this interest was part of additional compensation, and hence, as per the case law of Hindustan Housing Land Dev Trust 161 ITR 524 (SC), it was not taxable till the dispute was finally settled. However, now assessee was claiming interest u/s 34. After considering the facts and material on record, the ld CIT(A) held that impugned interest was part of the additional compensation, and, hence, receipt u/s 28 of the Land Acquisition Act and, thus, taxable in the year of receipt. Ld CIT(A) relied on the decision of Hon'ble SC in the case of Ghanshyam Page No. 4 (HUF) 224 CTR 522 wherein it was, inter-alia, held that interest u/s 28 of Land Acquisition Act, 1894, unlike interest u/s 34, is an accretion to the value and hence, it is part of enhanced compensation. Ld CIT(A), without prejudice to his finding that the impugned amount was receipt u/s 28 of the Land Acquisition Act, further pointed out that assessee did not give any bifurcation of total amount of interest relating to various relevant years. He, accordingly, dismissed the assessee's appeal.
8. Being aggrieved with the order of ld CIT(A), the assessee is in appeal before us and has taken following grounds of appeal:-
"1. That the authorities below were not justified in taxing the interest on enhanced compensation amounting to Rs. 15,12,039/- which was granted to the assessee U/s 28 of the Land Acquisition Act, hence a part of the compensation . As the land acquired was agricultural land situated outside the specified municipal limits, hence was not a capital assets. The learned CIT(A) was not justified in taxing the income as capital gain.
2. That the appellant craves the leave to add/ or to amend any grounds appeal at the time of hearing."
9. Ld counsel for the assessee submitted that ld CIT has held that the additional amount was receipt u/s 28 of the Land Acquisition Act. Therefore, it forms part of the additional compensation like original compensation. Ld counsel submitted that since the original compensation was exempt from tax being receipt for agricultural land, therefore, the additional compensation should be held to be exempt from tax.
10. Ld DR submitted that enhanced compensation is a deemed income u/s 45(5) , and, therefore, should be taxed accordingly.
11. We have considered the rival submissions and have perused the record of the case. The department has not disputed the findings of ld CIT(A) in holding that the impugned amount was received by the assessee u/s 28 of the Land Acquisition Act. The assessee is also not aggrieved by the findings of ld CIT(A) that the impugned amount was received u/s 28 of the Land Acquisition Act. Now the narrow compass in which dispute has been raised before us is regarding taxability of the additional compensation. We find that ld CIT(A) has not give any finding to Page No. 5 this effect particularly when he was holding that the impugned amount was a receipt u/s 28 of Land Acquisition Act and, thus, formed part of additional compensation. Ld CIT(A) was required to further examine the issue with reference to section 45(5) vis-à-vis the taxability of the original compensation received in 1989, We, accordingly, for recording requisite finding on the taxability of impugned amount in the relevant Assessment Year.
12. In the result the appeal is allowed for statistical purposes.
ITA No. 4845/Del/2011(Assessment Year: 2006-07) ITA No. 4846/Del/2011(Assessment Year: 2006-07)13. The facts in these two appeals are identical and, therefore, for the reasons given in ITA No. 4844/Del/2011 (Supra), we restore the matter back to the file of ld CIT(A) for the limited purpose of deciding the issue of taxability of impugned amount received by the assessee u/s 28 of the Land Acquisition Act.
14. In the result assessee's appeals are allowed for statistical purposes in case of all the three assessee's.
Order pronounced in the open court on 20.12.2013.
-Sd/- -Sd/-
(A. T. VARKEY) (S. V MEHROTRA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated 20 /12/2013
A K Keot
Copy forwarded to
1. Applicant
2. Respondent
3. CIT
4. CIT (A)
5. DR:ITAT
ASSISTANT REGISTRAR
ITAT, New Delhi