Income Tax Appellate Tribunal - Delhi
Delhi Development Authority vs Income-Tax Officer on 24 January, 1995
Equivalent citations: [1995]53ITD19(DELHI)
ORDER
R.M. Mehta, Accountant Member
1. Delhi Development Authority (hereinafter referred to as "DDA") was constituted by the Delhi (Control of Building Operations) Ordinance, 1955 which was later on replaced by the Delhi Development Act, 1957. The primary object was to promote and secure the development of Delhi in accordance with the Master Plan as also the Zonal Development Plans to be prepared by the "DDA" and approved by the Central Government. The further relevant fact to be recorded is that the Delhi Development Authority is working under the control and superintendence of the Ministry of Urban Development, Government of India.
2. One of the avowed objects of the DDA is to provide housing facilities to the public at large and with a view to fulfilling the aforesaid object, it has been floating various Housing Schemes from time to time. One such scheme is the Self-Financing Scheme popularly known as "SFS", the salient features being as follows:-
(1) Application's are invited for registration within a given period of time on the terms and conditions contained in the brochure issued as per prescribed norms. It also involves an initial deposit on account of registration.
(2) By a subsequent draw of lots successful applicants are declared and Demand-cum-Allocation letters are issued to them indicating therein the prescribed dates on which the payments are required to be made in instalments.
(3) One of the terms of allotment stipulates the period of completion of construction of the house/flat and in case the same is extended due to one reason or the other including those beyond the control of DDA, then the corresponding liability on the part of the said DDA to pay interest to the allottees on the moneys received. By the same logic in case the payment of instalments by the allottees is delayed, then the corresponding liability on the part of the allottees to pay interest to the DDA.
(4) At the time of allotment of a specific flat and prior to the physical handing over of the said flat to the allottee, the payment of the final instalment by the said allottee. This further takes into account the cost of the flat, the adjustment on account of the amount already paid, interest to be added on account of late payment of instalments and the further adjustment on account of the "interest" due to the allottee from DDA on account of the delay in construction arriving ultimately at the "net amount payable" by the allottee.
3. For the assessment years under appeal viz., 1987-88 to 1989-90 the Income-tax Officer took note of the fact that a sum of Rs. 29;63 crores was paid/credited to various allottees registered with the DDA under its SFS scheme. He also took note of the fact that no tax was deducted at source by the DDA within the meaning of Section 194A of the Income-tax Act, 1961. The aforesaid information in fact came to the notice of the Income-tax Officer during the course of the assessment proceedings in the cases of an allottee.
4. On the basis of the aforesaid information, the Income-tax Officer issued a notice under Section 131 to the "concerned Officers" of DDA seeking necessary information in respect of the amount "adjusted" in the accounts of various allottees on account of "interest". The objections of the DDA were solicited by the Income-tax Officer vide letter dated 19-12-1990 and a reply was furnished on 7-1-1991 raising various objections to the proposed action on the part of the Income-tax Officer, vis-a-vis, the provisions of Sections 194A, 201(1) and 2O1(1A), all of the Income-tax Act, 1961. The stand taken by the DDA was that it was not a local authority as defined in Section 2(31) of the Income-tax Act, 1961. This was rejected by the Income-tax Officer on the ground that DDA was a body corporate set up under the Delhi Development Act, 1957 and covered by the definition of the word "person" as appearing in Section 2(31) which was an inclusive definition. The Income-tax Officer observed that DDA came squarely within Clause (v) of the said section and alternatively it also fell within Sub-clause (vii). A reference was also made to the fact that DDA was deducting and depositing tax at source on the lotteries conducted by it.
5. The further submission on the part of the DDA was to the effect that no interest was paid or credited in the strict sense of the term "income" as defined in Section 2(24) and the amount in question was in fact a reduction in the cost of the flat. This submission on the part of the DDA was also rejected by the Income-tax Officer on the ground that the terms and conditions vis-a-vis the "SFS" stipulated the payment of interest at a specified rate after the expiry of a particular period. According to him, the amount so paid or credited was not intended to be a reduction in the cost of the flat. The Income-tax Officer also referred to the specific omission in the allotment letter to state so. The Income-tax Officer also took into account the condition once again mentioned in the allotment letter to charge interest from the allottees for the delay in payment of the instalments and this not being related to the cost of the flat. The Income-tax Officer also referred to the condition pertaining to the cost of the flat, wherein it was specifically stated that the same is provisional and subject to revision on the completion of the flat and further any price difference between the estimated cost and the cost as finally determined to be paid along with the final instalment.
6. In the final analysis, the Income-tax Officer opined that the amount paid or credited to the account of the various allottees clearly fell in the definition of the term "income" as defined in Section 2(24) and insofar as the allotees were concerned, liable to be taxed under Section 56. Further the provisions of Section 194A squarely applied insofar as the DDA was concerned. On the ground that the DDA had failed to deduct/pay tax according to the said provisions, the Income-tax Officer treated it as an assessee in default within the meaning of Sections 201(1) and (1A). He ultimately passed an order raising a demand of Rs. 3,11,22,589 under Section 201 and a further demand of Rs. 84,74,605 under Section 2O1(1A) aggregating in all to Rs. 3,95,97,194.
7. Being aggrieved with the consolidated order passed by the Income-tax Officer, the DDA came up in appeal before the CIT (Appeals). At this stage certain initial objections were raised, the first one being to the effect that principles of natural justice had been violated as no reasonable opportunity had been given to the DDA to state its case with reference to the provisions of Section 194A. The other argument was to the effect that the DDA was not liable to deduct any tax at source in view of Notification No. 570 issued by the Central Board of Direct Taxes on 22-10-1970 vide SO 3489. It was contended on behalf of the DDA that according to the aforesaid Notification, a corporation established by a Central, State or Provincial Act was not hit by the provisions of Sub-section (1) of Section 194A of the Income-tax Act. It was the submission that DDA was such a corporation. The aforesaid two initial arguments on behalf of the DDA were rejected by the CIT (Appeals), as, according to him, adequate opportunities had been allowed and the Notification issued by the Board was with reference to the provisions of Sub-section (3)(f) of Section 194A.
8. The further arguments on the part of the DDA's Counsel were to the effect that the amount "credited" by DDA to the account of the allottees was not in the nature of interest and alternatively it was a capital receipt and hence not taxable. Attention was invited to the provisions of Section 2[28A) of the Income-tax Act for the proposition that the case of the DDA did not fall for consideration under the said section as it was not a case of moneys borrowed or debt incurred and there being no relationship of borrower and lender between the DDA and the allottees. The sum and substance of the arguments was that the sum in question did not fall under the definition of "interest". The further argument on behalf of the DDA was to the effect that the amount although bearing the nomenclature of interest was in effect not interest but represented damages/compensation paid to the allottees for the delay in construction of the flats. In the face of the aforesaid arguments it was urged that the order passed by the Income-tax Officer be set at naught.
9. The aforesaid submissions did not find favour with the CIT (Appeals), who proceeded to uphold the action of the Income-tax Officer with reference to the provisions of Sections 194A, 201(1) and 2O1(1A), of the Income-tax Act, 1961. The CIT (Appeals) also referred to the "terms and conditions" pertaining to the allotment of flats under the SFS scheme of the DDA arriving at the ultimate conclusion that the amount adjusted/credited in the accounts of the allottees was covered under the definition of "interest" vis-a-vis Section 2(28A) of the Income-tax Act and was not in the nature of a reduction or variation in the price of the dwelling unit.
10. Being dissatisfied with the consolidated order passed by the CIT (Appeals), the DDA is in further appeal to the Tribunal. At this stage we would like to mention that one of the allottees of a DDA flat at Munirka, namely, Shri A.K. Mahadevan had also filed an appeal to the Tribunal being aggrieved with the action of the Income-tax Officer in subjecting to tax an amount of Rs. 39,058 being the "interest" received by him on account of the delay in the construction of the house by the DDA. The said allottee had in fact not reflected the aforesaid amount in his return of income but which came to be included by the Income-tax Officer, who was not satisfied with the Explanation tendered to the effect that the same was not his income but pertained to the "cost of the flat". On further appeal, the Deputy Commissioner (Appeals) upheld the view taken by the Income-tax Officer opining in the process that the "interest" paid by the DDA was not in the nature of damages for the delay in construction and nor did it relate to the "cost of the flat". According to him, the said amount was taxable under the head "Income from other sources".
11. In order to appreciate the issue in proper perspective it was decided to hear together the appeals of DDA which had paid/credited the interest as also the allottee, namely, Shri A.K. Mahadevan, who had received said "interest" to decide as to what was the exact nature of the amount in question, vis-a-vis the payee and the recipient. On behalf of DDA, ShriG.C. Sharma, learned Advocate advanced his arguments, whereas the allottee was represented by Shri R. Ganesan, Chartered Accountant. We would initially like to highlight the arguments advanced by Shri G.C. Sharma in support of the stand taken that the amount although described as "interest" was in fact not so as it did not fall within the definition of the said term as appearing in Section 2(28A) of the Income-tax Act, 1961. According to him, the amount adjusted in the accounts of the allottees was neither in respect of "moneys borrowed" nor "debt incurred" or for that matter a "deposit". He was fair enough to concede that if it had any relation to any of the aforesaid three terms, then it would be "interest" liable for Tax Deduction at Source under Section 194A. The further submission on the part of the learned Counsel was that under the terms and conditions of the "SFS" an allottee was not entitled to any interest if the allotment was cancelled for one reason or the other and interest was available once again under certain circumstances to be detailed subsequently in case the transaction between the DDA and the allottee matured and reached a final conclusion. In other words, the viewpoint canvassed by the learned Counsel was that the agreement between the parties was one of acquiring an immovable property viz., a flat and nothing more. The further arguments advanced by Shri G.C. Sharma were as follows :-
(1) The amount in question was a compensation to the allottee due to the non-fulfillment of the "contract" by the DDA in allotting and handing over the physical possession of the flat within the stipulated period.
(2) The agreement between the parties represented a transaction on capital account and not revenue account.
(3) The terms and conditions stipulating payment of interest by the allottee to the DDA for delay in the payment of instalments as also the payment of interest by the DDA to the allottees for the delay in the allotment and handing over of the flats was in fact a "variation" in the purchase price.
(4) That while determining the quantum of capital gain on the sale of the flat the amount paid as interest to the DDA by an allottee would have to be included as part of the cost. On the same analogy the "interest received" from the DDA would have to be excluded from the cost for the same purpose.
(5) That an allottee would not be entitled to the possession of the flat until and unless all the payments had been made including interest.
(6) That although the final letter of demand issued by the DDA to an allottee used the term "interest", it was trite law that a nomenclature given to a transaction was not determinative of its true and correct nature.
(7) That the agreement between the parties was one of simple purchase and sale of an immovable property and not in the nature of a loan transaction.
(8) That the amount could not be regarded as a revenue receipt in the hands of the allottee.
(9) That the amount paid in instalments to the DDA by an allottee was not a loan but it represented the finance for the construction of a flat by the DDA on behalf of the allottee.
(10) That an allottee when paying instalments to the DDA did not feel that he was lending money to the said DDA for the purpose of earning any income much less income in the nature of "interest".
(11) That the amount received by the DDA from the allottees was neither "moneys borrowed" nor "debt incurred" or a "deposit" since in its books of account the same was taken to the income and expenditure account and not shown as a liability. (This factual submission was not challenged by the Revenue before us).
(12) That the aforesaid adjustment in the accounts of the allottees became necessary only when the DDA failed to keep up its commitment to construct the flats and hand them over to the allottees within a stipulated period and not otherwise, when the DDA stuck to the time schedule stipulated.
(13) That the relationship between the DDA and the allottee was that of a builder and a buyer of a flat and not a "depositor".
(14) That part payment of the purchase consideration which in the present case meant the cost of a flat was not a "deposit" but on the cancellation of the contract between the parties it may become a "debt due" from the DDA to the allottee.
(15) Further that it was the nature of the receipt at the time of its inception, that was determinative of its true character.
(16) That DDA was exempt from payment of income-tax and it worked on 'no profit no loss' basis.
(17) That right from 1978 DDA had been floating various schemes for allotment of houses and similar amounts had been adjusted in the accounts of the allottees and till the assessment years under appeal, the Income-tax Department had not raised any questions, vis-a-vis, the tax to be deducted at source.
12. On the basis of the aforesaid submissions the learned Counsel concluded his arguments by urging that since the amount in question was not "interest" within the meaning of Section 2(28A), there was no liability on the part of the DDA to deduct tax at source. He further referred to the written submissions addressed to the CIT (Appeals) during the course of the first appellate proceedings and a copy thereof having been filed before us during the course of the hearing of the present appeals. The learned Counsel also placed reliance on the following decisions to support the viewpoint canvassed :-
(1) Challapalli Sugars Ltd. v. CIT [1975] 98 ITR 167 (SC).
(2) D.L.F. Housing & Construction (P.) Ltd. v. CIT [1983] 141 ITR 806 (Delhi).
(3) CIT v. Chiranjilal Multani Mal Rai Bahadur (P.) Ltd. [1989] 179 ITR 157 (Punj. & Har.) (4) Shree Hanuman Cotton Mills v. Tata Aircraft Ltd. AIR 1970 SC 1986.
(5) Ram Janki Devi v. Juggilal Kamlapat AIR 1971 SC 2551.
(6) CIT v. Motor & General Finance Ltd. [1974] 94 ITR 582 (Delhi).
(7) Morley (Inspector of Taxes) v. Tattersall [1939] 7 ITR 316 (CA).
13. On behalf of the allottee Shri R. Ganesan, Chartered Accountant, at the outset stated that he was adopting in entirety the arguments advanced by Shri G.C. Sharma but raised for our consideration the following further arguments in support of the stand that no part of the amount adjusted was taxable in the hands of the allottee:-
(1) That the definition of "income" in Section 2(24) was an inclusive definition which provided various categories of income on the receipt of which tax became payable.
(2) Under Section 4 there were three methods of recovering tax, namely, by assessment, by payment of advance tax and lastly by deduction of tax at source by the payer.
(3) That the case of the allottee did not fall under Section 2(24) as he had made a payment for acquiring a flat and due to unforeseen intervening circumstances there was a delay on the part of the DDA in allotting and handing over the physical possession of the flat necessitating thereby a suitable modification in future instalments to be paid by the allottee.
(4) That the transaction in question emanated from the acquisition of a capital asset, viz., a flat and any connected event including the receipt of an amount was also of the same nature, viz., a capital receipt.
(5) That all expenditure for acquiring a capital asset was also capital in nature and not otherwise.
(6) That the amount adjusted in the account of the allottee was in the nature of a compensation for the delay in the construction and handing over of the flat and not at all taxable within the meaning of Section 2(24) of the Income-tax Act, 1961.
14. On the basis of the aforesaid submissions the learned Counsel concluded his arguments making an impassioned plea for the exclusion of the amount in question from the taxable income of the allottee. In support of his arguments he placed reliance on the following :-
(1) Bombay Steam Navigation Co. (1953) (P.) Ltd. v. CIT [1965] 56 ITR 52 (SC).
(2) CIT v. Mithlesh Kumari [1973] 92 ITR 9 (Delhi).
(3) Challapalli Sugars Ltd's case (supra).
(4) Dr. Shamlal Narula v. CIT [1964] 53 ITR 151 (SC).
15. The learned Departmental Representative, on the other hand, supported the order passed by the CIT (Appeals) and subsequent arguments advanced by her were a reiteration of the reasons recorded both by the Income-tax Officer as also by the CIT (Appeals) in rejecting the view-point canvassed on behalf of DDA. It was urged that the meaning of the term "interest" was much wider in Section 2(28A) than it was understood with reference to provisions of Section 36(1). According to her, the interest emanating from the agreement between the DDA and the allottees could safely be brought under the term "obligation" appearing in Section 2(28A). For the aforesaid line of argument she referred to the commentary of the learned Author, Sampath Iyengar, 8th Edition Volume I, page 440. The learned Departmental Representative, thereafter took us through the relevant clauses of the terms and conditions offered by the DDA with reference to the "SFS" flats contending in the process that DDA was obliged to pay interest if the flats were not allotted within a stipulated period and correspondingly the said terms and conditions also provided for payment of interest by the allottees in case there was a delay in the payment of instalments. The further stand taken on behalf of the Revenue was to the effect that on the facts of the present case the amount of interest adjusted in the accounts of the allottees was not for any breach of contract but the same was necessitated due to the delay on the part of DDA in allotting and handing over physical possession of the flats to the allottees. It was further submitted that the principle of res judicata did not apply and it was immaterial that in none of the earlier assessment years the Department had raised the question of Tax Deduction at Source on the amount of interest adjusted in the accounts of the allottees. The learned Departmental Representative also went to the extent of contending that the nature of the receipt in the hands of the allottees was not a relevant factor to decide whether the amount in question was interest insofar as DDA was concerned. At this stage the learned Departmental Representative referred to the orders of the tax authorities in the case of the allottee, namely, Shri A. K. Mahadevan vehemently supporting the action of the said tax authorities in subjecting to tax the amount of interest under the head "Income from other sources".
16. As regards the decisions relied upon by Shri G.C. Sharma and Shri R. Ganesan, who argued on behalf of DDA and the allottee respectively the learned Departmental Representative sought to distinguish the various decisions with special reference to those reported in Bombay Steam Navigation Co. (1953) (P.) Ltd's case (supra), Multani Mal Rai Bahadur (P.) Ltd. 's case (supra) and ChallapaEi Sugars Ltd. 's case (supra) she in turn placed reliance on the decision in Multani Mal Rai Bahadur's case (supra) at page 160, which, according to her, supported the case of Revenue. In support of the orders of the tax authorities and her own arguments the learned Departmental Representative placed reliance on the following decisions:-
(1) Aggarwal Chamber of Commerce Ltd. v. Ganpat Rai Hira Lal [1958] 33 ITR 245 (SC).
(2) T.N.K. Govindarajulu Chetty v. CIT [1973] 87 ITR 22 (Mad.).
(3) CIT v. T.N.K. Gouindarajulu Chetty [1987] 165 ITR 231 (SC).
(4) Rama Bai v. CIT [1990] 181 ITR 400 (SC).
17. In a short reply, Shri G.C. Sharma laid stress on the following :-
(1) The agreement between the DDA and the allottees did not produce interest to any of the parties and it was a pure and simple agreement for purchasing an immovable property, viz., a flat by one from the other on no profit no loss basis.
(2) It was an agreement between the parties for purchase/sale of immovable property whose cost at the time of entering into the agreement was not determinate but only provisional.
(3) The agreement was to be read as a whole and not the individual clauses in islolation.
(4) The amount adjusted in the accounts of the allottees was not at all their income so it was irrelevant to decide whether it was interest or not.
(5) Section 194A only applied in the case of DDA in case the amount was treated as "interest" but not if the amount was treated as "income".
(6) In Section 56 of the Income-tax Act, 1961 the word "interest" was not used and interest payable within the meaning of Section 2(28A) did not mean damages or compensation payable under an obligation.
(7) In case the amount was to be treated as interest paid for deprivation of money vis-a-vis an allottee, then it must be treated as income but if it was interest paid for deprivation of use of property, then it was a capital receipt being in the nature of compensation and hence not taxable.
18. The aforesaid submissions were advanced by the learned Counsel both on behalf of the DDA as also the allottee. Further reliance was placed on the decision of the Hon'ble Supreme Court in the case of T.N.K. Govindarqju Chetty v. CIT [1967] 66 ITR 465.
19. We have examined the rival submissions and have also perused the material on record to which our attention was invited during the course of the hearing. The decisions cited at the bar have also been considered.
20. At the outset we find it necessary to express an opinion on the nature of the agreement (terms and conditions of allotment to successful applicants) between the DDA and the allottees. The term "Self Financing Scheme" itself denotes that the agreement is one for construction of a dwelling unit by the DDA with the money provided by the allottees in convenient instalments over a stipulated period. Then again the allotment letter refers to the payment of four instalments with reference to the "estimated cost" of the flat and the final instalment required to be paid at the time of allotment of a specific flat, the "actual cost" of the flat having been determined and mentioned in the "demand letter". This clearly shows that at the initial stages the cost is "provisional" and "subject to revision" and which becomes manifest from Clause 2 of the 'Terms & Conditions", which reads as under:-
The estimated cost of the flats as given in this letter is provisional & subject to revision on the completion of the flat. Any price difference between the estimated cost & the cost as it comes out on completion as per costing formula then in vogue would have to be paid along with the 5th and final instalment. There would be no review of the cost of the flat in the intervening period. "Interest @ 7% on the amount deposited will be payable for the period beyond 3 1/2 years to the date of issue of possession letter if the construction of the houses is not completed by them.
[Emphasis supplied]
21. There are other clauses pertaining to payment of interest by an allottee to the DDA for the delay in making payments of instalments as also the levy of penalty under certain circumstances. However, there is no clause which provides for payment of interest by the DDA to an allottee in case the allotment is cancelled. Clause 2 reproduced earlier speaks of interest @ 7% becoming payable only after the expiry of a period of 3 1/2 years from the date on which the allotment letter was issued and up to the date of issue of the possession letter. The other clauses refer to the payment of ground rent by an allottee as also the "restrictions" on transfer of the flat by an allottee, the remaining clauses being of a routine nature and not relevant to decide the issue at hand.
22. We would now refer to the "demand letter" pertaining to the 5th and final instalment by the DDA to the allottees and which contains the following heads/columns:-
(a) Cost of flat,
(b) Amount already paid.
(c) Add interest chargeable on account of late payment of instalments.
(d) Less interest payable to you on account of late construction.
(e) Documental charges.
(f) Ground rent for the first two years @ Re. 1.
(g) Service charges.
(h) Share money for membership of Registered Association/Agency.
(i) Net amount payable.
[Emphasis supplied)
23. A sample of an allotment letter as also a final demand letter in the case of an allottee was placed on record by the DDA which in the former document gave the estimated cost of a flat in 1984 at Rs. 1,92,000 but the final cost being determined at a figure of Rs. 2,47,500 in 1989. After making necessary deductions on account of amount already paid by the said allottee and crediting his account in respect of interest due for "late construction" and adding thereto interest payable by the allottee on account of late payment of instalments plus other nominal levies a net amount of Rs. 36,647 was found payable by the said allottee. This was required to be deposited within a period of two months from the date of issue of the said demand letter and on doing so entitling the allottee to the physical possession of the flat.
24. At this stage we would advert to the provisions of Section 2(28A) of the Income-tax Act, 1961 which read as under and on which considerable emphasis was laid by both the parties to canvass their respective view points :-
2(28A). "interest" means interest payable in any manner in respect of moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised.
25. Let us now examine whether the case of DDA would fall under any of the terms mentioned in the aforesaid provisions. It cannot be said that the instalments paid by the allottee to the DDA were "moneys borrowed" by the latter or that it was a "debt incurred" by the latter as both these terms stipulate a liability on the part of the DDA which on the facts of the case it was not except to the extent that it was obliged to construct the dwelling units with the funds provided by the allottees and deliver them within a stipulated period. Then again the amounts of instalments do not represent a "deposit" in the hands of the DDA having been taken to the income account (as stated by Shri G.C. Sharma and not rebutted by the learned Departmental Representative) and not denoting an interest earning event. The transaction further does not qualify for categorization under the other terms appearing in Section 2(28A) viz., "service fee" or "other charge" and nor does it fall for consideration under the terms "claim or other similar right or obligation". According to us the definition of interest in Section 2(28A) is not wide enough to encompass all types of transactions much less the one under consideration. The provisions of Section 194A would be attracted only if the case falls under Section 2(28A) irrespective of the fact that a particular receipt may represent income in the hands of the recipient.
26. It must be appreciated that the agreement between the parties is that of construction of a dwelling unit by one viz., the DDA with the funds provided by the other namely the allottee. At the time when the agreement is entered into the cost of the unit is "estimated" subject to "revision" later on. At the time of payment of the final instalment the cost of the unit is worked out and the allottee asked to pay the stipulated amount before getting possession. The interest credited to his account, in our opinion, represents an act on the part of DDA in compensating him for the delay in the construction of the dwelling unit whereby the allottee has been prevented from taking the physical possession and moving in. At no stage of the transaction the earning of interest by one or payment thereof by the other in contemplation of the parties or even their motive and what the assessee paid was a sort of levy for the delay in the payment of instalments and what the D. D.A. paid was a compensation for the delay in construction of the dwelling unit. By using the term "interest" the amount does not become so and on the facts of the present case we reiterate that it does not fall under any of the categories mentioned in Section 2(28A) and merely represents a measure for quantifying the "compensation" for the delay in construction.
27. In looking at the matter from another angle we cannot help but observe that the years before us in case of DDA are assessment years 1987-88 to 1989-90, the assessments in respect of which are presumed to have been completed in the cases of the various allottees. On the assumption that the amount in question was "interest" within the meaning of Section 2(28A) and Tax Deduction at Source provisions were attracted, then the DDA would recover or would have recovered the amounts paid by it to the department from the thousands of allottees. In the case of those allottees whose assessments were pending there would be no problem in staking a claim for the amount deducted but as already stated the period in question is one where it would be safe to assume that the assessments are already completed. Such allottees may find themselves without any remedy vis-a-vis the amount recovered by DDA. Their Lordships of the Hon'ble Madhya Pradesh High Court took note of such a situation no doubt in respect of salaries to come to the conclusion that where the regular assessment of an employee had been completed and tax fully paid by him, the Income-tax Officer had no jurisdiction under Section 201 of the Income-tax Act, 1961, to demand further tax from the employer in respect of the tax short deducted at source in relation to such employee. There is a string of decisions of the Hon'ble Madhya Pradesh High Court and we need refer to only one viz., CIT v. M.P. Agro Morarji Fertilizers Ltd. [1989] 176 ITR 282. The ratio of the aforesaid decision would apply to the facts of the present case as well and the order passed by the Income-tax Officer would be one without jurisdiction within the meaning of Section 201.
28. In the final analysis we being of the view that the amounts credited in the accounts of the allottees not being in the nature of interest within the meaning of Section 2[28A) quash the orders passed by the tax authorities with reference to the provisions of Sections 201(1) and 2O1(1A). The amounts if recovered from the DDA are directed to be refunded immediately. On the same analogy we hope that the DDA is equally quick in paying back the amounts if recovered from the allottees. It appears that the DDA had sent notices to the allottees asking them to remit their share of the amount recovered from the DDA by the Department.
29. As regards the allottee namely, Shri A.K. Mahadevan, we express a view to the effect that the amount in question would represent a non-taxable "Capital receipt" being in the nature of compensation paid by the DDA on account of delay in the construction of the dwelling unit and the term "interest" used only as a measure of quantification. The other observations recorded by us in the appeals of DDA would apply with equal force to the case of the allottee. The addition in question is therefore deleted.
30. Before we part with these appeals, we would like to mention that the decisions cited at the bar by the parties have been duly considered by us in coming to the various conclusions vis-a-vis the dispute raised before us in the case of D.D.A. as also the allottee. The decisions cited by Shri G.C. Sharma and Shri R. Ganesan aptly support the viewpoint canvassed by them on behalf of their respective clients whereas the decisions cited by the learned Departmental Representative are clearly distinguishable and not at all applicable to the facts of the present case.
31. In the result, all the appeals are allowed.