Referred Sections: Section 143(3) of the Income-tax Act, 1961. Section 28 of Land Acquisition Act 1894 Section 23(2) Section 45(5) Section 10(37) Section 194LA of the Act.
Referred Cases / Judgments: CIT vs Ghansham (HUF) 182 taxman.com 368
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `E', NEW DELHI
BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER &
SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER
. / ITA No.5986/Del/2016
[ [ / Assessment Year 2013-14
Mahesh Kumar Gupta,
S/o-Shri Tara Chand Gupta,
B-4, Sector-44, Noida.
PAN-ADMPG6786A ........../Appellant
vs
The DCIT,
Circle-2, Ayakar Bhawan,
A-2D, Sector-24,
Noida-201301. ............. × / Respondent
/ Appellant by : Sh. Mahesh Kumar Gupta, Assessee
× / Respondent by : Ms. Rakhi Vimal, Sr.DR
/ /
Date of Hearing : 16.10.2019 Date of Pronouncement: 16.10.2019
/ ORDER
PER SUSHMA CHOWLA, JM:
The appeal filed by assessee is against order of
CIT(A)-1, New Delhi, dated 30.08.2016 relating to assessment year
ITA No.5986/Del/2016
Assessment Year 2013-14
2013-14 passed under section 143(3) of the Income-tax Act, 1961.
2. The only issue raised in the present appeal is against the
assessibility of the amount received u/s 28 of the Land Acquisition Act (in
short "Act").
3. The Ld.AR for the assessee pointed out that land of the assessee
was acquired against which it received compensation u/s 28 of the Act,
which was part of additional compensation received and not taxable. He
also pointed out that portion of similar land was acquired in the case of
his cousin brother Sh. Satish Kumar Gupta and the issue has been
decided by the Tribunal.
4. The Ld. DR for the Revenue placed reliance on the orders of the
authorities below.
5. We have heard the rival contentions and perused the record. The
issue which arises in the present appeal is against the amount received
u/s 28 of the LAC Act i.e. enhanced compensation. The claim of the
assessee is that such enhanced compensation was part of the
compensation and was not taxable in his hands. However, the case of the
Revenue is that the same is to be taxed as interest in the hands of the
assessee.
6. We find that similar land (other portion) was acquired in the hands
of the cousin brother of the assessee i.e. Sh. Satish Kumar Gupta. The
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ITA No.5986/Del/2016
Assessment Year 2013-14
Tribunal in bunch of appeals with lead order in the case of Sh.
Amar Chand Gupta in ITA No.5367/Del/2018 relating to Assessment
Year 2014-15 and others including in the case of Sh. Satish Kumar Gupta
in ITA No.1707/Del/2018 relating to Assessment Year 2013-14, vide
order dated 14.08.2019 has decided the said issue. The Relevant finding
of the order of the Tribunal are as under:-
6. "We have heard both the parties and have gone through the
material placed on record. We find that in all these appeals, it is an
admitted fact that the assessees had received interest u/s 28 of
Land Acquisition Act on enhanced compensation. The Hon'ble
Supreme Court in the case of CIT vs Ghansham (HUF) 182
taxman.com 368 has clearly held that interest received by the
assessee in view of section 28 of Land Acquisition Act 1894 is part
of the compensation and therefore was not taxable. The Hon'ble
Delhi Bench of the Tribunal in the case of Shri Opinder Singh Virk,
vide order dated 14/03/2019 has dealt with the decision of the
Hon'ble Supreme Court in the case of Chet Ram (HUF) as well as the
case laws of Ghanshyamdas and after analysing the same has
again held that interest receipt on enhanced compensation u/s 28 of
the Land Acquisition Act is in the nature of compensation. We further
find that Hon'ble Delhi Tribunal vide order dated 09/08/2019 in the
case of Shri Manish Yadav in ITA No.3836/Del/2016 has taken
cognisance of the order of the Hon'ble Delhi Tribunal in the case of
Shri Opinder Sing Virk and has dismissed the appeal of the Revenue
by holding as under:-
"4. We have heard rival parties and have gone
through the material placed on record. We find that it is
an undisputed fact that assessee has received interest
u/s 28 of Land Acquisition Act, 1894. The Hon'ble Apex
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ITA No.5986/Del/2016
Assessment Year 2013-14
Court in the case of CIT vs Ghanshyam(HUF) 182
taxman 368 has clearly held that interest received by
the assessee in view of section 28 of Land Acquisition
Act 1894 is part of the compensation and therefore was
not taxable. The Hon'ble Delhi Bench of the Tribunal
in the case of Shri Opinder Singh Virk, vide order dated
14/03/2019 has dealt with the decision of the Hon'ble
Supreme Court in the case of Chet Ram (HUF) as well
as the case laws of Ghanshyamdas and after
analysing the same has again held that interest
receipt on enhanced compensation u/s 28 of the Land
Acquisition Act is in the nature of compensation. The
finding of the Hon'ble Tribunal as reproduced below:-
"8. We have gone through the orders of the
authorities below in the light of the arguments on
either side and the decisions of the Hon'ble Apex
Court cited above. In the case of Ghanshyam
(supra), the Hon'ble Supreme Court held in
unequivocal terms that the additional amount u/s
23(1A), solatium under section 23(2) and interest
on excess compensation u/s 28 of the Land
Acquisition Act form part of enhanced
compensation u/s 45(5)(b) and, therefore, is
subject to tax u/s 45(5) in the year of receipt. No
contrary view is taken by the Supreme Court in the
subsequent judgments and as on the date, law is
fairly settled that the amount of interest received
u/s 28 of the land Acquisition Act is in the nature
of capital gain. In the case of Hari Singh (supra)
while dealing with the similar question under
identical set of facts while setting aside the matter
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ITA No.5986/Del/2016
Assessment Year 2013-14
to the file of the AO to examine the facts of the
case and to apply the law as contained in the
Income-tax Act, Hon'ble Supreme Court specifically
directs that in case the learned AO finds that the
compensation was received in respect of the
agricultural land, the tax deposited with the
Income-tax Department shall be refunded to the
assessee. Hon'bleSupreme Court gave the above
direction after noticing the decision in the case of
Ghanshyam (supra).
9. In this set of circumstances, it does not admit of
any doubt as to the nature of receipt by way of
interest u/s 28 of the Land Acquisition Act in the
hands of the assessee or the applicability of the
Income-tax Act to sch amount. When the Hon'ble
Supreme Court specifically directs in the case of
Hari Singh (supra), the learned AO shall examine
the facts of the case and then apply the law as
contained, CIT(A) has not stated that such an
amount shall be brought to tax u/s 45(5) without
applying the provisions under 10(37) of the Act,
which exempts such receipts from being taxed. It
could be noted that Section 45(5) makes no
reference to the nature of property that is acquired
but it deals with the category of cases which falls
in the description of "capital assets". However,
Section 10(37) exempts specifically an income
chargeable under the head "capital gains" arising
from the transfer of agricultural land. It is,
therefore, clear that once the Hon'ble Supreme
court directed the AO in the case of Hari Singh
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ITA No.5986/Del/2016
Assessment Year 2013-14
(supra) that after examining the facts to apply the
provisions contained in the Income-tax Act with a
specific reference to the agricultural land stating
that in case if it is found that the compensation
was received in respect of the agricultural land,
the tax deposited with the Income-tax Department
shall be refunded to these depositors.
10. In this matter, what was acquired by the
Government was an agricultural land and such a
fact is well evident from the assessment order
itself . As a matter of fact, learned AO, by granting
exemption under section 10(37) of the Act,
refunded a sum of Rs. 1,22,01,723/-. Only
question is whether the interest received under
section 28 of the Act assumes the character of
enhanced compensation and consequently it is
exempt under section 10(37) of the Act. In view of
the decisions of the Hon'ble Supreme Court
referred to above, we do not have any doubt in our
mind as to the law in this aspect and while
respectfully following the ratio laid down by the
Hon'ble Supreme Court in the case of Ghanshyam
(supra) and Hari Singh (supra) above, direct the ld.
AO to refund the TDS amount that was deducted
on account of the interest received under section
28 of the Land Acquisition Act Also. With these
directions, we allow the appeal of the assessee.
11. In the result, the appeal of the assessee is
allowed."
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ITA No.5986/Del/2016
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5. Further, we find that the Hon'ble Chandigarh
Bench of the Tribunal vide order dated 11/01/2019
has dealt with the case law of Manjit Singh and relying
on the order of the Hon'ble Supreme Court in the case
of Hari Singh has allowed relief to the assessee by
cancelling order u/s 263 by holding as under:-
6. During the course of hearing before us, Id.
counsel for the assessee pointed out that
subsequent to the decision passed by the Hon'ble
jurisdictional High Court in the case of Naresh Jain
(supra),which was heavily relied upon by the Id.
Pr. CIT in his order for stating that the proposition
laid down by the Apex Court in the case of
Ghanshyam, HUF stood overruled, and that
interest u/s 28 was liable to tax as 'income from
other sources', the Hon'ble Apex Court had
categorically reiterated its decision rendered in the
case of Ghanshyam, HUF in the case of Union of
India Ors. Vs Hari Singh & Ors. in CA No.
15041/2017 dated 15.09.2017. It was pointed out
that the decision of the jurisdictional High Court in
the case of Naresh Jain was dated 12.07.2017,
while the Apex Court had reiterated the decision
rendered in the case of Ghanshyam, HUF
subsequently in September,2017 and therefore,
the proposition laid down by the Apex Court was
the law of the land following which interest u/s 28
of the LAA, 1894,was in the nature of enhanced
compensation and not in the nature of interest and
therefore, had been rightly not returned to tax by
assessees. It was pointed out that in view of the
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same, there was no error in the order of the AO
and the jurisdiction assumed by Id. Pr. CIT,
therefore, was erroneous.
7. The Id. DR on the other hand, relied on the
order of the Id. Pr. CIT.
8. Having heard the rival contentions. We find
merit in the contention of the Id. counsel for the
assessee. Undoubtedly the Ld. Pr. CIT had heavily
relied on the decision of the jurisdictional High
Court in the case of Manjit Singh (supra) and more
specifically in the case of Naresh Jain (supra) to
hold that the proposition laid down by the Apex
Court in the case of Ghanshyam, HUF that interest
received u/s 28 of the Land Acquisition Act, 1894
was part of the enhanced compensation, was not
good law. As rightly pointed out by the Id. counsel
for the assessee the Hon'ble Apex Court has
reiterated the aforesaid proposition in the case of
Hari Singh (supra) subsequent to the decision
passed by the Hon'ble High Court in the case of
Naresh Jain (supra) .We have gone through the
order of the Apex Court in the case of Hari Singh
and find that the Union of India had come before
the Supreme Court against the decision of the High
Court in writ petition filed by the asseseees before
the High Court. The issue before the High Court
was that the assessees had received enhanced
compensation on which tax had been deducted at
source as per the provision of Section 194LA of the
Act. The assessee had contended that no tax was
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ITA No.5986/Del/2016
Assessment Year 2013-14
deductible on the same as land was agricultural
land and without examining these facts, taxes had
been deducted at source. The Hon'ble High Court
had directed refund of the taxes to the assessees
and had directed the Land Acquisition
Officer/Collector to examine whether their lands
were agricultural or not and decide whether taxes
were liable to be deducted therefrom as per the
provisions of the Act. The Union of India had come
in appeal before the Hon'ble Supreme Court
against this order of the High Court stating that it
was the Assessing Officer who was capable of
determining the nature of land as being
agricultural or not for the purposes of taxability
under the Income Tax Act, 1961. The same was
agreed to by the Hon'ble Apex Court and they had,
therefore, directed the AO to examine this aspect
and further categorically stated that the
proposition laid down by it in Ghanshyam,
HUF(supra) vis a vis interest received u/s 28 of the
LAA, 1894 be kept in mind to ascertain whether
the interest received amounts to compensation or
not. The relevant findings of the Hon'ble Supreme
Court in this regard are as under :
We find force in the submission of the learned
Additional Solicitor General insofar as the
challenge to the direction given to the Land
Acquisition Collector to determine as to
whether the land in question is agricultural
land or not Since the Land Acquisition
Collector had. already deducted tax at source
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and deposited with the Income Tax
Department, in such circumstances, better
course of action, which is in consonance with
the provisions of Income Tax Act, is for the
respondents to approach the concerned
Assessing Officer(s) and to raise the issue
that no tax is payable on the
compensation/enhanced compensation which
is received by them as their land was
agricultural land. Once such an issue is
raised before the Assessing Ojficer(s), it is for
the Assessing Officer(s) to examine the facts
of each case and then apply the law as
contained in the Income Tax Act to determine
the aforesaid question. Insofar as these cases
are concerned, we allow these appeals by
setting aside the directions contained in
paragraph 7 and substitute the same with the
following directions: (I) The respondents shall
file appropriate returns before the Assessing
Officer(s) in respect of Assessment Years in
question within a period of two months from
today in case they feel that the compensation
in respect of land belonging to them which
had been acquired was agricultural land, and
claim refund of the tax which was deducted
at source and deposited with the Income Tax
Department. On the filing of these returns, the
Assessing Officer(s) shall go into the aforesaid
question and wherever it is found that the
compensation was received in respect of
agricultural land, the tax deposited with the
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Income Tax Department shall be refunded to
these respondents. (2) While determining as to
whether the compensation paid was for
agricultural land or not, the Assessing
Officer(s) will keep in mind the provisions of
Section 28 of the Land Acquisition Act and the
law laid down by this Court in 'Commissioner
of Income Tax. Faridabad v. Ghanshyam
(HUF)' [2009 (8) SCC 412] in order to ascertain
whether the interest given under the said
provision amounts to compensation or not. (3)
The direction to refund the amount of Tax
Deducted at Source (TDS) to the Land
Acquisition Collector is, accordingly, set aside.
However, in those cases where the amount
has already been refunded, no interference is
called for and it will be for the Income Tax
Department to proceed in accordance with the
provisions of Income Tax Act.
(4) Where such notices have not already been
issued or assessments have not already been
made, if such'an action is taken within a
period of two months from today, issue of
limitation would not come in the way of the
Income Tax Department. This order is passed
having regard to the fact that the present
proceedings were pending in this Court
because of which it was not possible for the
Income Tax Department to issue these notices
earlier.
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9. In view of the categorical affirmation of the
proposition laid down by the apex court in the case of
Ghanshyam HUF(supra) ,in its latest decision in the
case of Hari singh (supra), we hold that there is no
error in the order of the AO treating the interest
received by them u/s 28 of the LAA,1894,as
compensation following the proposition laid down by
the apex court in Ghanshyam HUF(supra).The order
passed by the Ld.Pr.CIT u/s 263 is therefore set aside.
10. The appeal of the assessee therefore stands
allowed".
6. The argument of the Ld. DR that the case law of
Chet Ram (HUF) decided by the Hon'ble Apex Court will
be applicable do not hold any force in view of the fact
that order in the case of Chet Ram (HUF) has been
passed by Hon'ble Apex Court on 12/09/2017, whereas,
the order in the case of Hari Singh has been passed by
Hon'ble Apex Court on 15/09/2017 and wherein the
Hon'ble Apex Court has directed the Assessing Officer to
keep in mind the proposition laid down by it in the case
of Ghanshyam Dass (HUF).
7. In view of the above, we do not find any infirmity
in the order of the Ld. CIT(A) and therefore, the appeal
filed by the Revenue is dismissed."
7. In view of the above judicial precedents, the appeals of the
assessee are allowed."
7. The issue arising in the present appeal is similar to the issue before
the Tribunal in bunch of appeals and following the same parity of
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reasoning, we allow the claim of the assessee. Thus, grounds of appeal
raised by the assessee are allowed.
8. In the result, the appeal of assessee is allowed.
Order pronounced in the open court on 16th day of October, 2019.
Sd/- Sd/-
(ANADEE NATH MISSHRA) (SUSHMA CHOWLA)
/ACCOUNTANT MEMBER Û /JUDICIAL MEMBER
ã / Dated : 16th October, 2019.
* Amit Kumar *
/Copy of the Order is forwarded to :
1. / The Appellant;
2. × / The Respondent;
3. () / The CIT(A)
4. , , ã / DR, ITAT, Delhi
5. [ / Guard file.
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