1982 (8) TMI 109 - AT - Income Tax

Assessee's Interest on Compensation to be Taxed over Relevant Years per Tribunal Ruling

The Tribunal held that interest received by the assessee in the year of enhanced compensation should be spread over the relevant assessment years in which ... - Issues:1. Whether interest received by the assessee in the year of enhanced compensation is taxable in the year of receipt or spread over a period.Analysis:The issue before the Tribunal was whether interest received by the assessee in the year of enhanced compensation should be taxed in the year of receipt or spread over a period from 29-3-1971 to 31-10-1975. The Tribunal considered the judgments of the Supreme Court and the High Courts to decide the matter. It noted that the interest payable under section 34 of the Land Acquisition Act is similar to that under section 28. The Tribunal held that the amount of interest could not be taxed in one year but should be spread over the relevant assessment years in which it accrued.The Tribunal's decision was based on the guidance from judgments of the Supreme Court, including the case of Dr. Sham Lal Narula and State U.P. vs. Jogendra Singh. It observed that the revenue's reliance on High Court judgments did not consider the Supreme Court's decision in Dr. Sham Lal Narula's case. The Tribunal concluded that the interest payable under section 34 of the Land Acquisition Act is akin to section 28, leading to the decision that the interest amount should be taxed in the years it accrued, starting from 29-3-1971 to 31-10-1975.The assessee's counsel argued that no reference to the High Court was necessary as the Supreme Court had already addressed the issue in the case of Brig. Sahib Singh Kaila v. Amristar Improvement Trust. The Supreme Court's judgment in Shiv Kumar vs. State of Punjab clarified the ambiguity regarding interest on enhanced compensation, stating that interest should be payable on the enhanced portion from the date of land possession. The Tribunal agreed with the counsel's argument, stating that the issue was already concluded by the Supreme Court's judgments, and hence rejected the reference application by the revenue.In conclusion, the Tribunal dismissed the reference application, emphasizing that the question raised by the revenue was not referable as it had already been addressed and concluded by the judgments of the Supreme Court. The Tribunal's decision was based on the interpretation of relevant legal provisions and previous judicial precedents, leading to the rejection of the revenue's application for reference to the High Court.