2010 (9) TMI 412

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....uestion of law :   "Whether, on the facts and circumstances of the case, the hon'ble Income-tax Appellate Tribunal is right in holding that assessment of interest cannot be made until the matter is finally settled by the High Court, in contradiction with the judgment of the hon'ble jurisdictional High Court of the Punjab and Haryana following the judgment of the apex court in the case of Rama Bai v. CIT [1990] 181 ITR 400 whereby interest on enhanced compensation is to be taxed on accrual basis irrespective of the pendency of appeal in higher courts in respect of the enhanced compensation (I. T. A. No. 176 of 2005 and I. T. A. No. 177 of 2005 in the case of CIT, Faridabad v. Naresh Kumar and CIT, Faridabad v. Dilbagh Singh, respecti....

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....ed counsel for the parties and perused the record.   4. Learned counsel for the Revenue submitted that the assessee was following the cash system of accountancy as is evident from the assessment order and, therefore, the interest for delayed payment of compensation which was received by the assessee in the year relating to the assessment year in question was taxable. According to the Revenue, even if the matter regarding compensation was in dispute, the same would not make any difference in view of the method of accountancy being followed by the assessee. Learned counsel further submitted that the Tribunal had erred in relying upon the apex court decisions in CIT v. Hindustan Housing and Land Development Trust Ltd. [1986] 161 ITR 52....

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....nbsp; 8. We may now advert to the judgment of the apex court in Hindustan Housing and Land Development Trust Ltd.'s case [1986] 161 ITR 524 on the basis of which theTribunal had adjudicated the issue in favour of the assessee. In that case, the assessee-company was following the mercantile system of accountancy whose certain lands were compulsorily acquired by the Government. The award was announced by the Land Acquisition Collector granting Rs. 24,97,249 as compensation and thereafter the arbitrator fixed the quantum of compensation at Rs. 30,10,873. The State Government had challenged the award of the arbitrator by filing an appeal before the High Court and during the pendency of the said appeal, an amount of Rs. 7,36,691 deposited by ....