TaxTMI 
TaxTMI 
2014 (9) TMI 587
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..... Sikri,J. The question of law that arises for consideration in all these appeals which are filed by the Commissioner of Income Tax, Rajkot (hereinafter referred to as the 'Revenue') is common. The respondents in all these appeals are also common. The three respondents (hereinafter referred to as the 'assessee') are brothers. The issue raised is identical in all these appeals which pertains to different assessment years and that is the reason that there are eight appeals before us. For the sake of convenience, we will refer to the facts emerging from the records of Civil appeal No.8103 of 2009. 2. The respondents are three brothers. Their father died leaving the land admeasuring 17 acres and 11 gunthas to the three bro....
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....ession of land, that is the assessment year 1987-88 till the year of actual payment which was received in the assessment year 1999-2000 applying the principles of accrual of income. It is in this backdrop that the Revenue has approached this Court challenging the decision of the High Court. 5. Insofar as the treatment of the respondents giving the status of 'individual' and assessing on that basis is concerned, the issue is no more res integra. Learned counsel for the Revenue candidly and fairly conceded that this aspect stands conclusively determined by various judgments. It would be suffice to refer to the judgment of this Court in Meera and Company, Ludhiana vs. Commissioner of Income Tax, Punjab, J & K and Chandigarh, Patiala....
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....heir right to separate enjoyment, and except for receiving the dividends and interest jointly, it has been found that they have done no act which has helped to produce income in respect of the shares and deposits. On these findings it cannot be held that the three widows had the status of an association of persons within the meaning of section 3 of the Indian Income Tax Act." 20. The meaning of "an association of persons" was also examined by this Court in the case of G. Murugesan & Brothers v. CIT, (1973) 4 SCC 211. It was held in that case that an association of persons could be formed only when two or more individuals voluntarily combined together for certain purposes. Volition on the part of the members of the association was a....
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.... laid down in Meera & Company (supra) inasmuch as it is not a case where any "Association of Persons" was formed by volition of the parties for the purpose of generation of income. This basic test to determine the status of AoP is absent in the present case. 7. Insofar as the second question is concerned, that is also covered by another judgment of this Court in Commissioner of Income Tax, Faridabad vs. Ghanshyam (HUF) reported in (2009) 8 SCC 412, albeit, in favour of the Revenue. In that case, the court drew distinction between the "interest" earned under Section 28 of the Land Acquisition Act and the "interest" which is under Section 34 of the said Act. The Court clarified that whereas compensation given to the assessee of the land ac....
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....nterest under Section 28 unlike interest under Section 34 is an accretion to the value, hence it is a part of enhanced compensation or consideration which is not the case with interest under Section 34 of the 1894 Act. So also additional amount under Section 23 (1-A) and solatium under Section 23(2) of the 1961 Act forms part of enhanced compensation under Section 45(5)(b) of the 1961 Act." 8. It is clear from the above that whereas interest under Section 34 is not treated as a part of income subject to tax, the interest earned under Section 28, which is on enhanced compensation, is treated as a accretion to the value and therefore, part of the enhanced compensation or consideration making it exigible to tax. After holding that interest ....
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....nce the enhanced compensation/consideration (including interest under Section 28 of the 1894 Act) becomes payable/ paid under the 1894 Act at different stages, the receipt of such enhanced compensation/ consideration is to be taxed in the year of receipt subject to adjustment, if any, under Section 155(16) of the 1961 Act, later on. Hence, the year in which enhanced compensation is received is the year of taxability. Consequently, even in cases where pending appeal, the court/tribunal/authority before which appeal is pending, permits the claimant to withdraw against security or otherwise the enhanced compensation (which is in dispute), the same is liable to be taxed under Section 45(5) of the 1961 Act. This is the scheme of Section 45(5) an....