TaxTMI 
TaxTMI 
2015 (1) TMI 1116
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....quisition of its land by the Government. According to the AO, as the income of the assessee had escaped assessment within the purview of the provisions of s. 147 of the Act, the assessee was required to furnish its return of income for the AY by issuance of a notice u/s 148 of the Act. In compliance, the assessee had requested the AO to treat the return of income filed originally be treated as in response to the said notice. During the course of assessment proceeding, the assessee was asked to furnish the details of properties acquired, compensation and interest received on acquisition etc., In response, the assessee submitted that the lands were originally purchased by Smt. Radhabai, w/o Ramchandra Asawa out of joint family funds way back in 1960 and on her demise in March, 1986, the said property was devolved on her sons viz., Ramnivas Asawa and Ramvallabh Asawa equally. Since Ramnivas Asawa also passed away on 29.3.2002, 50% share in the said property was taken over by his sons which are held in HUF status by the present Kartha i.e., Mohanlal Asawa and the other 50% is taken over by Ramvallabh Asawa & Sons group. On account of acquisition of land by the Land Acquisition Officer,....
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....1. Hence, this treatment is mandatory for the assessment year 2010-11 and onwards and not for earlier years." 4.2. Aggrieved, the Revenue has come up before us with the present appeal. During the course of hearing, the learned DR submitted that the CIT (A) ought to have appreciated the facts recorded by the assessing officer in the assessment orders that the interest received by the assessee relates to additional compensation, the interest so received has to be charged to tax in the year of receipt. It was, further, submitted that the CIT (A) ought to have appreciated the fact that the amendments to section 145A of the Act was done later on the decision of the Hon'ble Supreme Court in the case of CIT v. Ghanshyam (HUF) (supra) and, thus, it was argued that the facts of the said of the Hon'ble Court is applicable to all similar cases prior to the assessment year 2010-11. It was, further, pointed out by the learned DR that the CIT (A) ought to have appreciated the facts of the judgment of the Hon'ble Apex Court in the case of Ghanshyam (HUF) (supra) as discussed by the assessing officer in the assessment orders wherein it was held that the interest on account of acquisition of land ....
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....ssessee. 4.2.2. In conclusion, it was prayed that there was no infirmity in the findings of the CIT (A) on the issue warranting interference. 5. We have carefully considered the rival submissions, perused the relevant materials on record and also the case laws on which either of the party have placed strong reliance. The property owned by the assessee was acquired by the Government by fixing the compensation to be paid for such acquisition at Rs. 53,658/acre as per the Acquisition Proceedings dated 7.3.1990. The compensation amount was enhanced to Rs. 3 lakhs per acre by the Civil Court which was, however, subsequently fixed at Rs. 2,75,000/- per acre by the Hon'ble jurisdictional High Court vide its judgment dated 24.10.2005. Based on the said judgment, the assessee had furnished his returns of income for the assessment years under dispute, admitting, among others, interest received on enhanced compensation on accrual basis by placing reliance on the judgment of the Hon'ble Supreme Court in the case of CIT v. Hindustan Housing & Land Development Trust Ltd [161 ITR 524 (SC)]. The AO has, after due consideration of the assessee's contentions, as recorded in the respective assessme....
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....me chargeable under the head 'capital gains' of the previous year in which the said amount came to be received. He accordingly, brought to tax the amount of enhanced compensation and the interest thereon received by the assessee in the year of receipt. On appeal, the CIT (A) accepted the assessee's contention and deleted the amount of enhanced compensation and interest thereon from the total income of the assessee. The Tribunal upheld the order the CIT (A). The High Court also dismissed the revenue's appeal. When the issue had finally reached before the Hon'ble Supreme Court for consideration, the Hon'ble Court, after duly analysing the provisions of sections, 2 (47), 45(1) (as it stood prior to 1.4.2004), 45(5) (as it stood prior to 1.4.2004), 45(5) after 1.4.2004, 155(6) after 1.4.2004, came to the conclusion that - "32. The issue to be decided before us - what is the meaning of the words 'enhanced compensation/consideration' in section 45(5)(b) of the 1961 Act? Will it cover 'interest'? These questions also bring in the concept of the year of taxability. 33. It is to answer the above questions that we have analysed the provisions of sections 23, 23(1A), 23(2), 28 and 34 of the....
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....ion, the provisions of the newly inserted (with effect from 1.4.2004) section 155 (16) by the Finance Act, 2003 (32 of 2003), have been enacted. 35. It was urged on behalf of the assessee that section 45(5) (b) of the 1961 Act deals only with re-working, its object is not to convert the amount of enhanced compensation into deemed income on receipt. We find no merit in this argument. The scheme of section 45(5) of the 1961 Act was inserted with effect from 1.4.1988 as an overriding provision. As stated above, compensation under the LA Act 1894, arises and is payable in multiple stages which does not happen in cases of transfers by sale etc. Hence, the legislature had to step in and say that as and when the assesseeclaimant is in receipt of enhanced compensation, it shall be treated as - deemed income' and taxed on receipt basis. Our above understanding is supported by insertion of clause (c) in section 45(5) with effect from 1.4.2004 and section 155(16) which refer to a situation of a subsequent reduction by the Court, Tribunal or other authority and re-computation/amendment of the assessment order. Section 45(5) read as a whole (including clause 'c') not only deals with re-working....
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.... assessment year 2002-03 in which the amount had been received. It was, therefore, held that the assessing officer was justified in assessing the amount of enhanced compensation along with interest thereupon in the year in which it was received..........................." 5.5. Further, we would like to refer to the observation of the CIT (A) that the judgment of the Hon'ble Supreme Court in Ghanshyam's case is distinguishable on the premise that 'In the Supreme Court case the enhanced compensation and the interest received by assessee was in dispute and is pending before the court and the assessee has received the amount against the security furnishing up to the satisfaction of the executing court [source: Page 9 of CIT (A)'s order]. However, the Hon'ble Supreme Court had explicitly clarified that "35. ........... 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." Thus, the judgment of the Hon'ble Apex Court is directly on the point and is not....