AI Drafter 
TaxTMI 
TaxTMI 
2015 (10) TMI 1898
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....crutiny under CASS and statutory notice u/s 143(2) dated 21.8.2010 was issued and duly served upon the assessee. Thereafter fresh notices u/s 142(1) of IT Act along with a questionnaire was issued and served upon the assessee. In response to the same, the AR of the assessee attended the proceedings from time to time and filed written submissions. Required details were called for. These were examined and case was discussed with him and assessment was completed u/s 143(3) on 29.12.2011. 3. The assessee is an individual and a co-owner of 12.5% share, in an undivided property bearing no. 8, Jantar Mantar, New Delhi, admeasuring approximately 10800 square metre. The property was acquired by Land Acquisition Collector (LAC) New Delhi, in the financial year 2000-01 for Delhi Metro Rail Project. The Land Acquisition Collector determined a compensation of Rs. 3,48,19,915/-, the capital gain on which was returned by the assessee in assessment year 2003-04. The assessee filed an appeal before the Additional District Judge (ADJ) for enhancement of compensation. The Additional District Judge (ADJ) passed an order dated 18/08/2008 pursuant to which the compensation has been enhanced by Rs. 14....
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....compensation being finally determined in the Court of law. He relied on the following case laws. (i) CIT vs. Hardwari Lal 312 ITR 151 (P & H) (ii) CIT vs. Smt. T. Girija Ammal 282 ITR 614((Mad) (iii) CIT vs. Padam Parkash (HUF) 104 ITD 1 (Del) (SB) (iv) CIT vs. Hindustan Housing & Land Development Trust Ltd. 161 ITR 524 (SC) 8. He also relied on the explanatory notes introducing to the provisions of the Finance No. 2 Act, 2009 and Circular No. 5/2010/[F.No. 142/13/2010-SO(TPL)] dated 3.6.2010 for the proposition that, interest income should be computed on accrual basis as held by the Hon'ble Supreme Court in the case of Smt. Rama Bai vs. CIT 181 ITR 400. Hence he argued that, as the compensation and interest thereon is sub-judice before the Hon'ble Delhi High Court, the question of taxing the same as income in the current year does not arise. 9. The ld. DR Mr. Robin Rawal on the other hand, opposed the contentions of the assessee and submitted that the assessee filed an appeal with the help of professionals and has offered the income in question to tax voluntarily. He submitted that the AO cannot be blamed at all, for the reason that, he ha....
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.... Hence we confine ourselves only to the issue of taxability or otherwise, of the interest on compensation, which is admittedly subjudice before the Hon'ble Delhi High Court. 13. In this case the assessee has filed a return of income, wherein he declared income from interest on enhanced compensation. Such a declaration of interest income on disputed enhanced compensation, under the facts and circumstances of the case, is against the propositions of law laid down by various Courts. Such disputed interest income cannot be taxed in the impugned Assessment Year. 13.1. This is clear from the following case laws which have laid down the law on this issue. 1). CIT vs. Hindustan Housing & Land Development 161 ITR 524: "Business - dealing in land - compulsory acquisition of land - additional compensation fixed by arbitrator - appeal by government against award - amount deposited in Court - assessee permitted to withdraw only on furnishing security - additional compensation does not accrue and not taxable as profit at that state. Income - accrual - compulsory acquisition of land - right to enhanced compensation is an inchoate right - additional compensation does not ac....
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....'s land was acquired under provision of Land Acquisition Act, 1894 and enhanced compensation was granted to assessee by Appellate Court, enhanced compensation was to be taxed in the year of receipt, notwithstanding that order under which compensation and interest was received, was challenged before higher courts and litigation was pending Held Yes. Sec.5 of the Act Income accrual of AY 1995-96, 1998-99, 1999-2000 - whether where a dispute relating to interest payable to assessee under provisions of Land Acquisition Act, 1894 and enhanced compensation was pending before a Court of law and had not attained finality, same would not accrue and could be subjected to tax only after it was finally determined Held Yes." 3) Dy.CIT vs. Shri Bhim Singh Lather, Karnal: 2005-TIOL-97-ITAT-DEL: "The assessee had received the additional compensation in the year under consideration pursuant to the judgment of the Addl. District Judge, Karnal and, therefore, it would be chargeable to tax in the year of receipt as per the provisions of sec. 45(5) of the Act irrespective of the fact that the additional enhanced compensation is subject matter of further litigation, (Para 28) ....
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....not fully redeemed but remains active, which he prosecutes in the civil court. This, however, does not meant that the valuation of this right done by the civil court subsequently would be its valuation as age the relevant date of the purpose of either the E.D. Act or the W.T. Act. It is the duty of the Assessing authority under either of those enactments to evaluate the property (the right to receive compensation at market value on the date of the relevant notification) as on the relevant date (i.e. the date of death under the E.D. Act or the valuation date under the W.T. Act. Act No such situation is appearing in this case for estimating the right or compensation and, therefore, reliance on the decision of Supreme Court in the case of Mrs. Khorshed Shapoor Chennai (supra) is misplaced and is of no help to the Revenue. In may opinion, therefore, the interest though would be chargeable on year to year basis but only when the right disputed by the parties is finally settled by the court, Tribunal or any authority and since in this case the matter is pending in the High Court in the relevant year no right to receive compensation or to interest accrued to the assessee and consequently,....
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.... and which can be lawfully assessed under the Act. The law empowers the Income-tax Officer to assess the income of an assessee according to law and determine the tax payable thereon. In doing so, he cannot assess an assessee on an amount, which is not taxable in law, even if the same is shown by an assessee. There is no estoppel by conduct against law nor is there any waiver of the legal right as much as the legal liability to be assessed otherwise than according to the mandate of the law (sic). It is always open to an assessee to take the plea that the figure, though shown in his return of total income, is not taxable in law." 3). In the case of Nirmala L Mehta vs. A Balasubramaniam, CIT and others reported in 269 ITR p.185, the Hon'ble Bombay High Court has held as under. "The problem arose because the petitioner in her return for the assessment year 1988-89 filed on June 30, 1988, offered the prize money of the lottery to tax rather a fundamental error of law on the part of the assessee, but that error of law once detected by the petitioner, it was urged before the Commissioner of Income Tax that the prize money earned by the Petitioner could not be taxed under....