Just a moment...

Report
FeedbackReport
Bars
×

By creating an account you can:

Logo TaxTMI
>
Feedback/Report an Error
Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters0/2000
TMI Blog
Home / RSS

2008 (2) TMI 397

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....nishing security in terms of the interim order passed by the appellate authority till the final decision of the appeal filed by the State, challenging the award of enhancing the additional compensation. 2. The appellants have questioned the aforesaid decision of the Appellate Tribunal on the ground that it has failed to consider the basic fact that the amount of additional compensation received by the assessee under the interim order of the appellate court on furnishing security cannot be considered to have been received by the assessee in the year of receipt, which has not become final and against which the appeal is pending. The expression "received" as existing in section 45(5)(b) of the Act would mean received in pursuance of the accrual of right to receive as a result of or in consequence of a decision given by a court, Tribunal or authority settling the lis between the claimant and the State finally. The word "received" cannot be given a meaning of physical receipt of additional compensation without any right or title conferred upon the claimant by the adjudicatory process of the court, the Tribunal or authority. According to the appellants, the additional compensation is c....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....s of the different High Courts, including the Karnataka High Court in the case of Chief CIT v. Smt. Shantavva [2004] 267 ITR 67, it was held that section 45(5)(b) would be attracted only when the assessee receives the enhanced compensation in pursuance of final award/order of a court, Tribunal or other authority increasing the compensation and not on the actual receipt of the said amount under the interim order passed by the appellate court. All those appeals filed by the Revenue, i.e., Income-tax Appeal No. 322 of 2004 and other connected appeals were dismissed by this court in CIT v. Prem Singh (I. T. A. No. 695 of 2005 decided on May 16, 2007), while observing as under: "At the outset, learned counsel for the assessee contended that the question of law raised in the present appeals is squarely covered by the decision of this court in CIT v. Karanbir Singh [2007] 303 ITR 231, as these appeals also involved the same question of law as has been decided in the aforesaid case (supra). However, Mr. Putney, learned counsel appearing for the Revenue has contended that the amendment in section 45(5) of the Income-tax Act, 1961 (for short 'the Act'), has not been noticed in the said jud....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....v. C. P. Lonappan and Sons [2004] 265 ITR 101 (Ker); (vi) CIT v. Laxman Dass [2000] 246 ITR 622 (All) ; and (vii) Anil Kumar Forma (HUF) v. CIT [2007] 289 ITR 245 (Mad). 7. On the other hand, Mr. Yogesh Putney, advocate, learned counsel for the Revenue submitted that neither in the case of the Karnataka High Court in Smt. Shantavva [2004] 267 ITR 67 nor in the Division Bench decisions of this court in Prem Singh (I. T. A. No. 695 of 2005 decided on May 16, 2007) and CIT v. Karanbir Singh, Rajinder Kuti's case [2007] 303 ITR 231, or any other judgment cited by learned counsel for the appellants, the effect of the provision of clause (c) of section 45(5) of the Act and sub-section (16) of section 155 of the Act, which were inserted by the Finance Act, 2003, with effect from April 1, 2004, was considered. However, both these provisions have been taken into consideration by the learned Appellate Tribunal, while passing the impugned order. 8. For ready reference, both the aforesaid provisions are reproduced herein below: "45.(5)(c) Where in the assessment for any year, the capital gain arising from the transfer of a capital asset is computed by taking the compensation or considerat....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....fect from April 1, 1988. Thereafter, sub-section (5) of section 45 of the Act was added, vide the Finance Act, 1987, with effect from April 1, 1988, to charge the compensation enhanced or further enhanced. However, even this provision was not adequate to deal with the situation where the enhanced compensation was reduced on appeal. Therefore, clause (c) in sub-section (5) of section 45 of the Act was inserted by the Finance Act, 2003, with effect from April 1, 2004, which provides that "Where in the assessment for any year, the capital gain arising from the transfer of a capital asset is computed by taking the compensation or consideration referred to in clause (a) or, as the case may be, enhanced compensation or consideration referred to in clause (b), and subsequently such compensation or consideration is reduced by any court, the Tribunal or other authority, such assessed capital gain of that year shall be recomputed by taking the compensation or consideration as so reduced by such court, the Tribunal or other authority to be the full value of the consideration." Learned counsel further submitted that for recomputation of capital gain in the case of reduction in compensation, a ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....existing in section 45(5)(b) of the Act mean received in pursuance of the accrual of right to receive as a result of or in consequence of a decision given by a court, the Tribunal or authority settling the lis between the claimant and the State. Learned counsel submitted that the expression "received" cannot be given a meaning of physical receipt of additional compensation without any right or title conferred upon the claimant by the adjudicatory process of the court, authority or the Tribunal. "Received" means lawfully received or received under a legal title. He submitted that the enhanced compensation received under the conditional order of the court cannot be taken as income received because the order is liable to be varied, reversed or set aside. Such temporary arrangement cannot give rise to "accrual" of income. Learned counsel submitted that as far as application of clause (c) of section 45(5) and sub-section (16) of section 155 of the Act, which were inserted by the Finance Act, 2003, is concerned, these clauses will not be applicable and taken into consideration while deciding the present appeals, which pertain to the assessment years 1994-95 to 1998-99, because these prov....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....t is received after stay of the award, in pursuance of any interim order, as payment subject to the final result, it will not be an amount received as enhanced compensation under section 45(5) (b). This provision will be attracted only when the final decision is rendered by the appellate or other authority. In these decisions, the decision of the Supreme Court in Hindustan and Land Development Trust Ltd. [1986] 161 ITR 524 was constantly followed. We do not see any reason to have a contrary view to these judgments, which have already been followed by this court in Karanbir Singh, Rajinder Kuti's case [2007] 303 ITR 231, and Prem Singh (I. T. A. No. 695 of 2005) decided on May 16, 2007). 13. In these appeals, learned counsel for the Revenue has argued that the two provisions, i.e., clause (c) of section 45(5) and sub-section (16) of section 155 of the Act, which have been inserted by the Finance Act, 2003, and which have changed the entire dimension, have not been considered. After the introduction of these two provisions, the view taken by this court and the other courts in the aforesaid judgments is not sustainable. It is the case of the Revenue that both these provisions are pro....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....y stated that this amendment will take effect from April 1, 2004, and will, accordingly, apply in relation to the assessment year 2004-05 and subsequent years. Similarly, sub-section (16) to section 155 of the Act was introduced with effect from April 1, 2004, and as per Note [published in [2003] 260 ITR 166] the amendment was to apply in relation to the assessment year 2004-05 and subsequent years. If the legislation wanted to insert these clauses with retrospective effect, it could have been so stated in the Amending Act. Previously, when sub-section (7A) to section 155 of the Act was inserted by the Finance Act, 1978, it was specifically mentioned that it was inserted with retrospective effect from April 1, 1974. If the legislation wanted to insert these clauses with retrospective effect, it could have been so mentioned in the Amending Act, but when specifically the legislation has mentioned that these clauses have been inserted with effect from April 1, 2004, and will be applicable in relation to the assessment year 2004-05 and not prior to that, then these clauses cannot be given retrospective operation merely on the ground that these are declaratory in character. It is settle....