2024 (1) TMI 1076

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....ief facts of the case are that, the assessee filed return of income for the Assessment Year under consideration claiming refund of Rs. 1,39,820/-. The case of the assessee was selected for complete scrutiny on following issues:- (i) Income from other sources (ii) Refund claim (iii) Winnings from Lottery/Crossword Puzzle/House Races. The assessment was completed u/s 143(3) read with Section 143(3A) & 143(3B) of the Income Tax Act, 1961 ('Act' for short) vide order dated 24/03/2021 accepting the returned income filed by the assessee. Later on, on perusal of the assessment record, the Ld. PCIT noticed that the assessee received interest of enhanced compensation to the tune of Rs. 1,86,42,030/- u/s 28 of the Land Acquisition Act, 1894 and the A.O. did not conduct enquiry on the said issue, therefore, initiated proceedings u/s 263 of the Act. The order u/s 263 of the Act came to be passed on 30/12/2022, wherein held that the assessment order dated 24/03/2021 passed for the Assessment Year 2018-19 is erroneous, in so far as it is prejudicial to the interest of the Revenue. Accordingly, set aside the assessment order and directed to pass fresh assessment order. Aggrieved by the ord....

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....tery/Crossword Puzzle/House Races. 8. The assessee filed reply to the said notice on the issue of 'refund claim' and also other issues. The relevant portion of the reply given by the assessee in respect of the issue of 'refund claim' are as under:- "4. (ii) Refund Claim Interest u/s 28 of Land Acquisition Act 1894: 4.1 It may be noted that interest u/s 28 of the Land Acquisition Act 1894 awarded by the Court is a capital receipt being an integral part of enhanced compensation and is exempt u/s 10(37) of the Income Tax 1961 (the Act). In this case, the assesses owned ancestral agricultural land siluated villages Om Nagar Budhera in the district of Gurgaon, The agricultural fang belonging to the assessee had been acquired by the Government of Haryana for Master Water treatment plant. The Land Acquisition Collector by an award no 64 dated 21.12.2009 determined the compensation for the land. On a reference made by the landowners, including the Assessee, the Additional District Judge, by an order dated 16-11-2011, enhanced the compensation. This led to further appeals being filed before the Punjab & Haryana High Court where the compensation was further enhanced along with the s....

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....and section 28 of the Land Acquisition Act, 1894 are defined as under Section 34 of the 1894 Act reads as under: - "Payment of interest. When the amount of such compensation is not paid or deposited on or before taking possession of the land, the Collector shall pay the amount awarded with interest thereon at the rate of nine per centum per annum from the time of so taking possession until it shall have been so paid or deposited." The award of interest under section 34 of the 1894 Act is mandatory and is determined where there is delay in payment of either original or enhanced compensation. Interest under section 34 is for delay in making payment after the compensation amount is determined. Therefore, the interest awarded under section 34 of the Land Acquisition Act, 1894 is awarded for delay in payment of either original or enhanced compensation being mandatory in nature is revenue receipt and chargeable to tax as 'Income from Other Sources u/s 56 of the Income Tax Act. Section 28 of the 1894 Act reads as under: - "Collector may be directed to pay interest on excess compensation.-If the sum which, in the opinion of the Court, the Collector ought to have awarded as ....

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....on which reads as under:- "3. Enhance Compensation: The assessee has received of Land Acquisition Act of Rs. 3.32,27,840/- enhanced compensation the cheque received in Bank of Baroda. In which interest amount of Rs. 1,86,42,032/- on which TDS of Rs. 18,64,203/- was deducted. The assessee agricultural land situated in villages Om Nagar Budhera in the district of Gurgaon. The assessee received interest u/s 28 of the Land Acquisition Act 1894 awarded by the Court is a capital receipt being an integral part of enhanced compensation and is exempt u/s 10(37) of the Income Tax Act 1961". 11. After considering the reply given by the assessee, the Ld. A.O. satisfied that the amount so received under the Land Acquisition Act, 1894 has not been brought to the tax. By going through the above facts and circumstances, it is found that in the original assessment proceedings, the A.O. has already examined the issue of the refund claim which includes the issue of amount received by the assessee under the Land Acquisition Act. 12. From the above, it is observed that it is not a case wherein the Assessing Officer failed to conduct enquiry rather it is the case wherein the Assessing Officer ha....