TaxTMI 
TaxTMI 
2025 (6) TMI 146
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.... is prejudicial to the interest of the Revenue in terms of Explanation 2 of section 263 and the assessment order was set aside with a direction to pass a fresh order in accordance with law. The Ld. Counsel submits that the assessment order passed by the AO was held to be erroneous for the reason that the AO failed to consider the decision of Jurisdictional High Court in the case of Mahendra Pal Narang Vs. CBDT, on the taxability of interest on additional compensation received by the assessee under the Land Acquisition Act. 3. The Ld. Counsel further referring to page 11 & 12 of the Paper Book submitted that in the course of assessment proceedings the Assessing Officer issued notice u/s 142(1) dated 26.10.2020 along with Annexure, wherein the AO required the assessee to furnish bank statement highlighting the amounts received from Government by way of compensation, how the amount is accounted for in the ITR, if claimed exempt to provide reason and under which section the exemption was claimed. Ld. Counsel for the assessee referring to page 14 of the Paper Book submits that the assessee has furnished reply to the said notice giving the details of compensation received and stated t....
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....arma vs Pr CIT in ITA NO. 357/D/2023 vide order dt. 24.01.2024." 5. On the other hand, the Ld. DR submits that issue is squarely covered by the decision of the Jurisdictional High Court in the case of Mahendra Pal Narang Vs. CBDT and therefore there is no scope for taking different views in this case. Ld. DR submitted that there are no two views possible and therefore the assessment order was rightly held to be erroneous and prejudicial to the interest of the Revenue for not considering the decision of the Jurisdictional High Court by the AO while completing the assessment. 6. Heard rival submissions, perused the orders of the authorities below. The Ld. PCIT passed order u/s 263 of the Act holding that the assessment order passed u/s 143(3) dated 02.02.2021 was erroneous and prejudicial to the interest of the Revenue for the reason that the AO failed to conduct necessary enquiries and to consider the judgment of the Jurisdictional High Court in the case of Mahendra Pal Narang Vs. CBDT with regard to the exemption claimed u/s 10(37) in respect of the interest received by the assessee on additional compensation under Land Acquisition Act. 7. We find that identical issue came....
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....the issue of enhanced compensation and interest received under the Land 7ITA i503/Del/2023 Acquisition Act. In the instant case the A.O. has conducted the enquiry and adopted one of the two views which was plausible. In the case of Jai Singh Karwal vs PCIT Rohtak ITA No. 1963 /Del/2024the Coordinate Bench held that: "10. Further, the Hon'ble Supreme Court in the case of Pr. CIT vs. Canara Bank Securities Ltd., S.L.P.(C) No. 25651 of 2019, vide order dated 14th October, 2019 dismissed the Department's appeal affirming the view taken by the Bombay High Court in ITA No. 1761 of 2016, dated February 11, 2019, wherein the High Court held that the question whether the income should be taxed as business income or has arisen from other source was a debatable issue and the Assessing Officer had taken the plausible view that it was a business income after due enquiries and therefore it is not open for the Commissioner to take such an order in revision. Even in the present case, whether the receipt of interest related to the additional compensation granted under Land Acquisition Act, 1894 is a part of exempt u/s 10 (37) of the Act or not is a debatable issue, therefore, follo....
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....lowing citation in support of the argument before the A.O. Jai Singh Karwal, Vs. PCIT a) CIT Vs Ghanshyam HUF (2009) 315 ITR 0001 b) C.I.T. vs. Govindbhai Mamaiya (2014) 367 ITR 0498 (SC) c) State of Punjab vs. Amarjit Singh (2011) 4 SCC 734 d) Commissioner of Income Tax Vs. Chet Ram HUF Civil Appeal No.13053/2017 dated. Sept. 12,2017 e) Union of India and Ors Vs Hari Singh and Others Civil Appeal No. 15041 of 2017 Dt. 15.09.2017 f) Income Tax 0fficer-TDS2, Rajkot Vs Muktanandgiri Maheshgiri Civil Appeal No. 27333 of 2017 Dt. 10.11.2017. 8. After considering the reply given by the Assessee, the Ld. A.O. satisfied that the amount so received under the Land Acquisition Act, 1894 is not deserves to be brought to tax. 9. Thus, it is observed that, in the above assessment proceedings initiated u/s 147/148 of the Act, the A.O. has already examined the issue of interest received by the Assessee on the enhanced compensation under the Land Acquisition Act. Therefore, it is not a case wherein the Assessing Officer failed to conduct enquiry, rather it is the case where the Assessing Officer has conducted an enquiry and ad....
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.... 11. In the result, appeal filed by the Assessee is allowed. Order pronounced in open Court on 12th November, 2024." 9. In the case of J. Parkash Vs. PCIT, Rohtak in ITA No.1675/Del/2023 dated 15.04.2024 the Tribunal held as under: "7. We have heard the rival contentions and perused the material available on record and also gone through the orders of the authorities below. 7.1 We find plausible reasons in the contention of the Ld. AR that that the issue under consideration is no longer res integra, in as much as that identical issue arises into the case of other individuals namely Gulshan Kumar S/o Mohari Ram, wherein exactly similar and identical order has been passed by the Ld. PCIT, Rohtak u/s. 263 of the Act and our Coordinate Bench in ITA No. 1676/Del/2023 (AY 2018-19)- Gulshan Kumar vs. Pr. CIT, Rohtak vide order dated 13.02.2024 has decided the issue in favour of assessee, a copy of which has been placed on record. In order to impart completeness, we may hereinafter, refer to the relevant discussions in Tribunal order dated 13.2.2024 for AY 2018-19 :- "10. We have considered the submission of the parties and perused the records. The f....
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....n accrual/cash basis on the basis of accounting principles as held by the decision of Hon'ble Supreme Court in Rama Bai vs. CIT (1990) 181 ITR 400. It was also explained that insertion of section 145A, 145B, 56(2)(viii) and 57(iv) by the Finance (No.2) Act. 2009g did not change the character of interest under section 28 of the Land Acquisition Act from capital receipt forming part of enhanced compensation as envisaged in section 45(5) of the Act to revenue receipt' chargeable to tax as income from other sources. It was also explained to the Ld. PCIT that after analysing the provisions of section 28 and 34 of Land Acquisition Act the Hon'ble Supreme Court held in the case of Ghanshyam HUF that interest is different from compensation. However, interest paid on the excess amount under section 28 depends upon a claim by a person whose land is acquired whereas interest under section 34 is for delay in making payment. This vital difference needs to be kept in mind in deciding this matter. Interest under section 28 is part of the amount of compensation whereas interest under section 34 is only for delay in making payment after the compensation amount is determined. Interest under ....
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....f the Act. An application under section 264 was made claiming that by mistake the assessee treated the interest income as income from other Sources whereas the same is part of enhanced compensation. The revisional authority rejected the application under section 264 on 30.1.2019. It was in this factual matrix that the assessee filed writ petition before the Hon'ble P & H High Court. The question for consideration was "whether after the insertion of section 56(2)(vii) and 57 (iv) of the Act w.e.f. 01.04.2010, can the assessee claim that interest received under section 28 of the Land Acquisition Act, 1894 will partake the Character of the compensation and would fall under the head "capital gain and not income from other sources" ? It was argued by the assessee that there is no amendment in section 10(37) and by insertion of sections 56(2)[viii) and 57(iv), the nature of interest under section 28 of the compensation and decisions of the Hon'ble Supreme Court in the case of 1894 Act will remain that of Ghanshvam (HUF) and the decision of Hon'ble Guirat High Court in Movaliya Bhikhubhai Balabhai vs. ITO TDSS (2016) 388 ITR 343 were relied upon. 15. It may be mentioned that ....