TaxTMI 
TaxTMI 
2026 (3) TMI 674
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....n Collector has passed an award. Dissatisfied with that award, assessee filed a Reference bearing No. 25 dated 16.07.2007 for referring the case to Civil Court for determination of fair compensation qua agricultural land compulsorily acquired by the Land Acquisition Collector. Ultimately fair compensation was determined by the Civil Court and according to the AO, a sum of Rs. 2,06,01,408/- has been received as interest and enhanced compensation u/s 28 of the Land Acquisition Act. The AO brought to tax this compensation and therefore, he recorded reasons for re-opening of the assessment. The copy of the reasons is available on page Nos. 4 to 6 of the Paper Book. The AO, thereafter determined the taxable income of the assessee vide assessment order dated 30.11.2019 passed u/s 143(3) read with Section 147 of the Act. The AO has assessed 50% of alleged interest income received u/s 28 of the Income Tax Act as per Section 56 to (viii) and 57(iv) of the Income Tax Act. He determined the taxable income of the assessee at Rs. 1,18,42,346/- which include declared income of the assessee at Rs. 15,41,642/ -. 4. Appeal to the ld. CIT (Appeals) did not bring any relief to the assessee. 5. ....
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...."Para 16. the Court finds that they are distinguishable in their application to the facts of the present case. It is not as if the Additional CIT here has merely appended his signature without specifically noting his approval. This is also not a case where a "Yes" rubber stamp has been used as was in the case of Central India Electric Supply Co. (supra). For the purpose of Section 151(1) of the Act, what the Court should be satisfied about is that the Additional CIT has recorded his satisfaction "on the reasons recorded by the Assessing Officer that it is a fit case for the issue of such notice". In the present case, the Court is satisfied that by recording in his own writing the words: "Yes, I am satisfied", the mandate of Section 151(1) of the Act as far as the approval of the Additional CIT was concerned, stood fulfilled. Additionally, by his letter dated 22 March, 2011 the Additional CIT confirmed and reiterated his approval already granted on the Form ITNS-10," Thus, in the above case, Honorable Delhi High Court has considered use of phrase 'Yes, I am satisfied as sufficient enough mandate for section 151(2) of the Income tax Act. II. High Court of DELHI ....
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.... Court in Para 22 of the order again confirms the ration laid down in the case of Principal Commissioner of Income-tax- 6 v. Meenakshi overseas Pvt Ltd. [ITA 651/2015]. In the other word Hon'ble High Court recognized that, the use of phrase "Yes I am satisfied " will fulfill the mandate of the section 151 of the IT act. The said Para 22 of the order is reproduced as under :- "22. So far as the decision relied upon the Revenue in the case of Meenakshi Overseas Pvt. Ltd. is concerned, the same was a case where the satisfaction was specifically appended in the proforma in terms of the phrase- "Yes, I am satisfied". Moreover, paragraph 16 of the said decision distinguishes the approval granted using the expression "Yes" by citing Central India Electric Supply, which has already been discussed above. The decision in the case of Experion Developers P. Ltd. would also not come to the rescue of the Revenue as the same does not deal with the expression used in the instant appeal at the time of granting of approval." IV. IT AT DELHI BENCH in the case of Karishna Devi V.ITO, ward-38(3) [ITA NO.6356/DEL/20191 (Copy Enclosed) Vide aforesaid decision, the ....
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....Commissioner to be satisfied of reasons recorded by Assessing Officer that it was a fit case for issuance of such notice where notice was issued beyond expiry of 4 years - Held, yes - Whether thus, there was no requirement for Commissioner to record his own reasons and it would suffice that he recorded satisfaction regarding reasons recorded by Assessing Officer - Held, yes - Whether, therefore, impugned reopening notice issued against assessee was valid - Held, yes [Paras 11 and 13] [In favour of revenue]" 4.3 As argued during the course of hearing it is evident from the Page No. 3 of paper book filed by the assessee that the satisfaction has been recorded by approving authority i.e. Joint Commissioner of Income Tax by making following noting/remarks in the prescribed pro-forma. "Satisfied it is a fit case" The above noting as been made by the approving authority on the basis of reasons recorded by the Assessing Officer. In view of ratio laid down in above mentioned decisions, the approval given by Joint Commissioner of Income Tax under section 151(2) of this Act is in accordance of provisions of the I.T. Act. and the issue raised by assessee is found to....
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.... of Land Acquisition Act, the interest is part of enhanced value of the land, hence to be treated at par with the compensation/enhanced compensation. We take note of Section 28 of the Land Acquisition Act which reads as under : "28. 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 compensation is in excess of the sum which the Collector did award as compensation, the award of the Court may direct that the Collector shall pay interest on such excess at the rate of [nine per centum] per annum from the date on which he took possession of the land to the date of payment of such excess into Court." 9.1 The Hon'ble Supreme Court while discussing the Scheme of compensation under the Land Acquisition Act, 1894 has explained the meaning of this clause and we deem it appropriate to take note of the finding of the Hon'ble Supreme Court from paragraph No. 22 to 25, which reads as under : "22. Section 23(1A) was introduced in the 1894 Act to mitigate the hardship caused to the owner of the land who is deprived of its enjoyment by taking possession ....
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....hen the amount originally awarded has been paid or deposited and when the Court awards excess amount. In such cases interest on that excess alone is payable. Section 28 empowers the Court to award interest on the excess amount of compensation awarded by it over the amount awarded by the Collector. The compensation awarded by the Court includes the additional compensation awarded under Section 23(1A) and the solatium under Section 23(2) of the said Act. This award of interest is not mandatory but is left to the discretion of the Court. Section 28 is applicable only in respect of the excess amount, which is determined by the Court after a reference under Section 18 of the 1894 Act. Section 28 does not apply to cases of undue delay in making award for compensation [See: Ram Chand & others etc v. Union of India & Ors. - 1994(1) SCC 44]. In the case of Shree Vijay Cotton & Oil Mills Ltd. v. State of Gujarat - (1991) 1 SCC 262, this Court has held that interest is different from compensation. 24. To sum up, interest is different from compensation. However, interest paid on the excess amount under Section 28 of the 1894 Act depends upon a claim by the person whose land is acquire....
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....isition Collector. In order to compensate the assessee, interest u/s 28 has also been granted which provides that Land Acquisition Collector would pay interest on such excess compensation @ 9% per annum from the date it took possession of the land to the date of payment of such excess, thus on the difference of Rs. 21,40,000/- minus (-) Rs. 6 lacs, interest was required to be calculated @ 9% from the date of possession till the payment. The Hon'ble Supreme Court construed this interest u/s 28 of the Land Acquisition Act considered towards insufficiency of compensation in comparison of value of land. This interest u/s 28 is not for delay in making payment, rather to compensate a land owner qua lower compensation granted by the Land Acquisition Collector. Thus, the alleged interest u/s 28 granted to the assessee deserves to be treated as compensation and not simpliciter interest as construed by the Income Tax Department u/s 2(28A) of the Income Tax Act. 10.1 There is no dispute with regard to the fact that this amount is taxable in the year of receipt as contemplated in Section 45(5). This has also been decided by the Hon'ble Supreme Court in the case of Shri Ghanshy....
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....uestions 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 1894 Act. As discussed hereinabove, Section 23(1A) provides for additional amount. It takes care of increase in the value at the rate of 12 % per annum. Similarly, under Section 23(2) of the 1894 Act there is a provision for solatium which also represents part of enhanced compensation. Similarly, Section 28 empowers the court in its discretion to award interest on the excess amount of compensation over and above what is awarded by the Collector. It includes additional amount under Section 23(1A) and solatium under Section 23(2) of the said Act. Section 28 of the 1894 Act applies only in respect of the excess amount determined by the court after reference under Section 18 of the 1894 Act. It depends upon the claim, unlike interest under Section 34 which depends on undue delay in making the award. It is true that "interest" is not compensation. It is equally true that Section 45(5) of the 1961 Act refers to compensation. But as discussed hereinabove, we have to go by the provisions of the 18....
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....uent reduction by the Court, Tribunal or other authority and recomputation/amendment of the assessment order. Section 45(5) read as a whole (including clause "c") not only deals with reworking as urged on behalf of the assessee but also with the change in the full value of the consideration (computation) and since the enhanced compensation/consideration (including interest under Section 28 of the 1894 Act) becomes payable/paid under 1894 Act at different stages, the receipt of such enhanced compensation/consideration is to be taxed in the year of receipt subject to adjustment, if any, under Section 155(16) of the 1961 Act, later on. Hence, the year in which enhanced compensation is received is the year of taxability. 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. This is the scheme of Section 45(5) and Section 155(16) of the 1961 Act. We may clarify that even before the insertion of Section 45(5)(c) and Section 155(16) w.e.f. 1.4.04, the rece....
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.... section 2; (ii) such land, during the period of two years immediately preceding the date of transfer, was being used for agricultural purposes by such Hindu undivided family or individual or a parent of his; (iii) such transfer is by way of compulsory acquisition under any law, or a transfer the consideration for which is determined or approved by the Central Government or the Reserve Bank of India; (iv) such income has arisen from the compensation or consideration for such transfer received by such assessee on or after the 1st day of April, 2004. Explanation. - For the purposes of this clause, the expression "compensation or consideration" includes the compensation or consideration enhanced or further enhanced by any court, Tribunal or other authority; 11. It was contended before us that Section 2(14) provides the definition of Capital Asset. It excluded agriculture land where agriculture activities are being carried out. But if the agriculture land falls within the ambit of 8 Kms. of the Municipal Limit, as provided in the definition, then it would not be excluded from the ambit of Capital Asset and on transfer of such a capital asset....