TaxTMI 
TaxTMI 
2023 (6) TMI 1545
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....racted below:- "2. On a perusal of the assessment record of the assessee, it was observed as under: (i) During F.Y.2012-13(A.Y.2013-14), the assessee received an additional sum comprising of compensation for value of land of Rs. 56,99,12,543/- and interest thereon amounting to Rs. 47,66,44,977/- vide award dated 13.09.2012 treating compensation as well as the entire interest income under the head Long Term Capital gain. The interest received of Rs. 47,66,44,977/- on delay payment of compensation of Rs. 56,99,12,543/- for compulsory land acquisition during the year has been treated under the head income from LTCG instead of income from business or income from other sources as per provision of sec. 145A(b) of the IT Act, 1961. The same was allowed in the assessment which has resulted in underassessment of business income by an identical amount with consequent potential tax effect of Rs. 15,46,47,463/- (ii) LTCG of Rs. 91,97,43,881/- was available to be set off till A.Y.2013-14 but the assessee company was allowed set off of LTCL of Rs. 102,98,41,167/- of A.Y.2006- 07 thereby resulting in excess set off of LTCL of Rs. 11,00,97,286/- with consequent tax effec....
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....2 (iv) above. Thereafter he issued show-cause notice u/s 263 of the Act to the assessee as to why the assessment order should not be revised and finally set aside the assessment framed by the Assessing Officer by directing the Assessing Officer to frame the assessment afresh after providing reasonable opportunity to the assessee. 4. The ld. A/R vehemently submitted before us that the ld. Pr. CIT has wrongly exercised the revisionary jurisdiction so far as the issue raised in para 2 (i) & 2(iii) are concerned, due to which the assessment framed by the Assessing Officer cannot be said be erroneous. The ld. A/R contended that the order passed u/s 263 of the Act may kindly be modified to the extent the same relates to the issues as stated in para 2 (i) and 2 (iii) of the revisionary order. In defense, the ld. A/R relied on the judgment of the Hon'ble Jurisdictional High Court of Calcutta in the case of CIT vs. Polar Fan Industries Ltd. reported in 197 ITR 718 (Calcutta). 4.1. The ld. A/R stated that the issues raised in para 2 (i) of the revisionary order relates to the taxability of enhanced compensation of Rs. 47,63,44,577/- (and not Rs. 47,66,44,977/-). The ld. A/R contended t....
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....the ld. Pr. CIT, may kindly be modified so far as the issues discussed by the ld. Pr. CIT in para 2 (i) and 2 (iii) of the revisionary order are concerned. 5. The ld. D/R on the other hand heavily relied on the order passed by the ld. Pr. CIT passed u/s 263 by submitted that the interest on enhanced compensation received is not taxable as income from long term but as income from other sources. The ld. D/R also drew our attention to the fact that by treating the interest under the head capital term capital gain, the assessee seeks to set off the huge brought forward losses and, therefore, it is a sham transaction intended and initiated for the purpose of evading the tax liability and for availing the benefit of set off of losses against the said amount. Had the income been assessed under the head income from other sources which is the true character of the income, the said provisions for set off of losses against the said amount would not have been available to the assessee. 5.1. The ld. D/R in defense of his arguments relied on the decision of the Hon'ble Punjab & Haryana High Court in the case of Mahender Pal Narang v. Central Board of Direct Taxes, New Delhi reported in [20....
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.... passed by the Assessing Officer was erroneous insofar as it was prejudicial to the interest of the revenue on the three other counts, namely :- i. Assessee set of long-term capital loss of Rs. 102,98,41,167/- with consequent tax effect of Rs. 2,37,92,336/-. ii. Additional interest of Rs. 4,94,32,713/- included in the compensation is required to be treated as business income or income from other sources. iii. Bad debt written off to the tune of Rs. 3,63,43,711/- was allowed as Rs. 3,66,67,920/- thereby allowing excess deduction of Rs. 3,24,209/-. According to the assessee, the order of the ld. Pr. CIT is wrong and invalid so far as the exercise of jurisdiction relates to issue no. 1 & 3 i.e., interest on additional compensation or enhanced compensation. 7.1. It is also pertinent to note that the amount of compensation awarded by the arbitrator vide award dt. 13/09/2012 has been deposited with the Registrar of the Hon'ble High Court and assessee has not received even a penny out of the said compensation. Having perused the nature of interest and the fact that the said interest is awarded on the enhanced compensation by the arbitrator, we are of the c....
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....ources. The first respondent Income Tax Officer seeks to tax the interest received by the petitioner under section 28 of the Act of 1894 as income from other sources under section 56(2) (viii) read with section 145A(b) of the I.T. Act. In the opinion of this court, in the light of the law laid down by the Supreme Court in the case of Ghanshyam (HUF) (supra), the interest received under section 28 of the Act of 1894 would not fall within the ambit of the expression "interest" as envisaged under section 145A(b) of the I.T. Act, inasmuch as, the Supreme Court in the above decision has held that interest under section 28 of the Act of 1894 is not in the nature of interest but is an accretion to the compensation and, therefore, forms part of the compensation. It was argued on behalf of the Revenue before the Hon'ble Gujarat High Court in the above mentioned case of Movaliya Bhikhubhai Balabhai vs. ITO, that the decision of Hon'ble Supreme Court in the case of Ghanshyam (HUF) was rendered prior to the substitution of section 145A of the I.T. Act by Finance (No. 2) Act, 2009 with effect from 1st April, 2010, and hence, would have no applicability cases pertaining to AY 2010-11 ....