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October, 18th 2019

Referred Sections:
Section 143(3) of the Income-tax Act, 1961.
Section 28 of Land Acquisition Act 1894
Section 23(2)
Section 45(5)
Section 10(37)
Section 194LA of the Act.

Referred Cases / Judgments:
CIT vs Ghansham (HUF) 182 taxman.com 368


              IN THE INCOME TAX APPELLATE TRIBUNAL
                   DELHI BENCH `E', NEW DELHI

 
              BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER &
             SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER


                      . / ITA No.5986/Del/2016
                    [ [ / Assessment Year 2013-14


Mahesh Kumar Gupta,
S/o-Shri Tara Chand Gupta,
B-4, Sector-44, Noida.
PAN-ADMPG6786A                                    ........../Appellant
vs
The DCIT,
Circle-2, Ayakar Bhawan,
A-2D, Sector-24,
Noida-201301.                                ............. × / Respondent

    / Appellant by : Sh. Mahesh Kumar Gupta, Assessee
×    / Respondent by : Ms. Rakhi Vimal, Sr.DR


   /                                      /
Date of Hearing :    16.10.2019        Date of Pronouncement:   16.10.2019



                                       / ORDER

PER SUSHMA CHOWLA, JM:


       The    appeal    filed     by   assessee     is    against     order    of

CIT(A)-1, New Delhi, dated 30.08.2016 relating to          assessment        year
                                                                     ITA No.5986/Del/2016
                                                                  Assessment Year 2013-14




2013-14 passed under section 143(3) of the Income-tax Act, 1961.


2.    The only issue raised in the present appeal is against the

assessibility of the amount received u/s 28 of the Land Acquisition Act (in

short "Act").


3.    The Ld.AR for the assessee pointed out that land of the assessee

was acquired against which it received compensation u/s 28 of the Act,

which was part of additional compensation received and not taxable. He

also pointed out that portion of similar land was acquired in the case of

his cousin brother Sh. Satish Kumar Gupta and the issue has been

decided by the Tribunal.


4.    The Ld. DR for the Revenue placed reliance on the orders of the

authorities below.


5.    We have heard the rival contentions and perused the record.          The

issue which arises in the present appeal is against the amount received

u/s 28 of the LAC Act i.e. enhanced compensation.         The claim of the

assessee    is   that   such   enhanced   compensation   was   part   of   the

compensation and was not taxable in his hands. However, the case of the

Revenue is that the same is to be taxed as interest in the hands of the

assessee.


6.    We find that similar land (other portion) was acquired in the hands

of the cousin brother of the assessee i.e. Sh. Satish Kumar Gupta. The


                                                                      Page | 2
                                                                    ITA No.5986/Del/2016
                                                                 Assessment Year 2013-14



Tribunal in bunch of appeals with lead order in the case of Sh.

Amar Chand Gupta in ITA No.5367/Del/2018 relating to Assessment

Year 2014-15 and others including in the case of Sh. Satish Kumar Gupta

in ITA No.1707/Del/2018 relating to Assessment Year 2013-14, vide

order dated 14.08.2019 has decided the said issue. The Relevant finding

of the order of the Tribunal are as under:-


      6.    "We have heard both the parties and have gone through the
      material placed on record. We find that in all these appeals, it is an
      admitted fact that the assessees had received interest u/s 28 of
      Land Acquisition Act on enhanced compensation. The Hon'ble
      Supreme Court in the case of CIT vs Ghansham (HUF) 182
      taxman.com 368 has clearly held that interest received by the
      assessee in view of section 28 of Land Acquisition Act 1894 is part
      of the compensation and therefore was not taxable.       The Hon'ble
      Delhi Bench of the Tribunal in the case of Shri Opinder Singh Virk,
      vide order dated 14/03/2019 has dealt with the decision of the
      Hon'ble Supreme Court in the case of Chet Ram (HUF) as well as the
      case laws of Ghanshyamdas and after analysing the same             has
      again held that interest receipt on enhanced compensation u/s 28 of
      the Land Acquisition Act is in the nature of compensation. We further
      find that Hon'ble Delhi Tribunal vide order dated 09/08/2019 in the
      case of Shri Manish Yadav in ITA No.3836/Del/2016 has taken
      cognisance of the order of the Hon'ble Delhi Tribunal in the case of
      Shri Opinder Sing Virk and has dismissed the appeal of the Revenue
      by holding as under:-

             "4. We have heard rival parties and have gone
             through the material placed on record. We find that it is
             an undisputed fact that assessee has received interest
             u/s 28 of Land Acquisition Act, 1894. The Hon'ble Apex
                                                                     Page | 3
                                                               ITA No.5986/Del/2016
                                                            Assessment Year 2013-14



Court in the case of CIT vs Ghanshyam(HUF) 182
taxman 368 has clearly held that interest received by
the assessee in view of section 28 of Land Acquisition
Act 1894 is part of the compensation and therefore was
not taxable.   The Hon'ble Delhi Bench of the Tribunal
in the case of Shri Opinder Singh Virk, vide order dated
14/03/2019 has dealt with the decision of the Hon'ble
Supreme Court in the case of Chet Ram (HUF) as well
as   the case laws        of    Ghanshyamdas          and   after
analysing the same         has again held that interest
receipt on enhanced compensation u/s 28 of the Land
Acquisition Act is in the nature of compensation. The
finding of the Hon'ble Tribunal as reproduced below:-

     "8. We have gone through the orders of the
     authorities below in the light of the arguments on
     either side and the decisions of the Hon'ble Apex
     Court cited above. In the case of Ghanshyam
     (supra), the Hon'ble Supreme Court held in
     unequivocal terms that the additional amount u/s
     23(1A), solatium under section 23(2) and interest
     on excess compensation u/s 28 of the Land
     Acquisition    Act        form   part       of   enhanced
     compensation    u/s       45(5)(b)   and,    therefore,   is
     subject to tax u/s 45(5) in the year of receipt. No
     contrary view is taken by the Supreme Court in the
     subsequent judgments and as on the date, law is
     fairly settled that the amount of interest received
     u/s 28 of the land Acquisition Act is in the nature
     of capital gain. In the case of Hari Singh (supra)
     while dealing with the similar question under
     identical set of facts while setting aside the matter
                                                                Page | 4
                                                   ITA No.5986/Del/2016
                                                Assessment Year 2013-14








to the file of the AO to examine the facts of the
case and to apply the law as contained in the
Income-tax Act, Hon'ble Supreme Court specifically
directs that in case the learned AO finds that the
compensation was received in respect of the
agricultural land, the tax deposited with the
Income-tax Department shall be refunded to the
assessee. Hon'bleSupreme Court gave the above
direction after noticing the decision in the case of
Ghanshyam (supra).

9. In this set of circumstances, it does not admit of
any doubt as to the nature of receipt by way of
interest u/s 28 of the Land Acquisition Act in the
hands of the assessee or the applicability of the
Income-tax Act to sch amount. When the Hon'ble
Supreme Court specifically directs in the case of
Hari Singh (supra), the learned AO shall examine
the facts of the case and then apply the law as
contained, CIT(A) has not stated that such an
amount shall be brought to tax u/s 45(5) without
applying the provisions under 10(37) of the Act,
which exempts such receipts from being taxed. It
could be noted that Section 45(5) makes no
reference to the nature of property that is acquired
but it deals with the category of cases which falls
in the description of "capital assets". However,
Section 10(37) exempts specifically an income
chargeable under the head "capital gains" arising
from the transfer of agricultural land. It is,
therefore, clear that once the Hon'ble Supreme
court directed the AO in the case of Hari Singh
                                                    Page | 5
                                                       ITA No.5986/Del/2016
                                                    Assessment Year 2013-14



(supra) that after examining the facts to apply the
provisions contained in the Income-tax Act with a
specific reference to the agricultural land stating
that in case if it is found that the compensation
was received in respect of the agricultural land,
the tax deposited with the Income-tax Department
shall be refunded to these depositors.

10. In this matter, what was acquired by the
Government was an agricultural land and such a
fact is well evident from the assessment order
itself . As a matter of fact, learned AO, by granting
exemption   under    section   10(37)    of   the   Act,
refunded a sum of Rs. 1,22,01,723/-. Only
question is whether the interest received under
section 28 of the Act assumes the character of
enhanced compensation and consequently it is
exempt under section 10(37) of the Act. In view of
the decisions of the Hon'ble Supreme Court
referred to above, we do not have any doubt in our
mind as to the law in this aspect and while
respectfully following the ratio laid down by the
Hon'ble Supreme Court in the case of Ghanshyam
(supra) and Hari Singh (supra) above, direct the ld.
AO to refund the TDS amount that was deducted
on account of the interest received under section
28 of the Land Acquisition Act Also. With these
directions, we allow the appeal of the assessee.

11. In the result, the appeal of the assessee is
allowed."



                                                        Page | 6
                                                              ITA No.5986/Del/2016
                                                           Assessment Year 2013-14



5.   Further, we find that the Hon'ble Chandigarh
Bench of the Tribunal vide order dated 11/01/2019
has dealt with the case law of Manjit Singh and relying
on the order of the Hon'ble Supreme Court in the case
of Hari Singh has allowed relief to the assessee by
cancelling order u/s 263 by holding as under:-

     6.    During the course of hearing before us, Id.
     counsel    for   the   assessee       pointed   out   that
     subsequent to the decision passed by the Hon'ble
     jurisdictional High Court in the case of Naresh Jain
     (supra),which was heavily relied upon by the Id.
     Pr. CIT in his order for stating that the proposition
     laid down by the Apex Court in the case of
     Ghanshyam,       HUF     stood    overruled,    and   that
     interest u/s 28 was liable to tax as 'income from
     other sources',    the    Hon'ble Apex Court had
     categorically reiterated its decision rendered in the
     case of Ghanshyam, HUF in the case of Union of
     India Ors. Vs Hari Singh & Ors. in CA No.
     15041/2017 dated 15.09.2017. It was pointed out
     that the decision of the jurisdictional High Court in
     the case of Naresh Jain was dated 12.07.2017,
     while the Apex Court had reiterated the decision
     rendered    in   the   case      of   Ghanshyam,      HUF
     subsequently in September,2017 and therefore,
     the proposition laid down by the Apex Court was
     the law of the land following which interest u/s 28
     of the LAA, 1894,was in the nature of enhanced
     compensation and not in the nature of interest and
     therefore, had been rightly not returned to tax by
     assessees. It was pointed out that in view of the
                                                               Page | 7
                                                  ITA No.5986/Del/2016
                                               Assessment Year 2013-14



same, there was no error in the order of the AO
and the jurisdiction assumed by Id. Pr. CIT,
therefore, was erroneous.

7.     The Id. DR on the other hand, relied on the
order of the Id. Pr. CIT.

8.    Having heard the rival contentions. We find
merit in the contention of the Id. counsel for the
assessee. Undoubtedly the Ld. Pr. CIT had heavily
relied on the decision of the jurisdictional High
Court in the case of Manjit Singh (supra) and more
specifically in the case of Naresh Jain (supra) to
hold that the proposition laid down by the Apex
Court in the case of Ghanshyam, HUF that interest
received u/s 28 of the Land Acquisition Act, 1894
was part of the enhanced compensation, was not
good law. As rightly pointed out by the Id. counsel
for the assessee the Hon'ble Apex Court has
reiterated the aforesaid proposition in the case of
Hari Singh (supra) subsequent to the decision
passed by the Hon'ble High Court in the case of
Naresh Jain (supra) .We have gone through the
order of the Apex Court in the case of Hari Singh
and find that the Union of India had come before
the Supreme Court against the decision of the High
Court in writ petition filed by the asseseees before
the High Court. The issue before the High Court
was that the assessees had received enhanced
compensation on which tax had been deducted at
source as per the provision of Section 194LA of the
Act. The assessee had contended that no tax was

                                                   Page | 8
                                                               ITA No.5986/Del/2016
                                                            Assessment Year 2013-14



deductible on the same as land was agricultural
land and without examining these facts, taxes had
been deducted at source. The Hon'ble High Court
had directed refund of the taxes to the assessees
and     had       directed      the        Land     Acquisition
Officer/Collector to examine whether their lands
were agricultural or not and decide whether taxes
were liable to be deducted therefrom as per the
provisions of the Act. The Union of India had come
in appeal before the Hon'ble Supreme Court
against this order of the High Court stating that it
was the Assessing Officer who was capable of
determining       the     nature      of    land    as     being
agricultural or not for the purposes of taxability
under the Income Tax Act, 1961. The same was
agreed to by the Hon'ble Apex Court and they had,
therefore, directed the AO to examine this aspect
and     further     categorically          stated   that      the
proposition laid down by it in Ghanshyam,
HUF(supra) vis a vis interest received u/s 28 of the
LAA, 1894 be kept in mind to ascertain whether
the interest received amounts to compensation or
not. The relevant findings of the Hon'ble Supreme
Court in this regard are as under :

      We find force in the submission of the learned
      Additional Solicitor General insofar as the
      challenge to the direction given to the Land
      Acquisition       Collector   to     determine     as    to
      whether the land in question is agricultural
      land or not Since             the Land Acquisition
      Collector had. already deducted tax at source
                                                                Page | 9
                                                ITA No.5986/Del/2016
                                             Assessment Year 2013-14








and    deposited    with    the    Income    Tax
Department, in such circumstances, better
course of action, which is in consonance with
the provisions of Income Tax Act, is for the
respondents    to   approach      the   concerned
Assessing Officer(s) and to raise the issue
that   no     tax    is    payable      on    the
compensation/enhanced compensation which
is received by them as their land was
agricultural land. Once such an issue is
raised before the Assessing Ojficer(s), it is for
the Assessing Officer(s) to examine the facts
of each case and then apply the law as
contained in the Income Tax Act to determine
the aforesaid question. Insofar as these cases
are concerned, we allow these appeals by
setting aside the directions contained in
paragraph 7 and substitute the same with the
following directions: (I) The respondents shall
file appropriate returns before the Assessing
Officer(s) in respect of Assessment Years in
question within a period of two months from
today in case they feel that the compensation
in respect of land belonging to them which
had been acquired was agricultural land, and
claim refund of the tax which was deducted
at source and deposited with the Income Tax
Department. On the filing of these returns, the
Assessing Officer(s) shall go into the aforesaid
question and wherever it is found that the
compensation was received in respect of
agricultural land, the tax deposited with the
                                                Page | 10
                                                         ITA No.5986/Del/2016
                                                      Assessment Year 2013-14



Income Tax Department shall be refunded to
these respondents. (2) While determining as to
whether the compensation paid was for
agricultural        land   or   not,    the    Assessing
Officer(s) will keep in mind the provisions of
Section 28 of the Land Acquisition Act and the
law laid down by this Court in 'Commissioner
of Income Tax. Faridabad v. Ghanshyam
(HUF)' [2009 (8) SCC 412] in order to ascertain
whether the interest given under the said
provision amounts to compensation or not. (3)
The direction to refund the amount of Tax
Deducted       at    Source     (TDS)    to   the    Land
Acquisition Collector is, accordingly, set aside.
However, in those cases where the amount
has already been refunded, no interference is
called for and it will be for the Income Tax
Department to proceed in accordance with the
provisions of Income Tax Act.

(4) Where such notices have not already been
issued or assessments have not already been
made, if such'an action is taken within a
period of two months from today, issue of
limitation would not come in the way of the
Income Tax Department. This order is passed
having regard to the fact that the present
proceedings         were   pending      in    this   Court
because of which it was not possible for the
Income Tax Department to issue these notices
earlier.


                                                         Page | 11
                                                                    ITA No.5986/Del/2016
                                                                 Assessment Year 2013-14



            9.    In view of the categorical affirmation of the
            proposition laid down by the apex court in the case of
            Ghanshyam HUF(supra) ,in its latest decision in the
            case of Hari singh (supra), we hold that there is no
            error in the order of the AO treating the interest
            received    by   them   u/s   28   of   the   LAA,1894,as
            compensation following the proposition laid down by
            the apex court in Ghanshyam HUF(supra).The order
            passed by the Ld.Pr.CIT u/s 263 is therefore set aside.

            10.   The appeal of the assessee therefore stands
            allowed".

           6.     The argument of the Ld. DR that the case law of
           Chet Ram (HUF) decided by the Hon'ble Apex Court will
           be applicable do not hold any force in view of the fact
           that order in the case of Chet Ram (HUF) has been
           passed by Hon'ble Apex Court on 12/09/2017, whereas,
           the order in the case of Hari Singh has been passed by
           Hon'ble Apex Court on 15/09/2017 and wherein the
           Hon'ble Apex Court has directed the Assessing Officer to
           keep in mind the proposition laid down by it in the case
           of Ghanshyam Dass (HUF).

           7.     In view of the above, we do not find any infirmity
           in the order of the Ld. CIT(A) and therefore, the appeal
           filed by the Revenue is dismissed."

      7.   In view of the above judicial precedents, the appeals of the
      assessee are allowed."



7.   The issue arising in the present appeal is similar to the issue before

the Tribunal in bunch of appeals and following the same parity of
                                                                    Page | 12
                                                                    ITA No.5986/Del/2016
                                                                 Assessment Year 2013-14



reasoning, we allow the claim of the assessee. Thus, grounds of appeal

raised by the assessee are allowed.


8.     In the result, the appeal of assessee is allowed.


     Order pronounced in the open court on 16th day of October, 2019.


            Sd/-                                               Sd/-

(ANADEE NATH MISSHRA)                          (SUSHMA CHOWLA)
 /ACCOUNTANT MEMBER                          Û /JUDICIAL MEMBER


ã /  Dated : 16th October, 2019.
* Amit Kumar *
    /Copy of the Order is forwarded to :
1.     / The Appellant;
2.    × / The Respondent;
3.     () / The CIT(A)
4.     ,   , ã / DR, ITAT, Delhi
5.    [  / Guard file.

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