TMI Blog2003 (11) TMI 296X X X X Extracts X X X X X X X X Extracts X X X X ..... 95,503 19-1-1993 8,77,082 5,64,115 3,12,849 29,01,531 19,60,682 9,40,849 The said amounts were not offered for taxation stating that the acquisition proceedings were challenged before different Courts. It was contended that, if the acquisition proceedings were held illegal, the entire receipts will have to be returned by the assessee. The assessee claimed that at the time of filing of return, the compensation as well as interest was nothing but liability of the assessee and no part of it was income. The same was processed under s. 143(1)(a) on29th March, 1996. 3. Proceedings under s. 148 were initiated and notice under s. 148 issued on3rd April, 1996since the assessee failed to offer compensation as well as interest received on it for taxation. A revised return was filed in response to notice under s. 148 on5th July, 1996at the same income as disclosed in the original return. Subsequently, assessment proceedings were initiated. Assessment order under s. 147 r/w s. 143(3) was passed on 27th March, 1998 wherein the interest on compensation amounting to Rs. 9,40,849 was added as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 15 days from the publication of notice under s. 9. Further, this section provided that 80 per cent of the estimated compensation should be paid on or before taking the possession. Since no such payment was made, the possession taken by the Collector was unauthorised. Reliance was placed on the Supreme Court judgment in the case of Jetmull Bhoj Raj vs. State ofBihar AIR1972 SC 1363. Secondly, it was contended that the stay order dt.12th March, 1988issued by the High Court was still pending at the end of the financial year 1992-93 relevant to asst. yr. 1993-94 and, therefore, the land had not vested in the Government throughout the relevant period. Hence, any payment including interest received by the assessee was in the nature of compensation in lieu of his right to retain the possession and consequently, it was a capital receipt not chargeable to tax. Reliance was placed on the Supreme Court judgment in the case of Dr. Sham Lal Narula vs. CIT (1964) 53 ITR 151 (SC). Reliance was also placed on the Kerala High Court judgment in the case of CIT vs. Periyar Pareekanni Rubbers Ltd. (1973) 87 ITR 666 (Ker). Alternatively, it was also contended that award and interest was contingent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was revenue receipt liable to tax. Hence, notice under s. 263 was issued to the assessee on30th Oct., 2001. A detailed reply was given by the assessee on13th Dec., 2001objecting to the proposed action under s. 263 and reiterated that the so-called possession by the Collector was unauthorised beyond the scope of s. 17 of LAA and, therefore, the amount received by way of interest was only part of the compensation which was a capital receipt. 8. The reply given by the assessee was considered by the CIT in the light of material placed before him. He noted that CIT(A),Ghaziabad, had considered this issue in the case of co-owners as well as in assessee s own case in individual capacity. He noted that CIT(A) had decided the issue in favour of the assessees. According to the CIT, the CIT(A) had relied upon only part observations of the judgment of Hon ble Supreme Court in the case of Sham Lal Narula and failed to consider the following observations: "But in case where title passes to the State, the statutory interest provided thereafter can only be regarded either as representing the profit which the owner of land might have made if he had the use of the money or the loss he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 9,40,849. 9. The learned counsel for the assessee, Mr. Anand Prakash, has vehemently assailed the order of CIT by contending that assumption of jurisdiction under s. 263 was bad in law inasmuch as the view expressed by the AO is a possible view in view of various judgments. Reliance was placed on the judgment of Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 159 CTR (SC) 1 : (2000) 243 ITR 83 (SC), wherein it has been held that order of the AO cannot be considered as erroneous if the view taken by him is a possible view. Proceeding further, he took us through all the events of acquisition and litigation at various stages and then pointed out that possession of the land taken by the Collector was in violation of the provisions of s. 17 of LAA inasmuch as notice under s. 9(1) of that Act was published on 9th/10th Dec., 1988 while the possession was taken on 14th Dec., 1988, i.e., much before the expiry of 15 days from the date of publication. Further, 80 per cent of the estimated compensation was required to be made by the Collector under s. 17(3A) of that Act before taking possession under s. 17(1) but no such payment was made to the assessee. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Development Trust. However, he repeated his earlier arguments to the effect that interest payment was capital receipt. 11. Rival submissions of the parties have been considered carefully in the light of material placed before us and the case law referred to. It is now the settled legal position that order of the AO cannot be considered as erroneous if the view taken by the AO is a possible view. Reference can be made to the recent judgment of the apex Court in the case of Malabar Industrial Co. So the issue to be considered is whether the view taken by AO can be said to be a possible view. Before considering the same, it is pertinent to note that AO had taken into consideration all the factual details and it is also not the case of the CIT that AO failed to consider any relevant facts. The AO had also considered the relevant provisions of LAA, i.e., ss. 16, 17, 31 and 32. He has also considered the judgment of Supreme Court in the case of Dr. Sham Lal Narula and the judgment of Kerala High Court in the case of Periyar Pareekanni Rubbers Ltd. Hence, it cannot be said that AO failed to apply his mind. 12. Let us now consider the views taken by the various Courts and the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion, where the possession was taken outside the scope of ss. 16 and 17 of LAA, is a capital receipt. 14. In fact, such inference has been drawn by Kerala High Court in the case of Periyar Pareekanni Rubbers Ltd. In that case, the land of the assessee was acquired on29th Nov., 1961, on the basis of an agreement between the assessee and the Government, but the award was given on31st Aug., 1962. Hence, the interest was given for the period from29th Nov., 1961to31st Aug., 1962. Such interest was held to be capital receipt by the High Court on the basis of the inference drawn from the proposition laid down by the apex Court in the case of Dr. Sham Lal Narula. 15. Similar view has been taken by the Tribunal in the case of J.D. Singhal. In that case, possession under s. 17 of LAA was taken on7th July, 1982while the award was given on9th Jan., 1988. The question arose as to whether interest paid for the period from the date of possession till the date of award could be taxed as revenue receipt. The Tribunal, after referring to the provisions of LAA and the decisions of various Courts, held that such interest amounted to capital receipt. Similar view has also been taken by the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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