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Vikrambhai Somabhai Patel Versus The Income Tax Officer, Ward 2 (3) , Ahmedabad.

2015 (11) TMI 421 - ITAT AHMEDABAD

Interest levy u/s 234B - can the assessee be held to be in default in payment of advance tax arising from the above stated interest income? - assessee’s stand claiming spread over of the enhanced compensation income - Held that:- It transpires from the case law of Ghanshyam HUF [2009 (7) TMI 12 - SUPREME COURT] itself that the hon’ble Punjab & Haryana high court in its lead judgment reported as CIT vs. Karanbir Singh (2007 (1) TMI 167 - PUNJAB AND HARYANA HIGH COURT) had accepted spreading over .....

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prevailed at the relevant time. A co-ordinate Bench of the tribunal in Intas Exports (2013 (7) TMI 926 - ITAT AHMEDABAD) considered issue of similar interest levy u/s 234B wherein the assessee had defaulted in AY 2003-04 based on amendment in section 80HHC of the Act introduced by the Finance Act, 2005 with retrospective effect from 01.04.2001. It holds that default giving rise to section 234B interest is not attributable to the concerned assessee. The Revenue does not point out any exception o .....

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ER For The Appellants : Smt. Urvashi Shodhan, AR For The Respondent : Shri D. C. Mishra, Sr DR ORDER PER SHRI S.S. GODARA, JUDICIAL MEMBER This assessee s appeal for AY 2007-08, arises from order dated 22.10.2010 passed by the CIT(A)-XVI Ahmedabad in case no.CIT(A)- XVI/Wd.2(3)/374/09-10 in proceedings u/s.143(3) of the Income-tax Act in short the Act . 2. This appeal raises five grounds. The first one is that the interest awarded on enhancement compensation relating to assessee s land acquired .....

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y of interest u/s 234B and initiation of section 271(1)(c) penalty; respectively. 3. A perusal of the case file reveals that a co-ordinate Bench in its order dated 23.05.2014 remitted the assessee s first three grounds back to the Assessing Officer as under:- 5. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. During the course of hearing, a query was raised to the ld.counsel for the assessee that before the AO as .....

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d on 31/03/2008 showing total income of ₹ 59, 934/-. The appellant claimed exemption of ₹ 14,57,444/- (principal amount) received as additional compensation on compulsory acquisition of agricultural land from Long Term Capital Gains Tax u/s 10 (37) of the Act in the revised return. It was further submitted that interest of ₹ 22,93,378/- on enhanced compensation for agricultural land compulsorily acquired under Land Acquisition Act be taxed on accrual basis as having accrued yea .....

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in view of the decision of the Hon'ble Supreme Court in CIT V/s Ghanshyam HUF (315 ITR 1) the interest awarded ought to have been held to be not taxable at all being merely integral part of compensation to the compulsory acquisition of land. 2. The Ld. CIT (A) erred in law and on facts in confirming the addition of ₹ 22,93,378 on account of interest awarded on enhanced compensation of agricultural land. 3. The Ld. CIT (A) erred in law and on facts in confirming the addition of ₹ .....

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t justified. Hon'ble Bench has raised a query that when the appellant never raised the claim that interest income being integral part of additional compensation on agricultural land compulsorily acquired would also be exempt since principal amount is exempt u/s 10 (37) of the Act before the lower authorities it would be appropriate to set aside the issue to the file of Id. CIT (A). It is respectfully submitted that though the appellant claimed spread over of interest income before the lower .....

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Hon'ble Tribunal on the basis of facts on record. The same view is take n by the Hon'ble Gujarat High Court recently in Tax appeal No. 2562 of 2009 and others vide order dated 02/04/2014 (Copy enclosed: please see page no. 30 & 31 in Para 40 & 41 reproduced below) "40. Therefore, any ground, legal contention or even a claim would be permissible to be raised for the first time before the appellate authority or the Tribunal when facts necessary to examine, such ground, conten .....

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ave considered such questions when a legal contention or a claim was based on material already on record but raised at an appellate stage. On such premise we wholeheartedly agree that the appellate authority and the Tribunal would have the power to entertain any such new ground, legal contention or claim. However, it is only the Bombay High Court in the case of Commissioner of Income-tax or Pruthvi Brokers and Shareholders P. Ltd. (supra), which has traveled a little beyond this proposition and .....

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e and in favour of the assessees in manner described above." With respect to the appellant claiming spread over of interest by mistake, ignorance of law or inadvertence included in his income any amount that is exempt from tax then it is permissible to bring it to the notice of the authorities to grant appropriate relief. The appellant for this proposition relies on the judgment of the Hon'ble Supreme Court in the case of CIT vs. Shelly Products and others (261 ITR 367) where Hon'bl .....

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concerned on being satisfied shall grant appropriate relief. The ratio of the judgment in Shelly Products (supra) is applied in TTA # 3403/Abd/1997 by the Hon'ble ITAT on page 23 Para 50 holding(Copy enclosed)- "50. In the instant case, we find that assessment was not quashed by the Ld. CIT (A) and further the decision on merits of the issue of Ld. CIT (A) wherever the Department has any grievance was agitated in appeal and the same have been decided on merits. We are of the considered .....

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ompensation being integral part of the compensation is not exigible lo tax since compensation itself is exempt from Long Term Capital Gains u/s 10(37) of the Act. It be so held now. 5.1. The ld.counsel for the assessee placed reliance on the judgement of the Hon ble Jurisdictional High Court rendered in the case of Commissioner of Income Tax s. Mitesh Impex in Tax Appeal No.2562 of 2009 & others, order dated 02/04/2014, wherein the Hon ble High Court vide para Nos.40 & 41 has held as und .....

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id they travel beyond the materials already on record, in order to examine the claim of the assessees for deductions under section 80IB and 80HHC of the Act. 41. In the decisions that we have noted above, the Courts have considered such questions when a legal contention or a claim was based on material already on record but raised at an appellate stage. On such premise we wholeheartedly agree that the appellate authority and the Tribunal would have the power to entertain any such new ground, leg .....

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als. We would, therefore, reserve our opinion on this limited aspect of the matter if and when in future the question presents before us in such form. For the present, we answer Questions (3) and (4) against the Revenue and in favour of the assessees in manner described above." 5.2. In view of this binding precedent of the Hon ble Jurisdictional High Court, the claim raised by the assessee is admitted for adjudication. The Hon ble Apex Court in the case of CIT vs. Ghanshyam (HUF) (supra) ha .....

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ward 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 o undue delay in making the award. It is true that interest is not compensation .....

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tional amount under section 23(1A) and solatium under section 23(2) of the 1961 Act forms part of enhanced compensation under section 45(5)(b) of the 1961 Act. In fact, what we have stated hereinabove is reinforced by the newly inserted clause (c) in section 45(5) by the Finance Act, 2003 with effect from 1-4-2004. This newly added clause envisages a situation where in the assessment for any year,- the capital gain arising from the transfer of a capital asset is computed by taking the - compensa .....

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/98 to 841/98, 311/98 & 332/98 to 336/98, dated 16/02/2005 is enclosed. The ld.Court has decided the claim of enhanced compensation as under: ORDER The present Land Acquisition Reference Cases are hereby partly allowed. The opponents are directed to pay total additional ₹ 178/- per Sq.Mtr. [Rupees one hundred seventy eight only] [Rs.210/- minus ₹ 32 = ₹ 178/-] to the applicants of all the respective cases. The applicants are also entitled to get 30% amount under the head of .....

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t court-fee if necessary. Copy of this order be kept in each Land Reference Cases. Award be drawn accordingly. Signed and pronounced in open Court on this 16th day of February, 2005 at Gandhinagar. 5.4. As per the aforesaid order of the ld.Court, the assessee is entitled to get 30% amount under the head of Solatium and also entitled to get 9% interest for the first year and thereafter at the rate of 15% for the second year upto depositing of the awarded amount. The ld.Court has also ordered for .....

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nt is exempt u/s.10(37) of the Act and for the sake of clarity section 10(37) is reproduced hereunder:- Section 10(37):- in the case of an assessee, being an individual or a Hindu undivided family, any income chargeable under the head "Capital gains" arising from the transfer of agricultural land, where- (i) such land is situate in any area referred to initem (a) or item (b) of sub-clause (iii) of clause (14) of section 2; (ii) such land, during the period of two years immediately prec .....

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e 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;] 6. In our considered view, the authorities below ought to have given a clear finding as to how this amount would become taxable if it is forming integral part of the compensation, when transfer is of the agricultural land. Since this claim was not made before the authorities below, but arising from .....

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t is to be seen that the assessee filed miscellaneous application No.167/Ahd/2014 seeking to recall the above stated order to the extent that interest levied u/s 234B was treated as mere consequential. The assessee quoted yet another co-ordinate bench decision of the tribunal in Intas Exports vs. ACIT, ITA No.1819/Ahd/2008, holding that section 234B interest is not leviable when the default in question in payment of advance tax is not attributable to an assessee. The learned co-ordinate bench he .....

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essee received compensation @ ₹ 32/- per Sq. Mtr. He sought for enhanced compensation by way of filing land acquisition reference. The hon ble reference court in its order dated 16.02.2005 enhanced the compensation awarded from ₹ 32/- per Sq. Mtr. to that of ₹ 210/- per Sq. Mtr. with 30% solatium, 9% interest for the first year and 15% for second year upto 28.02.2006. This resulted in gross compensation of ₹ 1,50,03,287/- in the hands of all co-owners received on 18.04.20 .....

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Bikram Singh & others vs. Land Acquisition Collector & others, 224 ITR 551, in support. The Assessing Officer rejected this spreading over in assessment order dated 29.12.2009. He inter alia observed that the assessee had received the compensation including interest component in April 2006. However, he did not file returns for AYs 2005-06 and 2006-07 as per time allowed u/s 139(4) and 139(1) of the Act. The Assessing Officer was of the view that regular books of accounts had not been ma .....

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holding that interest on enhanced compensation is liable to be taxed on receipt basis. We find from the case file that the Assessing Officer himself acknowledged that the hon ble apex court had rendered various decisions in earlier point of time in accepting this spread over plea. He would accordingly conclude that assessee s interest sum of ₹ 22,93,378/- was taxable in the year of receipt, i.e., April 2006 corresponding to the impugned AY 2007-08. He acted accordingly and added the above .....

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1/05/1996 as per which interest under section 234B, should not be levied. On the same issue boards of circular number 783 dated 18/11/1999 also provides that no such interest should be levied. 5.2 I have considered the submission made by the appellant and observation of the AO. There is a board's order dated 23/05/1996, and that is regarding power of the chief Commissioner for reduction or waiver of interest. It says "The Board has issued an order vide F.No. 400/234/95- IT(B), dated 23r .....

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IT(B)], dated 23- 5-1996, indicated the class of income or class of cases in which reduction or waiver of interest under sections 234A, 234B and 234C would be considered by the Chief Commissioner of Income-tax and Director-General of Income-tax. Prior to the issue of the order a Press Note was released on 21-5-1996 with a view to give wide publicity to the major step contemplated by the Board towards mitigating hardship in genuine cases. 2. However, the instances have come to the notice of the .....

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a final, legal document and to make any claim on the basis of it as against the contents of the final document is not maintainable. 3. The Board hereby reiterates that all requests for waiver of interest are to be considered by the Chief Commissioner of Income-tax] and the Director-General of Income-tax within the parameters laid down by Board's order dated 23-5-1996 read with the order dated 30-1- 1997, 5.3 The above clarification shows that this Press Note was also regarding power of the c .....

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njum M.H. Ghaswala [252 ITR 01]. Hence this ground of appeal is dismissed. In view of the above, this ground of appeal is also dismissed. This leaves the assessee aggrieved. 7. We have heard both the parties and gone through the case file. Relevant facts stand narrated in the preceding paragraphs. The question that arises for our consideration is as to whether the assessee can be held liable for interest levy u/s 234B of the Act or not. To put it simply, can the assessee be held to be in default .....

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