TMI Blog2015 (12) TMI 1066X X X X Extracts X X X X X X X X Extracts X X X X ..... 2015 as according to learned counsel for the parties the identical issues are involved therein. For brevity, the facts are being extracted from CWP No. 10125 of 2015. 2. CWP No. 10125 of 2015 has been filed by the petitioners under Articles 226/227 of the Constitution of India praying for issuance of a writ in the nature of mandamus directing the respondents to release the amount of deducted as Tax Deduction at Source (TDS) from the compensation of their acquired land. 3. Sans unessential, the facts necessary for adjudication of the present petition as narrated therein may be noticed. The petitioners were owners in possession of the agricultural land situated within the revenue estate of village Sultanpur, Tehsil Farrukh Nagar, District Gurgaon. State of Haryana acquired the said land vide notification dated 11.1.2005 issued under Section 4 of the Land Acquisition Act, 1894 (in short the Act ) for the public purpose for the development and utilization of Kundli-Manesar-Palwal Road in District Gurgaon. The Land Acquisition Collector vide award dated 10.5.2006 awarded compensation at the rate of ₹ 12.50 lacs per acre. The petitioners filed reference under Section 18 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the amount of enhanced compensation and interest thereon. A perusal of Annexures P-3 and P-4 appended by the petitioners clearly shows that tax has been deducted on the element of interest on enhanced compensation and, therefore, would fall under Section 194A of the Act which relates to interest other than interest on securities . 8. It may also be noticed that amendment was made to subsection (2) of Section 56 of the 1961 Act by Finance (No.2) Act, 2009 w.e.f. 1.4.2010 to the following effect:- viii) Income by way of interest received on compensation or on enhanced compensation referred to in clause (b) of Section 145A. Further, amendment was also carried out in Section 145A of the 1961 Act by inserting clause (b) by Finance (No.2) Act, 2009 w.e.f. 1.4.2010 as under:- (b) interest received by an assessee on compensation or enhanced compensation, as the case may be, shall be deemed to be the income of the year in which it is received. The cumulative effect of the aforesaid amendments would be that the interest component on the amount of compensation or enhanced compensation would be exigible to tax in the year of receipt irrespective of the method of accounti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of any credit facility which has not been utilised. The expression 'interest' occurring in sub-section (28A) of Section 2 of the Act widens the scope of the term 'interest' for the purposes of the Act. 14. Another three Judges bench of the Apex Court in Bikram Singh vs. Land Acquisition Collector, (1997) 224 ITR 551 following Dr. Shamlal Narula's case (supra) and taking into consideration definition of interest in Section 2(28A) of the Act had recorded that interest under Section 28 of the 1894 Act was a revenue receipt and is taxable. It was held as under:- The controversy is no longer res integra. This question was considered elaborately by this Court in Dr. Shamlal Narula vs. Commissioner of Income-tax, Jammu [51 ITR 151]. Therein, K. Subba Rao, J., as he then was, considered the earlier case law on the concept of interest laid down by the Privy Council and all other cases and had held at page 158 as under: In a 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 the land might have made if he had the use of the money or the loss he suffe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsaction covered under the definition of interest. It would mean that the interest received as income on the delayed payment of the compensation determined under Section 28 or 31 of the Acquisition Act is a taxable event. 15. Now, we advert to the judgment of the Apex Court in Ghanshyam (HUF)'s case (supra) on the basis of which learned counsel for the assessee had sought reconsideration of judgment of this Court in CIT v. Bir Singh, ITA No.209 of 2004 decided on 27.10.2010 where Division Bench of this Court has held that element of interest awarded by the court on enhanced amount of compensation under Section 28 of the 1894 Act falls for taxation under Section 56 as 'income from other sources' in the year of receipt. 16. The reliance was placed upon following observations in Ghanshyam (HUF)'s case (supra):- 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 acquired whereas interest under Section 34 is for delay in making payment. This vital difference needs to be kept in mind in deciding this matter. Interest under Section 28 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;s case (supra) (Annexure P-5) on which reliance has been placed by the petitioners being contrary to the aforesaid pronouncements cannot be taken to be interpreting the legal provisions correctly and is, thus, overruled. 14. Still further, this Court in Sarti v. Haryana State Industrial and Infrastructure Development Corporation Ltd. and others, CWP No. 9739 of 2011 decided on 30.5.2011 dealing with the issue of tax deducted at source under similar circumstances had recorded as under:- 8. This Court, in Income Tax Appeal No. 209 of 2004, decided on 27.10.2010 (Commissioner of In come Tax, Faridabad v. B ir Singh (HUF), Ballabgarh) had held that interest paid to the assessee under Section 28 of the Land Acquisition Act, 1894 (for brevity, 1894 Act ) on enhanced amount of compensation in respect of the acquired land falls for taxation under Section 56 of the Act as income from other sources and is exigible to tax in the year of receipt under cash system of accountancy. It had also been observed that where the assessee is not maintaining books of accounts by adopting any specific method, it shall be treated to be cash system of accountancy. In the present case, the interes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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