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TMI Blog2015 (12) TMI 1123X X X X Extracts X X X X X X X X Extracts X X X X ..... plain land except low lying area having depression upto 2-1/2 feet for which compensation @ `3 lacs per acre was assessed. The reference was made under Section 18 of the 1894 Act which was accepted vide order dated 11.8.2009, Annexure P.1. Compensation was awarded at the rate of `439/- per square yard alongwith other statutory benefits. It was further held that the petitioners shall also get compulsory acquisition charges @ 30%, additional amount @ 12% per annum and interest in accordance with sections 23(1-A), 23(2) and 28 of the 1894 Act. Thereafter, Form 'D', Annexure P.2 had been drawn on 11.5.2010 and 27.5.2010 by the Land acquisition Officer containing the complete details regarding the names of the petitioners, principal, interest, cost, total amount, TDS and net payable in accordance with the decision dated 11.8.2009, Annexure P.1. Proceedings for reassessment were initiated under Section 148 of the Income Tax Act,1961 (for brevity, "the Act") on 9.4.2012, Annexure P.5. Notice under Section 148 of the Act was issued to the assessee. He submitted written submissions and prayer was made for supply of reasons for initiation of reassessment proceedings. According to the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received the interest amount during the period relevant to assessment year 2010-11 and therefore, the assessee is liable to pay tax. 4. We have heard learned counsel for the parties and perused the record. 5. Learned counsel for the petitioner submitted that the judgment of this Court in Bir Singh (HUF)'s case (supra) requires reconsideration being contrary to the decision of the Hon'ble Supreme Court in Ghanshyam's case (supra). In CWP No.15506 of 2013, besides the aforesaid reassessment notice under Section 148 of the Act has been challenged whereas in CWP Nos.26907, 26921 and 26924 of 2013, proceedings under Section 154 of the Act are under challenge. 6. On the other hand, learned counsel for the revenue besides supporting the action of the department by relying upon judgment in Bir Singh (HUF)'s case (supra) also drew support from the following observations in the judgment of the Apex Court in the case of State of Punjab v. Amarjit Singh and another reported as JT 2011 (2) SC 393, wherein the Apex Court held as under:- '13. Learned counsel for the respondents placed reliance on the following observations of this Court in Commissioner of Income Tax, Faridabad v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditional amount under section 23(1A) is awardable only on the market value determined under the first factor of Section 23 (1) of the Act and cannot be calculated on the solatium payable under Section 23(2) of the Act." It was contended that the judgment in Bir Singh (HUF)'s case neither requires any reconsideration nor any clarification as the same is in consonance with the Scheme of 1894 Act and law enunciated by the Constitution Bench of the Apex Court in Sunder v. Union of India reported as JT 2001(8) SC 130. 7. The primary question for consideration that arises in these petitions relates to the nature of interest received by the landowner-assessee under Section 28 of the 1894 Act. In other words, whether the interest which is received by the assessee-landowner partakes the character of income or not and, in such a situation is it taxable under the provisions of the Act. 8. It would be apposite to quote herein below Sections 28 and 34 of 1894 Act which read thus:- "28. Collector may be directed to pay interest on excess compensation. - If the sum which, in the opinion of the court, the Collector ought to have awarded as compensation is in excess of the sum which the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approved the following observations of the Division Bench of this Court in State of Haryana vs. Smt.Kailashwati and others, AIR 1980 P&H 117:- "10. Once it is held as it inevitably must be that the solatium provided for under Section 23(2) of the Act forms an integral and statutory part of the compensation awarded to a landowner, then from the plain terms of Section 28 of the Act, it would be evident that the interest is payable on the compensation awarded and not merely on the market value of the land. Indeed the language of Section 28 does not even remotely refer to market value alone and in terms talks of compensation or the sum equivalent thereto. The interest awardable under Section 28 therefore would include within its ambit both the market value and the statutory solatium. It would be thus evident that the provisions of Section 28 in terms warrant and authorize the grant of interest on solatium as well." 12. Adverting to the case law on the subject, inevitably, reference is made to the judgment by the three Judges bench of the Supreme Court in the case of Dr. Shamlal Narula v. CIT , [1964] 53 ITR 151, which had considered the issue regarding award of interest under the 189 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f "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 suffered because he had not that use. In no sense of the term can it be described as damages or compensation for the owner's right to retain possession, for he has no right to retain possession after possession was taken under Section 16 or Section 17 of the Act. We, therefore, hold that the statutory interest paid under Section 34 of the Act is interest paid for the delayed payment of the compensation amount and, therefore, is a revenue receipt liable to tax under the Incometax Act." This position of law has been consistently reiterated by this Court in the case of TMK Govindaraju Chetty vs. Commissioner of Income-tax, Madras [66 ITR 465], Rama Rai & Ors. vs. CIT, Andhra Pradesh [181 ITR 400] and K.S. Krishna Rao vs. CIT, A.P. [181 ITR 408]. Thus by a catena of judicial pronouncements, it is settled law that the interest received on delayed payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st 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 part of the amount of compensation whereas interest under Section 34 is only for delay in making payment after the compensation amount is determined. Interest under Section 28 is a part of the enhanced value of the land which is not the case in the matter of payment of interest under Section 34." 17. In view of the authoritative pronouncements of the Apex Court in Dr. Sham Lal Narula, T.N.K.Govindaraja Chetty, Amarjit Singh, Sunder, Bikram Singh's cases (supra), Rama Bai vs. CIT (1990) 181 ITR 400 and K.S.Krishna Rao v. CIT, (1990) 181 ITR 408, the assessee cannot derive any benefit from the aforesaid observations quoted above. 18. At this stage, learned counsel for the petitioner submitted that the issue regarding tax deduction at source was not being agitated in this case and that it shall be taken up in appropriate case and thus the issue may ..... X X X X Extracts X X X X X X X X Extracts X X X X
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