TMI Blog2010 (8) TMI 1021X X X X Extracts X X X X X X X X Extracts X X X X ..... e CIT(Appeals) dated 15.03.2010 pertaining to the assessment year 2007-08. The Revenue has raised the following two main Grounds of Appeal : I. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) Panchkula is justified in deleting the addition made by the Assessing Officer on account of interest received on enhanced compensation ignoring the fact that addition has been made by AO in view of the judgment of the Hon ble Supreme Court in the case of CIT Vs Ghansyam (HUF) 315 ITR 1 wherein it has been held that whole of interest received by the appellant is taxable in the year of receipt. II. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) Panchkula is justified in deleting the addition made by the Assessing Officer on account of interest received on enhanced compensation ignoring the fact that the Hon ble Punjab and Haryana High Court in case of Karnail Singh Vs CIT 227 CTR 260 has held that interest received on enhanced compensation is not a part of enhanced compensation nor in the nature of enhanced compensation. Although the Revenue has raised multiple Grounds of Appeal, but essentially the dispute pertains to the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not relate to this case. The submission of the assessee was rejected and in para 3.3 of the assessment order, the Assessing Officer concluded as under : 3.3. In view of the above discussion, the whole of the interest received by the assessee being part of enhanced compensation is included in the income of the assessee in the year under consideration relevant to A.Y. 2007-08 on receipt basis. Accordingly, the entire amount of interest income of ₹ 40,72,141/- was taxed on receipt basis. Aggrieved with the assessment, assessee carried the matter in appeal before the CIT(Appeals). 5. In appeal before the CIT(Appeals), the assessee contended that the interest received was a part of additional compensation in terms of Section 28 of the Land Acquisition Act and therefore, it was endowed with the character of additional compensation and accordingly the same was also eligible for exemption u/s 10(37) of the Act. Reliance was placed on the judgement of the Hon'ble Supreme Court in the case of Ghanshyam, HUF (supra) in this regard. The CIT(Appeals) has relied upon the judgement of the Hon ble Supreme Court and held that the interest received by the assessee u/s 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce under section 18 of the 1894 Act. It depends upon the claim, unlike interest under section 34 which depends on undue delay in making the award. It is true that interest is not compensation. It is equally true that section 45(5) of the 1961 Act refers to compensation. But, as discussed hereinabove, we have to go by the provisions of the 1894 Act which award interest both as an accretion in the value of the lands acquired and interest for undue delay. Interest under section 28 unlike interest under section 34 is an accretion to the value, hence it is a part of enhanced compensation or consideration which is not the case with interest under section 34 of the 1894 Act. So also additional amount under section 23(1A) and solatium under section 23(2) of the 1894 Act forms part of enhanced compensation under section 45(5)(b) of the 1961 Act. From a perusal of the aforesaid, it is evident that as per the Hon'ble Supreme Court, payments made u/s 23(1A) or Section 23(2) or u/s 28 of the Land Acquisition Act, 1894 reflect part of enhanced compensation. In contrast, interest u/s 34 of the Land Acquisition Act, 1894, was not liable to be treated as a part of enhanced compensat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT(Appeals) wrongly inferred that the interest received was part of enhanced compensation. The aforesaid plea has been raised by way of an Additional Ground of Appeal, which reads as under : Whether on the facts and in the circumstances of the case, the learned CIT(Appeals), Panchkula is justified in admitting the fresh evidence in the shape of calculation sheet filed as per para 4 of the order and not confronting it to the A.O. and not providing any opportunity to the A.O. to defend his view violating thereby the Rule 46A of the Income Tax Rules, 1962. 11. At the time of hearing, both the parties have been heard with respect to the maintainability of the aforesaid Additional Ground of Appeal. In our view, the Additional Ground raised by the Revenue is entirely mis-conceived, as the following discussion would show. The Assessing Officer in para 3.3 of the assessment order concluded that interest received by the assessee being part of enhanced compensation is included The aforesaid clearly shows that the Assessing Officer was satisfied that the interest received by the assessee is a part of enhanced compensation. In this manner, the finding of the CIT(Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her aspect which has been set up by the Revenue is that the Hon'ble Supreme Court in the case of Ghanshyam, HUF (supra) was dealing with an income assessable under the head capital gains whereas the interest income in question has been assessed by the Assessing Officer as income from other sources . In our considered opinion, the distinction sought to be brought out by the Revenue is misplaced. It is quite well understood that the tax liability is to be determined with regard to nature of income in terms of the applicable legal position. 15. We may also refer to another argument taken by the learned DR that in the assessment proceedings, assessee had himself submitted that the decision in the case of Ghanshyam, HUF (supra) is not applicable in his case, and therefore, in the appellate proceedings, assessee is precluded from taking the benefit of the said judgement. In our considered opinion, the aforesaid argument set up by the learned DR is devoid of any merit. In our considered opinion, an admission or acquiescence cannot be the foundation for an assessment where a claim is made under an erroneous impression or mis-conception of law. Before the Assessing Officer, if ..... X X X X Extracts X X X X X X X X Extracts X X X X
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