TMI Blog2019 (7) TMI 933X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Income-tax is quashed. - Decided in favour of assessee. - ITA No.123/Coch/2019 - - - Dated:- 17-7-2019 - Shri Chandra Poojari, AM And Shri George George K, JM For the Appellant : Sri.T.John George For the Respondent : Sri.Shantom Bose ORDER PER GEORGE GEORGE K, JM : This appeal at the instance of the assessee is directed against the Commissioner of Income-tax s order dated 05.12.2018 passed u/s 263 of the Income-tax Act, 1961. The relevant assessment year is 2014-2015. 2. The solitary issue that is raised is whether the CIT is justified in invoking his revisionary power u/s 263 of the I.T.Act to bring to tax interest received on compensation / enhanced compensation? 3. Brief facts of the case are as follows:- The assessee is an individual. For the relevant assessment year 2014-2015, the assessee had received enhanced compensation of ₹ 8,80,56,564 for compulsory acquisition of immovable property belonging to him. The enhanced compensation was awarded by the Hon ble Sub Court, North Paravoor vide its order / decree dated 06.08.2012. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remained to be added back, as such. In respect of the above, the Assessing officer has neither made any observation in the assessment order, nor, obtained any supporting documents from the assessee, while allowing above interest on enhanced compensation amounting to Rs.l,83,31,228/-. Thus, it is evident, that no requisite disallowance / verification has been made by him while completing the assessment. Accordingly in my considered view, there is apparent error in the assessment order which is prejudicial to the interests of the Revenue, in the light of the scope of the Section 263 of the Act. 7. As discussed above, the Assessment Order; under consideration, is thus erroneous in so far as it is prejudicial to the interests of the Revenue, also. Accordingly, the Assessment Order on the above issues is set aside to the Assessing Officer for de-novo examination and to pass a speaking order in accordance with law and as per time limit specified under section 153 of the Income Tax Act, after affording due opportunity to the Assessee. 5. Aggrieved by the order of the CIT, the assessee has preferred this appeal before the Tribunal. The learned AR has file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Interest @ 12% on enhanced value ₹ 46,52,425 Solatium @ 30% (of ₹ 4,47,82,047) 1,34,34,614 Interest u/s 28 of the Land Acquisition Act allowed by the Court @ 9% from 19.08.2010 to 18.08.2011 ₹ 56,83,028 @ 15% from 19.08.2011 to 12.02.2014 ₹ 2,35,88,457 Total Compensation ₹ 9,24,16,237 6.2 Out of the above, the assessee received ₹ 8,80,56,564 during the previous year relevant to the assessment year 2014- 2015 (copy of the decree passed in LRA 3/2011 dated 06.08.2012 and its calculation statement are attached in the paper book filed by the assessee). 6.3 The solitary issue that is raised in this appeal is regarding the taxability of interest allowed by the Hon ble Sub Court on enhanced compensation. The assessee had established before the Assessing Officer that the interest all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee u/s 28 of the Land Acquisition Act, 1894 was to be taxed u/s 56(2)(vi) of the I.T.Act. According to the learned Commissioner of Income-tax, the Assessing Officer has not considered the taxability of ₹ 91,65,640 being 50% of the interest received, viz., ₹ 1,83,31,228. According to the CIT, the Assessing Officer has not made any observation in the assessment order in this regard nor has he obtained any supporting document from the assessee while allowing the above interest as exempt. The learned CIT s observation is contrary to the facts. The Assessing Officer initially observed that the interest received is liable to be taxed u/s 56(2)(viii) of the I.T.Act. When the assessee pointed out that the interest awarded by the Sub Court was u/s 28 of the Land Acquisition Act, 1894 and in the light of the judgment of the Hon ble Apex Court cited supra, the same cannot be brought to tax, the Assessing Officer had taken a conscious decision not to bring to tax the interest awarded u/s 28 of the Land Acquisition Act, 1894, since the original compensation itself was not liable to capital gain tax. The copy of the assessee s letter dated 18.10.2016 addressed to the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X
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