TMI Blog2023 (8) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... the RFCTLAAR Act has to be held as exempt from levy of income-tax. CIT(A) was not correct in upholding the assessment order wherein the AO has granted part relief to the assessee u/s 57(iv) of the Act and not applying the provisions of section 10(37) of the Act on the interest received by the assessee on enhanced compensation. Therefore, the orders of the authorities below are set aside being not sustainable and not in accordance with the provisions of the Act. Therefore, the grounds of appeal of the assessee are allowed and the AO is directed to allow deduction u/s 10(37) of the Act to the assessee on the entire amount of interest received on enhanced compensation u/s 28 of the Act. Decided in favour of assessee. - ITA No. 693/Del/2023 - - - Dated:- 7-7-2023 - Shri C.M. Garg, Judicial Member For the Assessee : Shri Pawan Chhikara, CA For the Revenue : Shri Om Parkash, Sr. DR ORDER PER C. M. GARG, J. M.: 1. This is an appeal filed by the assessee against the order of the ld CIT(A), National Faceless Appeal Centre (NFAC) dated 19.01.2023 for AY 2018-19. 2. The assessee has raised the following grounds of appeal:- 1. The Ld. CIT(A), NFAC, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6) The Ld. CIT(A) has erred in fact and law in upholding the order passed by Ld. A.O who has made an addition on account of Interest on enhanced compensation which was otherwise an exempt income. 7) Any other grounds of appeal at the time of hearing. 3. The ld counsel of the assessee submitted that the Ld. CIT (A), NFAC, has erred in facts and law in upholding the action of the A.O, not deleting the addition made for interest received on enhanced compensation on account of compulsorily acquisition of Agriculture land even without Considering our detailed reply with so many ruling announced by the Honorable Apex Court and High court, Tribunal in this regard which clearly said that the Interest awarded to the Land owner on enhanced compensation by Apex court on compulsorily acquisition of his Agriculture Land as per section 28 of the Land acquisition Act, 1894 is only an accretion to the value of land and not in the nature of interest and the same is liable to be treated as per the provision of section 45(5) read with section 10(37) of the I.T Act, 1961 and if the Original compensation is Taxable then the same will also be taxable and if original compensation is exempt u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has also relied on the following judgements:- (i) CIT v. Ghanshyam (HUF) [(2009) 8 SCC 412]; (ii) CIT, Rajkot v. Govindbhai Mamiya [(2014) 16 SCC 449]; (iii) Movaliya Bhikhubhai Balabhai v. Income Tax Officer, Surat [(2016) 70 taxmann.com 45 (Gujarat)]; (iv) Union of India Ors. V. Hari Singh Ors. [ Civil Appeal No. 15041 of 2017]; (v) Baldev Singh vs. ITO [2019] 104 taxmann.com 99 (Delhi - Trib); (vi) Mahender Pal Narang v. Central Board of Direct Taxes, New Delhi [(2020) 120 taxmann.com 400 (Punjab Haryana)] 6. On careful consideration of the above submissions, I am of the considered view that the identical issue was placed for adjudication before the ITAT Delhi F Bench in the case of Ram Kishan vs. ITO, wherein, after considering all the relevant judgements, the issue was decided as follows:- 8. On careful consideration of the issue before us we find That The finance (number 2) act, 2009 with effect from 1 April 2010 in the income tax act has introduced the provisions of Section 145A (b) which defines the year of taxability as the year of receipt, irrespective of the method of accounting followed by the assessee with respect to the enhanced com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of revenue. It is a settled law that Statute must be interpreted according to the intention of the legislature and the court should act upon the true intent of the legislation while applying the law and its interpretation. If a statutory provision is open to more than one meaning, the Court has to choose the interpretation which represents the intention of the legislature. In the present case the Department circular number 5/2010 dated 3/6 / 2010 clearly demonstrates the intention of the legislature. Accordingly we hold that interest on u/s 28 of the land acquisition act, 1894 being part of the compensation shall be treated as a tax free in the case of an individual and HUF u/s 10 (37) if transfer is of an agricultural land. In view of above facts and judicial precedence we hold that the interest received by the assessee u/s 28 of the land acquisition act of ₹ 24,207,223 is not taxable. Accordingly ground number 2 3 of the appeal of the assessee are allowed. 7. In view of the above, I clearly note that the coordinate Bench of the Tribunal categorically held that after judgement of the Hon ble Supreme Court in the case of Ram Bai (supra), the undue hardship to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r exemption for such compensation in the Income-tax Act. The ld. Counsel submitted that the land of the assessee was acquired under the old Land Acquisition Act, but, the intention of the legislature is also clear as per the said Circular wherein the compensation received by the assessee u/s 96 of the RFCTLAAR Act has to be held as exempt from levy of income-tax. Therefore, the grievance of the assessee may kindly be allowed. The ld. Sr. DR simply stated that the land of the assessee had been acquired long back under the old Land Acquisition Act, therefore, the CBDT Circular regarding acquisition of land under section 96 of the new Land Acquisition Act is not applicable to the present case. On these submissions, I am of the considered view that the Board Circular is not directly applicable to the present case of the assessee as, in the present case, the land was acquired under the old Land Acquisition Act, 1896, but, the intention of the legislature can be gathered therefrom that the Revenue does not want to tax the amount of enhanced compensation or interest thereon. 10. Therefore, in view of the foregoing, I am inclined to hold that the ld.CIT(A) was not correct in upholding t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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