Chief Commissioner Of Income Tax (Osd), Faridabad v. Nathi Singh

ITA No. 47 of 2007 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 47 of 2007 Date of Decision: 7.12.2010 Chief Commissioner of Income Tax (OSD), Faridabad Versus Nathi Singh ....Appellant. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Ms. Urvashi Dhugga, Standing Counsel for the appellant.None for the respondent.None for the respondent. AJAY KUMAR MITTAL, J. 1.This order shall dispose of ITA Nos. 47 and 50 of 2007 ascommon questions of law are involved therein. 2.ITA No. 47 of 2007 has been preferred by the revenueunder Section 260A of the Income Tax Act, 1961 (in short “the Act”)against the order dated 7.9.2005 passed by the Income Tax AppellateTribunal, Delhi Bench “D”, New Delhi (hereinafter referred to as “theTribunal”) in ITA No. 3945/Del/2001 relating to the assessment year1998-99. 3.The appeal was admitted for determination of the followingsubstantial questions of law by this Court:- “1.Whether on the facts and in the circumstances of thecase, the Hon'ble ITAT was right in law in upholdingcase, the Hon'ble ITAT was right in law in upholding the order of the CIT(A) directing the AssessingOfficer not to treat that percentage of capital gain andinterest arising out of payment which is covered bysecurity as income for the year when the law hadalready been changed by amendment and newsection 45(5) was inserted w.e.f. 01.04.1988? 2.Whether on the facts and in the circumstances of thecase the Hon'ble ITAT has erred in not adjudicatingthe issue of deduction u/ss 54B & 54F?” 4.We have heard learned counsel for the revenue. 5.The point that arises in this appeal is whether the amountof enhanced compensation which was released against security and theinterest received thereon would be taxable in the year of receipt. 6.The similar issue came up for consideration before thisCourt in ITA No. 209 of 2004 (The Commissioner of Income Tax,Faridabad v. Bir Singh (HUF) Ballabgarh) decided on 27.10.2010,wherein it was concluded as under:- “(a)that 'income from Business or profession' and'income from other sources' are ascertain on thebasis of system of accountancy followed by theassessee;'income from other sources' are ascertain on thebasis of system of accountancy followed by theassessee; (b)where assessee is not maintaining books of accountsby adopting any specific method, it shall be treated tobe cash system of accountancy;by adopting any specific method, it shall be treated tobe cash system of accountancy; (c)the interest under Section 34 to be awarded by theCollector partakes the characters of compensationCollector partakes the characters of compensation and is taxable in the year of receipt in view of Section45(5)(b) of the Act; and (d)under cash system of accountancy, the element ofinterest awarded by the Court received on enhancedamount of compensation under Section 28 of the1894 Act falls for taxation under Section 56 as'income from other sources' in the year of receipt.” 7.Further, the Apex Court in Commissioner of Income-taxv. Ghanshyam (HUF), [2009] 315 ITR 1 (SC) had held that the amountof enhanced compensation received by the assessee would be taxablein the year of receipt in view of insertion of Section 45(5)(b) of the Actirrespective of the pendency of any litigation at the behest of the Statein any court of law. 8.Accordingly, question No.1 is decided in favour of therevenue and against the assessee. The appeal is allowed to thatextent. 9.Since the Tribunal has not decided the issue relating todeduction under Sections 54B and 54Fof the Act, the matter isremanded to the Tribunal for decision in this regard in accordance withlaw. (AJAY KUMAR MITTAL) JUDGE December 7, 2010gbs (ADARSH KUMAR GOEL)JUDGE ITA No. 47 of 2007 -4- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 50 of 2007 Date of Decision: 7.12.2010 8.Accordingly, question No.1 is decided in favour of therevenue and against the assessee. The appeal is allowed to thatextent. 9.Since the Tribunal has not decided the issue relating todeduction under Sections 54B and 54Fof the Act, the matter isremanded to the Tribunal for decision in this regard in accordance withlaw. (AJAY KUMAR MITTAL) JUDGE December 7, 2010gbs (ADARSH KUMAR GOEL)JUDGE ITA No. 47 of 2007 -4- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 50 of 2007 Date of Decision: 7.12.2010 Chief Commissioner of Income Tax (OSD), Faridabad Versus Smt. Chhotan ....Appellant. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Ms. Urvashi Dhugga, Standing Counsel for the appellant. None for the respondent. AJAY KUMAR MITTAL, J. This appeal is allowed. For reasons, see the order of even date recorded in ITA No. 47 of 2007 (Chief Commissioner of Income Tax (OSD),Faridabad v. Nathi Singh). (AJAY KUMAR MITTAL) JUDGE December 7, 2010gbs (ADARSH KUMAR GOEL) JUDGE