Commissioner Of Income Tax, Faridabad v. Ajay Sharma

ITA No. 150 of 2010 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 150 of 2010 Date of Decision: 5.8.2010 Commissioner of Income Tax, Faridabad Versus Ajay Sharma ....Appellant. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Ms. Urvashi Dhugga, Advocate for the appellant. ADARSH KUMAR GOEL, J. 1.This order will dispose of ITA Nos. 150 and 343 of 2010 ascommon questions of law are involved. 2.ITA No. 150 of 2010 has been filed by the revenue underSection 260A of the Income Tax Act, 1961 (in short “the Act”) againstorder dated 6.5.2009 passed by the Income Tax Appellate Tribunal,Delhi Bench 'A' New Delhi (hereinafter referred to as “the Tribunal”) inITA No. 2032/D/08 for the assessment year 2002-03 proposing to raisethe following substantial questions of law:- “I.Whether, on the facts and in the circumstancesof the case, the Ld. ITAT was right in law inupholding the order of the Ld. CIT (A) inholding that if the litigation regarding quantumof the case, the Ld. ITAT was right in law inupholding the order of the Ld. CIT (A) inholding that if the litigation regarding quantum II. of additional compensation is pending before aCourt and had not finality, enhancedcompensation would not accrue and could besubjected to tax only when the issue ofenhanced compensation is finally settledthough the assessee himself had offeredenhanced compensation for taxation on receiptbasis disregarding the fact that enhancedcompensation would be taxed in the year ofreceipt as the entire controversy on the year oftaxability of enhanced compensation has nowcome to rest with the judgment of the Hon'bleSupreme Court in the case of Commissioner ofIncome Tax, Faridabad Vs. Ghanshyam (HUF),reported in (2009) 315 ITR 1 (SC) wherein theHon'ble Apex Court has held that the year inwhich enhanced compensation is received isthe year of taxability? Whether, on the facts and in the circumstancesof the case, the Ld. ITAT was right in law inconfirming the order of the Ld. CIT (A) inholding that interest on enhancedcompensation could not be taxed in the yearunder consideration as issue regardingenhanced compensation has not attainedfinality disregarding the fact that interest on enhanced compensation would be taxed in theyear of receipt as the entire controversy on theyear of taxability of enhanced compensationand interest thereon has now come to rest withthe Judgment of Hon'ble Supreme Court in thecase of Commissioner of Income Tax,Faridabad Vs. Ghanshyam (HUF), reported in(2009) 315 ITR 1 (SC) wherein the Hon'bleApex Court has held that the year in whichenhanced compensation is received is the yearof taxability and the interest u/s 28 of the LandAcquisition Act, 1894 on enhancedcompensation is a part of enhancedcompensation, therefore, the interest u/s 28 ofthe Land Acquisition Act on enhancedcompensation will also be taxable in the year ofreceipt?” 3.The respondent-assessee received compensation in lieu ofacquisition of land under the provisions of the Land Acquisition Act,1894 which has been assessed as capital gain under Section 45 of theAct. Question for consideration before the authorities was whetheradditional compensation was liable to be taxed in the year in which itwas received irrespective of the fact that the proceedings had notbecome final. The authorities decided the matter in light of the earlierjudgment of the Hon'ble Supreme Court in CIT v. Hindustan Housing &Land Development Trust Ltd. (1986) 161 ITR 524 (SC) and judgments of this Court based on the said view. However, in view of subsequentamendment, the Hon'ble Supreme Court in Commissioner of Income- tax v. Ghanshyam (HUF), (2009) 315 ITR 1 (SC) held that enhancedcompensation was liable to be taxed in the year in which the paymentwas received. The said judgment of the Hon'ble Supreme Court hasbeen rendered after the judgment of the Tribunal. of this Court based on the said view. However, in view of subsequentamendment, the Hon'ble Supreme Court in Commissioner of Income- tax v. Ghanshyam (HUF), (2009) 315 ITR 1 (SC) held that enhancedcompensation was liable to be taxed in the year in which the paymentwas received. The said judgment of the Hon'ble Supreme Court hasbeen rendered after the judgment of the Tribunal. 4.We have heard learned counsel for the revenue. 5.In view of the judgment of the Hon'ble Supreme Court inGhanshyam (HUF) case (supra), the matter has to be re-examined bythe Tribunal. We have remanded matter to the Tribunal for freshconsideration in several cases including ITA No. 188 of 2010[Commissioner of Income Tax, Faridabad v. Horam (Indl)] decidedon 5.7.2010. 6.In view of above, even though notice has not yet beenserved on the assessee, it will be appropriate that the matter isremanded to the Tribunal for fresh decision in accordance with law. TheTribunal will hear the parties before passing its order. 7.A photo copy of this order be placed on the file of theconnected case. (ADARSH KUMAR GOEL) JUDGE August 05, 2010gbs (AJAY KUMAR MITTAL)JUDGE