Commissioner Of Income Tax, Faridabad v. Shri Chandi Ram

ITA No. 338 of 2007 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 338 of 2007 Date of Decision: 8.12.2010 Commissioner of Income Tax, Faridabad Versus Shri Chandi Ram ....Appellant. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Vivek Sethi, Advocate for the appellant,in ITA No. 338 of 2007. Ms. Urvashi Dhugga, Advocate for the appellant,in ITA No. 294. AJAY KUMAR MITTAL, J. 1.This order shall dispose of ITA Nos. 294 and 338 of 2007as learned counsel for the appellant submitted that similar question oflaw is involved therein. 2.ITA No. 338 of 2007 has been preferred by the revenueunder Section 260A of the Income Tax Act, 1961 against the orderdated 31.10.2006 passed by the Income Tax Appellate Tribunal, DelhiBench “G”, New Delhi in ITA No. 3382/Del/2003 for the assessmentyear 1998-99, raising following substantial question of law:- “Whether, on the facts and circumstances of thecase, the Hon'ble ITAT is right in holding that the AOshall be within his jurisdiction to bring to tax the element of interest on accrual basis upon its finaldetermination by the higher courts, in contradictionwith the judgment of Hon'ble jurisdictional High Courtof Punjab and Haryana following the judgment ofApex Court in the case of CIT vs. Rama Bai (181 ITR400) whereby interest on enhanced compensation isto be taxed on accrual basis irrespective of thependency of appeal in higher courts in respect ofenhanced compensation?” 3.We have heard learned counsel for the revenue. 4.The point that arises in this appeal is whether the interestreceived on enhanced compensation is taxable in the hands of theassessee in the year of receipt. 5.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; (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 -3- and is taxable in the year of receipt in view of Section45(5)(b) of the Act; and 45(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.” 6.In view of the above, the appeals are allowed and thequestion of law is answered in favour of the revenue and against theassessee. (AJAY KUMAR MITTAL) JUDGE December 8, 2010gbs (ADARSH KUMAR GOEL) JUDGE ITA No. 338 of 2007 -4- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 294 of 2007 Date of Decision: 8.12.2010 Commissioner of Income Tax, Faridabad Versus Shri Jas Lal (HUF) ....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. AJAY KUMAR MITTAL, J. The appeal is allowed. For reasons, see the order of even date recorded in ITA No. 338 of 2007 [Commissioner of Income Tax, Faridabad v. ShriChandi Ram]. (AJAY KUMAR MITTAL) JUDGE December 8, 2010gbs (ADARSH KUMAR GOEL) JUDGE