Commissioner Of Income Tax,Faridabad v. Sh. Ramanand (Huf

I.T.A. No. 221 of 2007[1] IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Income Tax Appeal No. 221 of 2007Date of decision: 19.8.2008 Commissioner of Income Tax,Faridabad. ... Appellant. v. Sh. Ramanand (HUF). ... Respondent. CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA HON'BLE MR. JUSTICE RAJESH BINDAL Present: Mr. Yogesh Putney, Advocate for the appellant. Mr. Avneesh Jhingan, Advocate for the respondent. .. Rajesh Bindal J. The appellant (hereinafter described as `the Revenue') is inappeal before this Court raising following substantial questions of law,arising out of order dated 29.9.2006, passed by the Income Tax AppellateTribunal, Delhi Bench `E' in ITA No. 2213/DEL/03 for the assessment year1998-99: “1.Whether, on the facts and circumstances of the case, theHon'ble ITAT is right in holding that interest onenhanced compensation will not accrue and not be liableto tax till the time the dispute relating to interest payableon enhanced compensation is pending before a Court oflaw and not attained finality ? 2. Whether, on the facts and circumstances of the case, theHon'ble ITAT is right in holding that the interest onenhanced compensation to be taxed on accrual basis onlyafter the finality of litigation regarding enhancedcompensation or interest, in contradiction with thejudgment of Hon'ble jurisdictional High Court of Punjaband Haryana following the judgment of Apex Court in thecase of CIT Vs. Rama Bai (181 ITR 400). [ITA No. 176of 05 and ITA No. 177 of 05 in the case of CIT, I.T.A. No. 221 of 2007[2] Faridabad Vs. Naresh Kumar and CIT, Faridabad Vs.Dilbagh Singh, respectively].” It is not disputed by learned counsel for the parties that theissues raised in the present appeal are squarely covered by a judgment ofthis Court in I.T.A. No. 490 of 2007-- Commissioner of Income Tax,Faridabadv. Shri Hardwari Lal, HUF, decided on 26.3.2008. Relevant parasthereof are extracted below: “In the present case, the question posed by the revenue isslightly different. The pith and substance of the question raisedbefore us is whether in the circumstances of a compensationcase where the matter of enhanced compensation has notattained finality, the interest on enhanced compensation wouldnot accrue and could be subjected to tax only when the issue ofenhanced compensation is finally settled. The Hon'ble SupremeCourt of India in the case of K.S. Krishna Raov. Commissionerof Income-Tax, Andhra Pradesh181 ITR 408 has held that theinterest on enhanced compensation cannot be taxed all in alump-sum as having accrued on the date on which the Courtpasses the order for enhanced compensation and the interest hasto be spread over on an annual basis right from the date ofdelivery of possession till the date of the order of the Court on atime basis. In another case titled as Vikram Singhv. LandAcquisition Collector224 ITR 551, the Hon'ble Apex Court hasheld that the interest received on delayed payment ofcompensation under the Land Acquisition Act is a revenuereceipt assessable to income tax. However, the assessee isentitled to spread over the income for the period for whichpayment came to be made, so as to continue the income forassessing tax for the relevant accounting year. Thus, in view of the above discussed judgments of the Hon'bleApex Court and this Court, the interest on enhancedcompensation would not accrue till the issue of enhancedcompensation is finally decided and thereafter on attaining thefinality of determination of enhanced compensation by theCourt, the interest accrued to the assessee has to be spread over I.T.A. No. 221 of 2007[3] Thus, in view of the above discussed judgments of the Hon'bleApex Court and this Court, the interest on enhancedcompensation would not accrue till the issue of enhancedcompensation is finally decided and thereafter on attaining thefinality of determination of enhanced compensation by theCourt, the interest accrued to the assessee has to be spread over I.T.A. No. 221 of 2007[3] on an annual basis right from the date of delivery of possessiontill the date of the order of the Court on the time basis.”For the detailed reasons recorded in the judgment of this Courtin Commissioner of Income Tax, Faridabadv. Shri Hardwari Lal (supra),we do not find that any substantial question of law arises in the presentappeal. Accordingly, the appeal is dismissed. 19.8.2008mk (Rajesh Bindal) Judge (Hemant Gupta) Judge