D.a.k.chinnaraj Naidu v. The Commissioner Of Income Tax, V.p.rathnasamy Nadar Road, Bibikulam, Madurai – 625 002

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURTDATED: 25.03.2021 CORAM THE HONOURABLE MR.JUSTICE G.R.SWAMINATHAN W.P.(MD)No.21513 of 2017 and WMP(MD) No.17793 of 2017 D.A.K.Chinnaraj Naidu ..Petitioner Vs. 1.The Commissioner of Income Tax, V.P.Rathnasamy Nadar Road, Bibikulam, Madurai – 625 002. 2.Assistant Commissioner of Income Tax, Circle-I, Virudhunagar. ..Respondents PRAYER:Writ petitionfiled under Article 226 of the Constitution ofIndia, to issue a Writ of Certiorarified Mandamus, calling for therecords of the first respondent in C.No.115/09/PCIT-2/MDU/2015-16Dated 30.03.2017 quash the same and consequently direct therespondents to forthwith sanction and pay the refund the sum ofRs.3,00,049/- deducted towards TDS with applicable interest from thedate of deduction and with cost, within such time may be directed bythis Court. For Petitioner : Mr.J.Parekhkumar For Respondents: Ms.M.Parameshwari for Mrs.S.Srimathy Standing Counsel O R D E R Heard the learned counsel for the petitioner and the learnedStanding Counsel for the respondents. 2.The petitioner is owning lands in Virudhunagar, which wasacquired for the Collectorate Complex of Virudhunagar District. Thepetitioner was granted compensation by the land acquisition officer.Aggrieved by the quantum awarded to him, the petitioner soughtreference and enhancement of the compensation. The proceedings wenton for number of years and ultimately only on 31.12.2006, thehttps://hcservices.ecourts.gov.in/hcservices/ petitioner was disbursed with the compensation amount. It comprisednot only enhanced compensation, but also solatium and interest. Theauthority, who had disbursed the compensation deducted a sum ofRs.5,94,000/- at source and handed over the balance amount to thepetitioner herein. Thereafter, the petitioner filed his returns forthe assessment year 2007-2008 and in the said return, the petitionerindicated that only a sum of Rs.1,52,539/- was received by himtowards interest component. The main contention of the petitioner isthat the accrued interest of Rs.45,00,000/- received by him has tobe spread over from the date of acquisition. Since the petitioner'srequest was not considered, he filed W.P.(MD) No.17675 of 2014 andvide order dated 03.11.2014, this Court directed the AssessingAuthority to pass orders on the petitioner's representation.Pursuant to the said direction given by this Court, the AssessingAuthority vide order dated 17.12.2014, held that the petitioner'srequest was not maintainable and rejected the same. The relevantportion of the said order is extracted as under:- 5.The assessee's second contention is regarding thequantum of interest to be assessed in AY 2007-2008.Assessee's contention in this regard is that interestreceived represents interest for the period from dateof delivery of possession ot the date of order of thecourt and hence the same is not to be assessed to taxentirely in this Assessment Year but has to be assessedin the respective Assessment Years on annual basis. Nodoubt, the Income Tax Act takes into account two pointsof time at which the liability to tax is attracted vizthe accrual of the income or its receipt. It is alsoevidenced from records that interest granted is for theperiod 21.09.1985 to 31.12.2006. However, this interestbecome due to the assessee only by the order dated18.11.2002 of the Hon'ble High Court. From theaffidavit filed it is gathered that though the order ofthe Hon'ble High Court was in the year 2002, theassessee filed execution petitions before SubordinateJudge, Virudhunagar only in the year 2004, theacquisition authority filed calculation memo only inthe year 2007 and the assessee also received the amuntwithin the financial year ending 31.03.2007.5.1. The interest income which was neither received noraccrued in the relevant previous years cannot beassessed in the respective assessment years, ascontended by the assessee. Further, though in thiscase, interest can also be taxed on due basis from AY2003-2004 onwards, as contended by the assessee, thereis nothing on record to show that the assessee hadalready admitted interest income on due basis in therespective earlier Assessment years viz AY 2003-04 tohttps://hcservices.ecourts.gov.in/hcservices/2006-07. As per Form 16A, total amount received by the assessee is Rs.58,30,939/- and as evidenced from thedetails available in record the breakup of the same isas under. 3.Aggrieved by the same, the petitioner filed a Revision beforethe first respondent herein under Section 264 of the Income Tax Act,1961. The Revisional Authority also noted that the petitioner hereinhad used the amount received on compulsory acquisition of land forconstructing a house and the said claim was supported by a valuationreport and held that the Assessing Authority has to give necessaryrelief to the petitioner on that score. The application was thuspartly allowed and he was sanctioned with refund alsocorrespondingly. The primary contention urged by the learned counselfor the petitioner is that the interest portion received by thepetitioner following his land acquisition should be spread over fromthe year of acquisition till the year of payment. He also pointedout that during the relevant assessment year 2007-2008, thepetitioner was not having any taxable liability. He also pointed outthat for the said assessment year, he could have rightly shown onlya sum of Rs.1,45,000/- as interest received. This amount would notattract any tax liability. The main contention is that the assessingauthority had never raised any demand in respect of the previousyears. Till date, no notice has been received from the respondentand the petitioner's income for the earlier years had not beenassessed to tax. Therefore, according to him, the respondentscommitted illegality by retaining a sum of Rs.3,49,000/- that wasdeducted from the compensation amount by way of TDS. 4.I have to necessarily sustain the contention of thepetitioner's counsel that even though a sum of Rs.45,00,000/- wasreceived as interest in the year 2006 for the assessment year 2007-2008, still it cannot be taxed as a single receipt and that the saidamount should be spread over from the year of acquisition. I calledupon the counsel on either side to file a memo of calculation todemonstrate if by such spreading over, whether the petitioner wouldbe liable to pay any tax at all. The learned Standing Counselappearing for the respondents filed a statement, which prima facieindicates that the petitioner would definitely have to pay asubstantial sum by way of tax. If only the petitioner is able todemonstrate that the petitioner's tax dues will be zero, if theinterest amount is spread over from the year of acquisition till thedate of payment, this Court can consider granting relief to thepetitioner.The petitioner's counsel would contend that it is for therespondent to issue notice of assessment. I cannot countenance suchhttps://hcservices.ecourts.gov.in/hcservices/a contention. I would be justified in ordering refund, only if the petitioner can demonstrate that he is not at all liable to pay anysum towards tax for the amount of compensation received by him. Asalready admitted by the petitioner's counsel, the petitionerreceived a sum of Rs.58,00,000/- out of the said amount,Rs.45,00,000/- alone represented the interest portion. The StandingCounsel has demonstrated that spreading over the interest portionover several years would still attract liability more than what wasdeducted at source. Since, the petitioner had not demonstrated thatthe petitioner is not liable to pay any tax, I am not inclined tointerfere with the impugned order. The Writ Petition is dismissed.No costs. Consequently, connected Miscellaneous Petition is closed. vrn Note: In view of the present lock down owing to COVID-19 pandemic, a webcopy of the order may be utilized for official purposes, but,ensuring that the copy of the order that is presented is the correctcopy, shall be the responsibility of the advocate/litigantconcerned. To 1.The Commissioner of Income Tax, V.P.Rathnasamy Nadar Road, Bibikulam,Madurai – 625 002. 2.Assistant Commissioner of Income Tax, Circle-I, Virudhunagar. +1 CC to M/s.P.SRINIVAS, Advocate (SR-13938[F] dated 26/03/2021)+1 CC to M/s.S.SRIMATHY, Advocate (SR-14045[F] dated 29/03/2021) https://hcservices.ecourts.gov.in/hcservices/