Decided on March 16,1995



M.K.Sharma - (1.)This reference application under Section 256(2) of the Income Tax Act has been filed by the Revenue praying for a direction requiring the Tribunal to draw up a statement of the case and refer the following question said to be a question of law arising out of the combined order of the Tribunal in I.T.A. No. 1874 and 2898/1987 relevant to the assessment years 1983-84 and 1984-85:- "Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was 'justified in dismissing the departmental appeal and holding that the interest accrued on compensation could be assessable only after-the enhanced compensation had been finally determined with the interest earned by the assessee during the year under consideration had nothing to do with the compensation/ enhanced compensation?"
(2.)Briefly staled, the facts of the case are that the assessee is a Trust which came into existence under a Deed of Trust dated 1.9.1973. Shri Om Prakash Goel and Shri Hari Shankar Goel who were brothers owned certain lands which were acquired by the Government of Madhya Pradesh under the Land Acquisition Act and compensation was awarded by the Land Acquisition Collector. The compensation awarded by the Land Acquisition Collector was considered to be inadequate by the owners of the land and accordingly a reference being sought for was made to the First Additional Judge, Gwalior for the enhancement of the compensation. The Additional Judge enhanced the compensation against which an appeal was filed by the Stale Government before the High Court of Madhya Pradesh. In the said appeal, it appears that there was a difference of opinion between the two learned Judges hearing the appeal regarding the Fixation of the quantum of compensation and the matter was referred to a third Judge for final decision.
(3.)The assessee Trust was made a party to the proceedings before the 'High Court in the appeal and the trust was allowed to withdraw the enhanced compensation deposited in the court by furnishing a bank guarantee for the amount of compensation and future interest. In the previous year relevant to the assessment year 1983-84, the assessee trust received an amount of Rs.6,53,614.00 by way of interest on the compensation and the said amount was' shown by the assessee as a liability in the balance sheet. Similarly for the assessment year 1984-85 a sum of Rs. 38,913.00 was withdrawn by way oi interest and this amount was also show as liability. Although none of the aforesaid amounts was shown as income in the respective assessment years by the assessee the Income Tax Officer while passing the orders of assessment held that the interest income of the assessee was income of the assessee trust and brought the same to lax in the respective assessment years. The asscssee being aggrieved thereby filed an appeal before the Commissioner of Income Tax (Appeals), who after considering the submissions made by the respective parlies held that the interest on the compensation amount could not be brought to tax and accordingly deleted the addition made by the Income Tax Officer. Appeal having been Filed therefrom by the Revenue the Income Tax Appellate Tribunal upheld the decision and the view taken by the CIT (Appeals). Thereafter an application under Section 256(1) of the Income Tax Act having been filed by the Revenue for requiring the Tribunal to draw up a statement of case and refer the aforesaid question to this court for its opinion, the Tribunal dismissed the said application holding that no referable question of law arose out of the order of the Tribunal.

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