RAKESH KUMAR GARG, J. - (1.) THE assessee has filed the present appeal under s. 260A of the IT Act, 1961 (for short 'the Act') against the order dt.
(2.) THE assessee firm is a co -operative society and its main object is to acquire land and build houses on that land. The land acquired by the society was compulsorily acquired by the Government. During the year under consideration, the society has received enhanced compensation of Rs. 9,45,32,917 from the reference Court comprising of additional compensation of Rs. 6,40,00,000 and interest of Rs. 3.08 crores thereon. The assessee declared a capital loss of Rs. 2,52,55,221 carried forward to next year on long -term capital gain of Rs. 12.32 lacs. The assessee also declared net income of Rs. 30,89,258 on account of interest received. Accordingly, the assessee declared a returned income of Rs. 18,56,620. crores on account of enhanced compensation is taxable in asst. yr. 2001 -02 only. The amount of Rs. 5.29 crores was held to be as a receipt under s. 45(5)(b) of the Act and interest of Rs. 4.27 crores was ordered to be taxed under the head "Income from other sources". The conclusions drawn by the AO are reproduced as under : "(i) The fact that enhanced compensation of Rs. 9.46 crores including interest is very much taxable, is not disputed by the assessee and therefore, this amount is held to be taxable. (ii) The only point raised by the assessee is the year in which the said amount shall be taxed i.e., the year when the issue of enhanced compensation is finally decided and there is no appeal filed by the State Government against such final order of the Hon'ble High Court or the year in which enhanced compensation has been received. (iii) The assessee has relied upon the decision of Hon'ble Supreme Court in CIT vs. Hindustan Housing & Land Development Trust Ltd. (1986) 58 CTR (SC) 179 : (1986) 161 ITR 524 (SC). For asst. yr. 1956 -57 which has been further followed by Patna and Delhi Tribunal Benches mentioned by the assessee, (iv) However it is very important to note that Government of India duly considered all these judicial pronouncements and made consequent amendments in the IT Act. As per the latest, position of law in cls. (a), (b) and (c) of s. 45(5) of IT Act, there remains no ambiguity and receipt of compensation, its enhancement or reduction by any Court thereafter has been separately considered. Therefore, the enhanced compensation is to be taxed in the year of such receipt. The assessee's interest of reduction by any Court later on as pointed out by Hon'ble Supreme Court has been duly safeguarded as per cl. (c) of s. 45(5) that the assessee can recompute the same in the year of any such reduction later on. (v) Therefore, it is held that the entire amount of Rs. 9.56 crores on account of enhanced compensation is taxable in assessment year of 2001 -02 only. The amount of Rs. 5.29 crores shall be taxed under the head "Income from other sources". assessing authority. compensation and interest thereon was deleted holding that enhanced compensation and interest thereon cannot be charged to tax until the same had attained finality from the highest Court. The CIT(A) while allowing the appeal found that in the present case, the assessee had not acquired any absolute right on the enhanced compensation received as same was received with conditions and since the assessee did not acquire any right over the enhanced compensation and the interest thereon, the same cannot be charged to tax in the hands of the assessee.
(3.) NOT satisfied with the order of the CIT(A), the Revenue filed the appeal before the Tribunal, Delhi Bench "F", New Delhi, challenging the abovesaid order. However, it was conceded by the Revenue before the Tribunal that the issue involved in the present case is covered by the Special Bench decision of the Tribunal in the case of Dy. CIT vs. Padam Parkash (HUF) 104 TTJ (Del)(SB) 989, wherein it has been held that enhanced compensation for acquisition of land is chargeable to tax in the year in which such compensation is received. However, interest on enhanced compensation is to be assessed on accrual basis from year to year and it can be subjected to tax only after it is finally determined. In view of the stand taken by the Revenue, the Tribunal directed the AO to tax the compensation in the year of receipt and interest on enhanced compensation in the assessment year relevant to the previous year in which it is finally determined.;