Rakesh Garg, J. - (1.) THE assessee has filed the present appeal under Section 260A of the Income Tax Act, 1961 (for short "the Act") against the order dated January 31, 2007 (annexure A -3) passed by the Income Tax Appellate Tribunal, Delhi Bench "F", New Delhi (for short "the Tribunal"), in I.T.A. No. 5370/Del/04 for the assessment year 2001 -02.
(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 lakhs. 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. The Assessing Officer, vide his order dated February 27, 2004, passed under Section 143(3) of the Act held that the entire amount of Rs. 9.56 crores on account of the enhanced compensation is taxable in the assessment year 2001 -02 only. The amount of Rs. 5.29 crores was held to be a receipt under Section 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 Assessing Officer are reproduced as under: (i) The fact that the 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 the enhanced compensation has been received. (iii) The assessee has relied upon the decision of the hon'ble Supreme Court in CIT v. Hindustan Housing and Land Development Trust ltd. : [1986] 161 ITR 524. For the assessment year 1956 -57 which has been further followed by the Patna and Delhi Income Tax Appellate Tribunal Benches mentioned by the assessee. (iv) However it is very important to note that the Government of India duly considered all these judicial pronouncements and made consequential amendments in the Income Tax Act. As per the latest position of law in Clauses (a), (b) and (c) of Section 45(5) of the Income Tax Act, there remains no ambiguity and the receipt of compensation, its enhanced 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 assessed interest of reduction by any court later on, as pointed out by the hon'ble Supreme Court, have been duly safeguarded as per Clause (c) of Section 45(5) that the assessment can be re -computed that 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 the enhanced compensation is taxable in the assessment year of 2001 -02 only. The amount of Rs. 5.29 crores shall be taxed under the head 'Income from other sources'.
(3.) THE assessee filed an appeal before the Commissioner of Income Tax (Appeals), Faridabad challenging the order dated February 27, 2004 passed by the assessing authority.;