Case Law Details
ACIT Vs SV Global Mill Ltd. (ITAT Chennai)
We find that the Tribunal in the context of Section 10(37) of IT Act, held that interest received for delayed payment of enhanced compensation in respect of acquisition of immovable property is in the nature of interest liable to be taxed u/s.56(2)(viii) r.w.s. 145A(b) of IT Act. We further note that under the provisions of Section 10(37) of IT Act, compensation received by an individual or HUF for compulsory acquisition of agricultural land was exempt from tax and there was no separate provisions of taxing or exempting interest received on enhanced compensation or interest paid on such compensation u/s. 10(37) of IT Act. However, provisions of section 56(2)(viii) of IT Act has been amended by the Finance Act, 2009 w.e.f. 01.04.2010 to bring into tax interest received on compensation or enhanced compensation in the year of receipt. Under those facts, the Tribunal came to the conclusion that by virtue of specific provisions of Section 56(2)(viii) r.w.s. 145A(b) of IT Act, interest received on compensation or enhanced compensation referred to in clause (b) of section 145A(b) of IT Act is not exempt u/s.10(37) of the IT Act. In this case, interest has been received under new Land Acquisition Act, which came in to existence from 01.04.2014 onwards. Under the new Land Acquisition Act, 2013, more particularly as per Section 96 of RFCTLARR Act 2013, no income tax or stamp duty shall be levied on any award or agreement made under the new Act except u/s.46 of the said Act. Therefore, after a new Land Acquisition Act, 2013, the law has been changed in as much as any compensation or enhanced compensation including interest if any, is completely exempt from Income Tax by virtue of section 96 of RFCTLARR Act 2013. Therefore, we are of the considered view that by virtue of overriding nature of the new Land Acquisition Act, 2013, the provisions of Income Tax if any which deals with taxability of compensation or interest if any received by an assessee for compulsory acquisition of land becomes redundant and has no application. Further, the assessee has relied upon the decision of Hon’ble Supreme Court in the case of CIT vs. Ghanshyamdas, 315 ITR 1, where the Hon’ble Supreme Court held that interest paid u/s.28 of the Land Acquisition Act forms part of compensation and is a part of enhanced value of land. The Hon’ble Gujarat High Court in the case of Movaliya Bhikhubhai Balabhai v. ITO, 388 ITR 343, held that interest forms part of compensation and the same is not taxable. The said two judgments rendered by Hon’ble Supreme Court and Gujarat High Court are in consonance with the provisions of Section 3(i) of new RFCTLARR Act 2013, which defines the terms compensation which includes interest if any payable under said Act. Therefore, we are of the considered view, the case laws relied upon by the assessee in the above two cases are squarely applicable to the facts of the present case.
In this view of the matter and by respectfully following the case laws discussed hereinabove, we are of the considered view that interest received by the assessee towards delayed payment of compensation for compulsory acquisition of land is akin to compensation for compulsory acquisition of land, which is exempt from Income Tax by virtue of Section 96 of RFCTLARR Act 2013. The ld.CIT(A) after considering relevant facts has rightly deleted additions made by the AO towards interest u/s.56(2)(viii) of the IT Act. There is no error in the finding recorded by the ld.CIT(A) and hence, we are inclined to uphold the order of the CIT(A) and dismiss the appeal filed by the Revenue.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal filed by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals)-15, Chennai, dated 31.07.2019 and pertains to the assessment year 2016-17.
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