Satender Kumar Vs ITO (ITAT Delhi)
Summary: The Delhi Bench ‘SMC’ of the Income Tax Appellate Tribunal allowed the appeal of Satender Kumar for Assessment Year 2020-21 and quashed the revisionary order passed by the Principal Commissioner of Income Tax under section 263 of the Income-tax Act, 1961.
The dispute concerned interest of Rs.3,97,56,460/- received by the assessee on enhanced compensation following compulsory acquisition of his agricultural land by HUDA. The assessee had received total enhanced compensation of Rs.6,86,17,767/-, including the aforesaid interest under section 28 of the Land Acquisition Act, 1894. TDS of Rs.39,75,646/- was deducted at 10%. The assessee treated the interest as exempt under section 10(37) of the Income-tax Act.
The original assessment was completed under section 143(3) without making any addition. During assessment proceedings, the Assessing Officer had specifically issued notice under section 142(1) requiring documentary evidence regarding the amount received under section 28 of the Land Acquisition Act. The assessee furnished an explanation and relied upon the Supreme Court decision in CIT v. Ghanshyam HUF, contending that interest under section 28 formed part of enhanced compensation. The Assessing Officer accepted the explanation.
The PCIT subsequently exercised revisionary jurisdiction under section 263. According to the PCIT, the Assessing Officer had failed to make necessary and proper enquiry concerning the taxability of interest on enhanced compensation and had not considered the decision of the Punjab & Haryana High Court in Mahender Pal Narang v. CBDT, which had treated such interest as income from other sources after the amendments introduced by the Finance (No. 2) Act, 2009. The PCIT set aside the assessment order and directed the Assessing Officer to pass a fresh order after necessary enquiry and verification.
