Satender Kumar vs Income Tax Officer

ORDER

“3 . B r ie f ly st at e d, t h e a s se ss e e i s an i n d i v id u al . H e f i l e d h i s r e t ur n f or AY 2 0 1 8 - 19 o n 29 . 0 8. 2 0 1 8 d e c la r i ng in co m e o f Rs. 6, 3 5, 4 7 0 / - . H i s r e t u r n wa s p r o ce ss e d un de r se ct i on 14 3( 1) ( a) on 2 8. 06 . 2 0 1 9 . H i s case w a s s e le ct e d f o r co m p l et e s cr u ti n y as s e s sm e n t u n d e r t he e - as se ss m e n t S ch em e , 2 01 9 o n t wo i ss u e s, n am e ly r e f un d c l a im and w inn i ng f ro m L ot ter y/ c r o ssw o r d p u z z le /h or s e r ac e s. Th e L d . A s se ss i n g O ff i c er (" A O ") se r v e d no t ic e u n d e r se ct i o n 1 43 ( 2) up on t h e a s se ss e e on 2 2 . 0 9. 2 0 1 9 fo l l o w ed b y i s s ue o f n o t ic e un de r s e c t io n 1 4 2 ( 1 ) of t h e Ac t o n 2 3. 1 1 . 2 0 2 0 . T h e L d. A O c o m p le te d t he as s e s sm e n t o n 2 2 . 0 1 .2 0 2 1 un de r s e c ti o n 1 43 (3 ) r .w . se ct i on 14 3( 3A ) an d 1 4 3 ( 3 B ) of t h e A ct o n in co me r e t ur ne d w it h t h e ob se rv at io n t h at o n af o r e s ai d t wo is su e s no a dd i t i o n is m a d e.

4.

In e x er c is e o f h is po w er s v e s te d i n h i m u n d e r s e c t i o n 2 6 3 o f th e Ac t , t h e L d. P CI T h e l d t h e i m p ug ne d o r d er o f t h e L d. A O as er ro n eo us a nd p r e j u d ic i a l to th e i n t e r e st o f R ev e n u e. A c co r d i ng to L d. P CIT , t he L d. AO sh o u ld h a v e t ak e n i n t o c o n s i de ra t io n, th e b in d i ng d e c is i o n of H o n ' b le J ur i s d ic t i on al H ig h C ou r t i . e . H o n 'b le P u n j a b & H ar ya n a H i gh Co ur t d a te d 1 9 . 0 2 . 2 0 20 i n t he cas e o f Mah e n d e r P al N ar an g v s. C BD T ( 20 2 0 ) 4 2 3 IT R 1 3 (P &H ) w h er e i n t h e H o n ' bl e H i gh C o u r t h as de al t w i t h t he con t ro ve r s y ar i s in g f ro m t h e ju d g m e n t of Ho n 'b l e Su pr e m e Co u r t i n t h e c as e o f C IT v s. G h a ns h y am H UF d at e d 1 6t h J u l y , 20 0 9 r e la t i ng to th e t ax ab i l i t y of in t e r e st r e ce iv e d on com p e n sa t io n or e n h a nc e d co m p e n s at i o n a n d al s o t he am e n d m e n t s / pr o v i s i o n s o f s e c t io n 5 6 ( 2 ) (v i i i ) in tr o du c e d th ro u g h F in a n c e A c t , 2 0 0 9 e ff e c t iv e fr o m 0 1 . 0 4 . 2 0 1 0 on t h e ab o v e is su e , wh i ch t h e L d. A O f ai le d to d o . T h e L d. P CIT po i n t e d o ut t h at t he S L P f i le d ag ai ns t t h e or de r of th e d ec i s io n (su pr a) of t h e H o n' b l e P& H H ig h C o u rt h as b e e n d is m is se d by th e H on 'b l e S up r e m e Co u r t v id e i ts o r d e r d at e d 4 th M ar c h, 20 2 1 in M ah en de r P al N ar an g v s . CB D T ( 2 02 1) 2 7 9 T axm a n 74 (S C ). H e, t he r efo r e , se t a s id e t h e im p u g n e d as se s sm e nt o r der wi th a d ir e c t io n t o p as s a n o r d e r af re s h af t er m ak i n g r e q u is i t e en q u ir i e s a n d p ro pe r v er if i c a t io n w it h r e g ar d t o t ax ab i l i ty o f in t e r e st o n e n h an ce d co m p e n s at i o n.

5.

A g g r iev e d, t h e as se ss e e i s i n a p p e a l b efo r e t h e T r i bu n al a nd al l th e g r o u n d s r e l at e t h er et o .

6.

T h e L d . A R s ub m it te d t h at t h e a ss e s sm en t o r d er w as n e i th e r er ro n eo us n o r p r e j u d i c ia l t o t he i nt e r e s t o f R ev e n u e b e c au s e ( i ) th e L d. A O h as p as s e d t h e o r d e r af t e r m a k in g p ro p er e n q u ir ie s du r i ng a s se s sm e n t p r oc e e d in gs ; ( i i) t h e L d . P C IT h as e x e r c i s ed th e j ur is d i ct io n u n de r se c t io n 2 63 m er e l y b as e d o n a u d it ob j e c t i o n , wh ich i s n ot p e r m i ss i b l e an d (i i i ) th e L d. A O h as va l i d ly h e l d t h a t i nt e r e st u nd e r se ct io n 28 o f L an d A cq u i s i t i on Act , 1 8 9 4 g r a nt e d b y t he c o u r t is an in t e g r a l p ar t o f e n h a n c ed com p e n sa t io n an d e x e m pt un d e r se ct i o n 1 0( 37 ) of t he Ac t in cas e o f t h e a ss es se e .

6.

1 E l a b or at in g t h e a bo v e co n te n t i o n s , t h e L d . A R po i nt e d o ut th at i n n o t i ce un de r se ct i on 14 2( 1) o f t he Act da t e d 2 3. 1 1 . 2 0 2 0 (co py a t P ap e r B o o k p ag e 1- 2 ), t h e Ld . AO r e qu ir e d t he as s e s se e t o f ur n is h do cum e n t a ry ev id e n ce i n s u p p o r t o f c la i m th at th e a m o u n t o f R s. 6, 86 , 1 7 , 7 6 7 /- i s r e c e i ve d u n der se ct i on 28 o f t h e L an d A cq ui s i t i o n A c t. T h e a s se ss e e r e s po n d e d v i de l e t t e r ( c o py at p a ge s 3 - 5 8 o f P ap er Bo o k ) t h at t h e a s se s s ee r e c e iv e d e n h an ce d c o m p en s at i o n o n co m pu l so r y ac q u is i t io n o f hi s ag r ic u lt ur al lan d by H a ry an a G ov t . o f Rs . 6 , 8 6, 1 7 , 7 6 7/ -wh ic h i n c lu de d in t er e st u n d e r s ec t io n 2 8 o f L an d A c qu i s it io n Ac t of Rs. 3 , 9 7 , 5 6 , 4 6 0/ - wh i ch w as pa rt of e n h an ce d co m p e n s at i on as h e l d b y t h e Ho n ' b l e S u p r em e C o ur t in C I T v s. Gh an sh y a m H UF (2 0 09 ) 3 1 5 IT R 1 (S C ). It w as c l ai me d t h at t he a ss e s s ee wa s en t i t l e d t o e xe m pt i o n u n d e r s e ct i o n 1 0 ( 3 7 ) o f th e A ct . T he ex p l a n at i o n o f th e a ss e s se e w as a cc ep t e d by th e L d . A O w h o p as se d t h e i m p u g n ed a s se ss m e n t o r d e r d at ed 2 2. 0 1. 2 0 21 wi th ou t m ak in g any a d d it io n. T h e as se ss m e n t w a s co m p l e t ed af t e r c ar r y in g o u t pr o p e r e n q u i r ie s w h i ch h e o ug ht t o h a ve car r i e d o u t i n r e s p e c t o f t h e e n h an c e d co m p e n sa t io n r e c e iv ed by t h e as s e s se e. I t i s no t a c a se o f ' l ac k o f e n q u i ry '. M e re l y be c a u se in h i s o r d er t h e L d . AO d i d no t m a k e e l a b o r a te d i s cu ss i o n b u t wa s sat isf i e d w it h th e e x p l an at io n of t h e as s e s se e , t h e o r d er cou l d no t b e h e l d t o b e er r o n e o us. In su p p o r t t h e d ec i s i o n s o f H o n ' b le D e l h i Hi g h C o u rt in C IT v s. Su n b e a m A ut o Lt d . ( 2 0 1 1 ) 3 3 2 IT R 1 67 ( D e l) an d de c is io n o f H o n 'b le R a j as th an H i gh C o u r t in C I T v s. G an pa t R am B is n o i 2 96 IT R 2 9 2 ( R aj . ) w er e c i t e d .

6.

2 T he L d. A R i n v i t e d o u r a tt e n t io n to A u d it Me m o at p a g e s 39 9- 4 0 2 of P ap er B o o k in t h e c as e of t he as se ss ee wh e r e i n IT O (A u d i t ) H i s ar r ai se d an au d it o b je ct io n o bs e r v in g t h at in te r e st un de r s e c t io n 2 8 o f L a n d A cq u i s it i o n A ct o f R s. 3 , 9 7, 5 6 , 46 0/ -wa s c h ar g e a bl e t o t ax u n d er se ct i on 5 6 ( 2 )( v i i i ) o f t h e A ct a nd al so r e f e r r e d to t h e de c is i o n s i n t h e ca s es o f S h r i M a nj e et S in g h H UF v . UO I & O t h er s i n C WP No . 1 5 5 06 o f 2 01 3; S h r i Pu ne e t S i n g h v s . C IT ( 2 01 9) 1 1 0 t ax m a n. c o m 1 1 6 an d S hr i Ma h e n dr a P a l N ar an g v s. C BD T in C WP N o . 1 7 9 71 o f 2 0 1 9 . T he L d. A R co n t e n de d t h at t he o r d er o f t h e L d . P C IT is m e r e ly b as e d o n th e au di t o b j e ct io n w it h o u t ap p ly in g h i s i n d e pe n d e nt m i n d an d w i t h o u t co n s i d e r i n g t h e su b se q u e n t d e c is i o n s o f H o n 'b le S up r e m e C o u r t i n t h e ca s e s of ( i ) CIT v s. Go v i nd b h a i Ma m ai y a (2 0 1 4 ) 52 ta x m an n. c o m 2 70 ( S C) ; ( i i) UO I v s. H a r i S in g h (2 0 18 ) 9 1 t ax m an n. co m 20 ( S C) ; an d ( i i i) I T O , T D S v . Mu k t an an g ir i Ma h e s hg ir i i n C iv i l Ap p e a l N o. 1 8 4 7 5 of 2 0 I 7 d at ed 10 . 1 1. 2 0 1 7 , wh e r e in t h e r at io o f d e c i s i on of C I T v s. G h an sh ya m ( H UF ) ( 20 0 9 ) 1 81 T ax m an 3 6 8 ( S C) h a s b e en af f ir m e d . T h e L d . A R c it e d d e c is io ns w he r e in as su m p t io n o f j ur is di c t io n u n d e r se ct i o n 2 6 3 on t h e b as i s of au d it o b je ct i o n by t h e Au d it w i ng of t h e D ep ar t m e n t h as b ee n he l d t o be in va l i d .

6.

3 T h e Ld . A R ex p l ain e d t h at t h e e n h a nc e d c o m pe ns a t io n aw ar d e d b y t h e a p pe l l a t e au th or it y / c o u rt t o a n as s e s s e e on ac q u is i t io n o f c a pi ta l as se t i s ch ar g e a b l e to t ax as c ap it al g a in in th e y e a r of r e c e i p t as p er se ct io n 4 5 ( 5 ) o f t h e Ac t . H o w ev e r , in t h e c as e o f an i nd iv i d u a l o r H UF su ch c ap i t a l ga i n f r o m com pu l so r y a cq u i s it io n o f ag r i cu l t ur a l l a nd b e in g c a p it a l as s e t i s e x e m p t f r o m t a x u nd er s e ct io n 1 0 ( 3 7) of t h e A c t.

6.

4 T h e L d. A R p o i n t e d o ut t h e d i st i nc t io n b e tw e en i n t e r e st aw ar d e d u nd er s e c t io n 3 4 an d int e r e s t p a id o n ex ce s s com p e n sa t io n u n de r se c t i o n 2 8 o f L an d A c qu is i t io n A c t . Wh e re a s in t er es t u n d e r s e c t io n 3 4 is pay ab l e f o r de l ay in m ak i n g p ay m e n t af t e r t ak i n g p os se ss i o n o f t h e acq u i re d l a n d, in t e r e st u n d er se ct i o n 2 8 i s aw ar d e d f o r ac cr e t i o n in th e v al u e of l an d an d is t h er ef o r e p ar t of e n h an ce d co mp e n s a t i on .

6.

5 I n G h an shy am ' s c as e ( s u pr a) , t h e H o n' b le S u p r e m e C o u r t he l d t h a t in te r e s t un de r s e ct i o n 2 8 , un l i k e in t e r e st u n d er se c t io n 3 4 is an a ccr et io n to th e v al u e an d h e n ce i t i s a p ar t o f en h a n c ed co m pe n s at io n o r co n s i de r a t io n w hi c h i s n o t t h e c a se un de r se c t ion 3 4 o f t h e 1 8 9 4 A c t.

6.

6 A s t o t h e al l e g e d n o n - c o n s id er at i o n o f t h e d e c i s i o n o f H o n 'b le P & H H i g h Co ur t in M a h e n d e r P al N ar an g ' s c a se (su pr a) b y t h e L d . A O , it i s su b m it t e d t h at th e H o n ' b le S u pr e m e Co u r t d i sm iss e d t h e SL P o f t h e a s s e s se e f il ed ag a i n s t t h e s a i d de c is i o n o f H o n ' b le P & H H ig h Co u r t i n l i m i ne a nd it i s a se t t l e d l aw t h at th e d is m is s a l o f S L P i n l i m i ne d o e s n o t a m o u nt to af f ir m at i on o f th e v i e w t a k e n by t h e H ig h Co u r t. Un l e s s t he j u d gm e nt o f t h e H i gh C o u r t is af f ir m e d, at le ast , w it h s h o r t r e aso n in g , th e s a m e w o u l d n o t a m ou nt t o bi n d in g pr e c e d en t.

6.

7 T h e L d . A R e l ab or a te d t h at th e i ns e rt io n o f s e ct i o n 1 45 A, se c t io n 1 45 B, s e c t i o n 56 (2 )(v i ii ) an d se ct i on 5 7 ( iv ) b y t he F in a nc e (N o .2 ) Ac t , 20 09 w . e. f . 0 1. 0 4 . 20 1 0 d o e s n o t ch an ge th e ch ar act e r o f i nt e re st u n d er se c t i on 2 8 o f t he L a n d Ac q u i s i t io n Ac t g r a n te d by th e co u r t fr o m 'c ap i t a l r e c e i p t ' f or m i ng p a r t o f e n ha nc e d co m pe ns a t io n a s e nv i s ag e d i n s e c t io n 45 ( 5 ) o f t h e A c t t o ' re v e n ue r e ce i p t' c h a rg ea b l e t o t ax a s in co me f r o m o t h e r s o u r ce s. T h e v iew t a k e n by t h e Ld . A O t h at in t e r e st u n d e r se ct i o n 2 8 o f L a n d Ac q u i s it i o n Ac t r e c e iv e d by th e ass e s se e is e x e m p t u n d e r se ct io n 1 0( 3 7 ) o f t h e A ct i s n ot con t r ary t o l aw. H is ass e s sm e n t o r de r is, t he r e f or e , n o t er ro n eo us an d n o t li a b le t o be r e v is e d u nd e r se ct io n 26 3 o f t he Act .

7.

T he L d . C I T- D R su p p o r t e d th e or de r o f th e L d . P CI T . H e p l ac e d o n re co rd a co p y o f t he de c i s io n o f H o n' b l e P u nj a b & H ar y an a H ig h C o u r t in M a h e n de r P a l N ar an g v . C B D T r ep o rt e d in ( 2 0 2 0) 4 2 3 I T R 13 ( P &H ) w h e r e in t he H o n ' b l e H igh C o u r t he l d th a t in t e r e s t r e c e iv e d o n co m pe ns at i o n or e n h an c e d com p e n sa t io n u n d e r La n d A c q u is i t io n A c t , 1 89 4 i s to be tr e a t e d as ' i n c o m e fr o m o t h er s o ur ce s ' an d n ot un de r th e h e ad ' c ap i t a l ga i n s'. T he L d . C IT - D R d r e w o ur at t e nt i on t o p a ra 9 an d 1 0 o f th e d e c is io n ( s u pr a).

8.

We h av e g i v e n o ur c ar e f u l t h o u g h t t o t he r i v a l s u bm i s s i on s an d p e r u se d t he r e co r ds. T he f ac t s ar e n ot i n d is p u t e . T he as s e s se e r e c e iv e d i nt e r e st o f R s. 3 , 9 7, 56 , 4 6 0 / - o n en h an c ed com p e n sa t io n f r o m H UD A af t e r t h e co m pu l sor y a cq u is it i on o f hi s a gr ic u l t u r a l l an d o n w h i ch T D S am o u n t i ng t o Rs. 39 , 7 5 , 6 4 6 / - @ 10 % w a s a l so d e d u c te d. T h e as s es se e c la i m ed th e s a id in te r e st as ex e m pt . O n p e r u s a l o f c as e r e c o r ds , t he L d. PC IT g a t h e re d t h a t th e L d . A O h a d co m p l e t e d t h e ass e s sm e nt wi th ou t c ar r y in g o u t n e ce ss a ry an d p ro pe r e n qu ir y wh i c h s ho u l d hav e be en m ad e r eg ar di n g a pp l i c a b le j u d g m en ts on t he ta x ab il i ty of i nt e r e st o n e n h a n ce d co m p en sat io n. Th e H o n 'b le Pu n ja b & H a ry an a H i gh Co u r t h a s g iv e n t he f i n d in g th at in te r es t r e c e iv e d o n c o m pe n sat io n o r en ha n c e d co m p e n s a t i on w i l l be ta x e d a s pe r ame n d e d pr o v is i o n s i n t r o d u c ed t hr o u g h F in a nc e (No . 2 ) Ac t , 2 0 0 9 w. e . f. 0 1 . 0 4. 2 0 1 0 an d t he j u dg m e n t o f t h e H o n 'b le Su p r e m e C o ur t i n t he c a se o f CIT v s. G h a ns h y am H U F wo u l d n o t co m e t o t he r e sc ue of t he a s s e s se e. T h e L d . P C IT th e r e f or e r e q u i r e d t h e a ss es se e t o s h o w c au se as t o w h y an ap p r o p r iat e o r d e r u n d er s e c t io n 26 3 o f t he Ac t b e no t p as se d. In r e s po n s e t he a s s es se e s ub m i t t e d t h a t t h e am ou nt r e c e iv ed un de r s e c ti o n 2 8 o f L an d A c q u i s it i on A ct is e x e m pt fr om t ax r e ly in g on t h e d e c i s io n of D e lh i Be nc h of th e T r i b u n a l in t he cas e o f S hr i P u n e e t S i ng h, K ar n al v s. A C I T pr o n o u n c ed on 08 . 1 2 . 2 0 2 2 f o r A Y 2 0 1 1 - 1 2 wh er e i n p l a c in g r e l i an ce u po n t h e de c is i o n o f H o n ' b l e S u pr e me Co ur t i n th e c a se o f Gh a ns h y a m H UF ( su pr a) d e c i de d in f av o ur o f t he a ss e s se e . T h e s u b m is s i on of t h e a ss e ss ee w a s no t ac ce pt a b l e t o t h e L d. P C I T i n v i e w o f th e d e c i s i on of H o n 'b l e P &H H ig h Co u r t i n M ah en de r P al N ar a ng vs ,. CB D T an d d i s m i ss al of S LP f i le d ag a in s t it b y t he H o n 'b le Su pr e m e C o ur t. H e , th e r e f or e, se t as i d e the as s es sm e n t o rd e r an d d ir e c t e d t he L d . A O t o p as s an o r de r af r e s h.

9.

A s to t h e i ss u e o f l ac k o f n e c e ss ar y a nd pr op e r e n qu i ry du r i ng a ss e s sm en t p r o c ee d i n g , t he L d. A R de mo n s tr a t e d t h a t in r e s p o n s e t o n ot i c e un de r s e ct io n 1 4 2( 1 ) o f t h e Ac t is su ed by th e L d . A O t h e a ss e s se e su b m i t t e d t h at in t er es t of R s. 3, 9 7, 5 6 , 4 6 0 / - r e c e i ve d b y th e a ss e s s e e f o r m e d p ar t o f en h a n c ed co m pe n s at io n a s h e l d b y t h e H o n ' bl e S u pr e m e C o u r t in G h an shy a m H U F' s c as e ( su pr a) w h i ch t h e a s se s se e c la i m ed as e x e m p t u n d e r s e ct i o n 1 0( 3 7 ) o f t he A ct . Pa ge s 1 t o 6 1 o f th e P ap e r Bo o k r e f e r . In ou r o pi n io n, i n th e l i gh t o f e v i d e n ce av a i la b l e o n r ec o r ds , i t c an n o t b e all eg ed a s d o n e b y t he L d. PC IT th at i t is a c a se of 'n o e n q u i r y ' o r 'l a c k o f e nq u ir y ' . No do u b t t h a t th e L d . AO d i d no t d i sc u s s e l a bo r at e ly in t he as s e s sm e n t o r de r bu t t h at al on e c a nn o t m a k e th e o r d er er ro n eo us as h e ld b y th e H on ' b le D e l h i Hi g h Co ur t i n Su n b e am Au t o L t d . ' s c as e ( s u pr a) a n d H o n 'b l e R aj a s th an H i g h C o ur t i n G an p at R am B is no i's ca se ( su pr a) . A n i n co r r e c t a s s um pt io n o f f act s or a n in cor r e c t ap p l ica t io n of l aw w il l s at i sf y t he r e q u ir e m e nt o f t h e o rd e r b e in g e rr o n e ou s a s h e l d b y t he H o n 'b le S u pr e m e C o ur t i n Ma l ab ar I n d u st r i a l Co . L t d . v s. C IT 24 3 I T R 8 3 (S C ). N on e of t h e s e e l e m e n t s e x i st in t h e ca s e at ha nd .

10 . P e ru s a l o f t h e or de r o f t he L d. PC I T s h ow s th at h e a s su m e d th e re v i s io n ary p o w er un d e r s e c t io n 2 6 3 o f t h e A ct m a in ly on th e g r o u n d t h at th e L d. A O pa ss e d t h e o rd er n o t in acc o rd a n ce wi th t h e b i nd i ng d e c i s io n o f H o n' b le P & H H i g h Co ur t in Ma h e n de r P a l N ar an g' s c as e ( s u pr a) ag a in s t wh ic h S L P s t an ds d i s m i s se d by t h e H o n 'b le S u pr e m e Co ur t . Th i s i s n ot s o. D ur i ng as s e s sm e n t p r o c ee d i ng s in re s po n s e t o no t i ce u n d e r se c t i on 14 3( 2) an d 1 4 2 (1 ) o f t he A ct, w i t h r e fe r en ce to sp ec i f i c q ue r y on r e c e ip t o f in te r e s t u n d e r s e c t io n 2 8 o f L an d Ac q u i s i t io n Ac t , th e ass e s s e e e x p l ai n e d v i d e l e t t e r a t p a g e s 3 - 5 o f P a p e r B o o k th at i n t e r e s t re c e i ve d u n d er se ct i o n 2 8 o f t h e L a nd Ac q u i s i t io n Act h a s be e n h e ld t o be pa rt of c o m p en s at io n by A pe x Co u r t in th e c as e o f C IT vs. G ha ns h y am H UF r e p o r t e d as (2 0 0 9 ) 3 15 IT R 1, t h e s am e b e i n g e xe m pt u n d e r s e ct io n 1 0 ( 3 7 ) o f t he A ct h as no t b ee n in c lu d e d i n t h e to t al in co m e o f t he a ss e s se e w h i le f i li n g r e t ur n o f i n co m e . Th e L d. A O a c ce pt e d th e e x p l an a ti on o f th e as se ss e e.

11 . T h e is su e o f am e n d e d p r o v i s ion s o f se ct i on 56 ( 2 ) (v i i i) by th e F i n an c e A ct , 2 0 09 an d t h e d e c i s i o n o f H o n' b le P & H H i gh Co u r t in M a he nd e r P a l N ar a ng 's c as e w as ra is e d b y t h e L d . P C IT in n o t i ce u n d e r s e c t io n 2 6 3 o n t h e b as is of a u d i t o b j e c ti on (co py o f a u d it m em o of IT O H is ar a t p ag e s 3 9 9 - 4 02 o f Pa per Bo o k ) . B ef o r e t he L d. P C I T th e as se ss e e ex p l a in e d t h at t h e am e n d e d pr o v is i on s w e r e n o t in c o nn e ct i o n w i th t h e d e c is i on o f H o n 'b le S up r e m e Co u rt i n G h a ns h y am H UF 's c a se bu t to m a ke s im p l e th e t ax a ti on o f i n t e r e s t i nc o m e as e ar l ie r i t w as t a x ab le on ac cr u al / c as h b as i s o n t h e b as i s o f ac co u n ti ng pr inc i p le s a s he l d b y t he d e c i s ion o f H o n ' b le S u p re m e Co ur t i n R a m a B a i v s. CIT ( 1 9 9 0 ) 1 8 1 IT R 40 0. It w as a ls o e x p l ai n e d t h at i n ser t i o n o f se c t io n 1 4 5 A , 1 4 5 B , 5 6 ( 2 )(v ii i ) a n d 5 7 ( iv ) b y t he F in an ce (No . 2 ) A c t , 2 0 0 9 d i d n ot ch an g e t h e c h ar ac t e r o f in t e re st u n d er se c t io n 2 8 o f t h e L an d A cq u is i t io n Ac t f ro m 'c a p i ta l r e c e i p t ' f or m i ng p a r t o f e n ha nc e d co m pe ns a t io n a s e nv i s ag e d i n s e c t io n 45 ( 5 ) o f t h e A c t t o ' re v e n ue r e ce i p t' c h a rg ea b l e t o t ax a s ' in com e f r o m o t h e r so u r c e s '. It w as al s o e x pl a in e d to t h e L d . PC IT t h at af t e r an aly z in g th e pr ov i s io ns o f se c t io n 2 8 a n d 3 4 o f L an d A c qu is it io n A ct th e H o n 'b le S u p r e m e C o u r t he l d in t he cas e o f G h an shy am H UF t h at in te r es t i s d if f e re n t f r o m com p e n sa t io n . H ow e v e r , i n t e r e st p a id o n th e e x c e s s am ou nt un de r se ct i on 2 8 d e p en ds up o n a c l a im b y a pe r so n w ho s e la nd i s ac qu ir e d w h e r e a s i n t er e st un de r s e c t io n 3 4 i s f o r d e la y in m ak i n g p ay m en t. T h i s v it a l d if f e r e nc e n e e d s t o b e k e pt i n m i nd in d e c i d i n g t h is m at t er . I n t e r e st u n d er se ct i on 2 8 is p ar t o f t h e am o u n t o f co m p e n s a ti on w h er e as i n t e r e s t un de r se c t io n 3 4 i s on ly f o r d e l ay in ma k ing p ay m e nt af te r t h e c o m p e ns a ti on am o u n t i s d e t e r m in e d . In te r e s t u nd e r s e ct i o n 2 8 is a p art o f en h a n c ed v a lue of t h e l a nd w h i ch i s n o t t he c ase i n t h e m a t t e r of p ay m e n t o f i n t e r e st u n d e r s ec t io n 34 . It i s th us e v i de nt t h at th e v ie w t a k en b y t h e L d. A O t h at i n t e r e s t un de r s e ct i o n 2 8 o f L an d Ac q u is i t io n A ct r e c e iv e d b y t he a ss es s e e is ex e m pt u n d er se c t io n 1 0( 37 ) of t h e Ac t i s n o t co nt r a ry to la w .

12 . We no t i c e t h a t i n C B D T C ir cu la r N o . 5 , d a te d 0 3 . 0 6. 20 1 0 r e p o r t e d i n ( 20 1 0 ) 3 2 4 I T R ( St . ) 2 9 3 , it i s s t at e d t h at t he H o n 'b le S u pr e m e Co ur t i n t h e case of R am a B a i V s . C IT (s u p r a) ha s h e l d th a t ar r e ar s of in t e r e s t co m pu t e d on d e l ay e d o r en h a n c ed c o m pe ns a t io n sh al l b e t ax a b l e on a ccr u al b as is. T h i s ha s cau s e d u n d u e h ar ds h ip t o t h e t a xp aye r s. W ith a v i ew to m i t i ga t e t h e h ar ds h i p s e ct i on 1 4 5 A h a s be e n s ub st i tu te d a nd c l au se (v i ii ) i n s u b- se ct io n ( 2) o f s e ct io n 56 h as b ee n in s e r t ed by t he F in an c e ( No . 2 ) A c t , 2 0 09 so as t o pr ov id e t h at t he in t e r e st r e c e iv e d o n co m pe n s at i o n o r on e n h an c e d com p e n sa t io n r ef e r r e d to i n c l au se ( b) o f s e c t i o n 1 45 A sh a l l be as s e s se d as in co m e f ro m ot he r so u rc e s i n t he y e ar in w h i ch i t i s r ec e iv ed . It is t h u s e v i de nt t h at t he am en de d pr o v is i o n s o f se c t io n 5 6 ( 2 )( v i i i) o f t h e Ac t r. w . se ct i on 1 4 5 A w er e b r o u g h t o n th e s ta t u t e to n u l l i f y th e ef f e c t o f H o n 'b l e S u pr em e C o u r t ' s r u l in g in t h e c a se o f R a m a B a i an d n o t Gh a ns h y am H UF . Mo r e o ve r , i t i s b r o u gh t t o o ur n o t ic e by t h e L d. A R th a t t he de c is i o n i n G h an sh y am H UF w a s p ro n o u nc e d i n J u l y , 2 0 16 a nd th e F in an c e B i l l p r o p os i n g a m e n d m e nt to se ct i o n 5 6 w as l a id in F ebr u ar y 2 0 16 . So th e in t e nt io n o f t h e l e g i s l at ur e co u ld ne v er be t he o v er r u l in g o f t he r at io la i d d o w n i n G h an sh y a m H U F cas e . T he iss ue i n R am a B ai c as e i nv o lv e d t he t a x ab i l it y in t he ye a r o f r e c e ip t. T h e f a ct s a nd q ue st i o n s f o r d e te r m in at io n in R a m a B a i's c as e w e r e d if f e r e n t fr o m t ho s e o f Gh a n s hy am H UF 's cas e . T h e po s it io n i n Gh an sh y a m H UF ' a c as e h as b e e n af f ir m e d by t h e H o n ' b l e Su pr e m e Co ur t in H ar i S in gh 's c ase . F u r t h e r, t he L d. A R su b m i t t e d b e f o re us t h a t S LP f i le d b y t h e R e v e nu e in H ar i S in g h 's c a se h as be e n w it hd r aw n by t h e R ev e n u e m e a n i ng th e r e by th a t n o w t h e i ss u e h as a t ta i n e d c er t ai n t y.

13 . We h av e g o n e t hr ou g h th e d e c is i o n o f t h e H o n ' b le P & H H ig h Co u rt i n th e ca se o f M ah e n d er P a l Na r a n g ( su pr a) . In t h at cas e t h e l an d o f th e a ss e ss e e wa s a c q u i r e d i n A Y 2 0 0 7 - 0 8 a nd 20 0 8 - 0 9. T he e nh an ce d c o m pe ns a t io n w as r e c e iv e d on 21 . 0 3 . 2 0 1 6. In h i s r e t u r n f i le d f o r A Y 2 01 6- 1 7 he tr e at e d t he in t e r e st r e c e iv e d u n d e r s e ct i on 2 8 o f t h e 1 8 9 4 A c t as in c o m e f ro m o t he r so ur c es an d c l aim e d d e d u ct i o n f o r 5 0 % as per se c t io n 5 7( i v) o f t h e 1 9 6 1 A c t. Th e r et ur n w as pr o c es se d u n d er se c t io n 1 4 3 ( 1) of th e Ac t. An ap p l i c a t i on un de r s e ct i on 2 6 4 w as m ad e c l ai m i n g th at by m i s t ak e t h e as s e s se e t r e at e d t he in t e r e st i nc o m e a s in co m e f r om ot h er sou rc e s w h er e as t h e sam e is p ar t of e nh an c e d c o m pe ns a t io n . Th e r e v i s io n a l au t h o r it y re je ct e d th e ap pl i c a t io n u n de r se c t ion 2 6 4 o n 30 . 1. 2 0 1 9 . I t w a s i n t h is f a c tu al m atr ix t ha t t h e a ss e s se e f il e d wr it p e t it io n be f o r e t he H o n ' b l e P & H H i g h C o ur t . T h e qu e s t io n f or co ns i de ra t io n w a s "w h et he r af t e r t h e i n s er t i on o f s e c t i on 56 ( 2 ) (v i i i ) a nd 5 7( i v) o f t h e A ct w . e. f . 0 1 . 0 4 . 20 1 0, c an t he as s e s se e c l ai m th a t i n t er e st r e ce iv e d un de r s e c t io n 2 8 o f t h e L an d Ac q u i s i t io n A ct , 18 9 4 w i ll p ar t a k e t h e c h a r a ct er o f t he com p e n sa t io n an d w ou l d f al l u n d er t he h ea d "c a p it a l g a in " a nd no t "in co m e fr o m ot h er s o ur ce s" ? I t w as ar gu e d b y t h e as s e s se e t h a t th e r e i s no a me n d m e nt in s e ct i o n 1 0 ( 3 7 ) an d b y in s er t i o n o f se c t io n s 56 ( 2 ) (v i i i) an d 5 7 ( iv ) , t h e n a tu r e o f in t e r e st u n d e r se ct i on 28 o f t h e 1 89 4 A ct w i l l r e m a i n th at o f com p e n sa t io n a n d d e c i s io ns o f t h e H o n ' b le S u p re m e C o ur t i n th e c a se o f G h an sh yam (H UF ) an d t he de c i s io n o f H o n 'b le G u jr a t H ig h Co ur t i n Mo v a l iy a B h i kh ub h a i Bal a bh a i vs . IT O T DS (2 01 6) 3 88 IT R 34 3 we r e r e l i ed u p on .

14 . It m ay b e m e n t io ne d t h at t h e H o n ' b l e S u p re m e Co u rt h as af f ir m e d its v i e w t a ke n in G h a n s hy am H UF 's c as e an d t he de c is i o n o f G u j r at H i g h Co u rt i n Mo v a l i y a 's c as e in it s d e c i s i o n in t h e c a se o f UO I v s. Ha r i S in gh ( 2 0 1 8 ) 9 1 t ax m an n .c o m 20 (S C ). T h e d ec i s io n of t h e Ho n ' b l e S u pr e m e C o ur t i n H ar i S in gh 's cas e ( su pr a ) w as no t b ro u g h t t o t he no t ic e o f H o n' b le P & H H ig h Co ur t w h i l e r e n d e r in g de c is io n i n M ah en de r P a l N ar an g 's cas e ( su pr a) . H o n 'b l e P &H H ig h Co u r t h a s t h u s r e n d e r e d t h e de c is i o n in Ma h e n d e r Pa l N a r a ng ' s c ase in i t s p e c u li ar f a ct s an d c ir c um st an c es. A cc o r d in gly , th e o p i n io n o f th e L d . P C IT t h a t t he L d. A O sh o u ld h av e p as se d t h e a ss e ss m e n t in ac co r d an ce w it h th e am e n d e d l aw a nd b in di n g d e c i s i on in M ah e n d e r P a l N ar a ng 's cas e ( s u pr a) ov e r l o o k in g t h e d e c i s io n o f H o n' b le S u p r e m e C o u r t in Gh an sh y a m ' s H UF 's c as e is n o t s us t a i na b le. Re li an ce of t he L d. C IT -D R o n t he d e c is i o n in M ah e n d e r Pa l N ar an g ' s c as e is m i s p l ac e d . Ne e d l es s to e m p h a s i s t h a t i n V. M . Sa l g ao c ar a nd Br o s P v t. L t d . v s. C I T 24 3 I T R 38 3 ( S C ) , th e H o n ' b le S u pr em e Co u r t h as h e l d t h at an o r d er d i s m i s s in g t h e S L P at t he th r e s h o l d w it h o u t d e t ai l ed r e as o n s d oe s no t c o n st i t u t e a n y de c l ar at i on of l aw or a b i n d i n g p r e c e de nt . T h er ef o r e , o v er em p h as is i n g t h e fa ct o f d is m is s a l o f S L P i n l im in e by t he H o n 'b le S u pr e m e Co ur t in Ma he n d e r P a l' s c as e b y t h e Re v en ue i s n o t o f an y l e g al as s is t an ce to i t .

15 . Re co r d r e ve a l s t h a t t h e o r d e r of th e L d . P CI T w as pr o mp t ed so l e l y b y th e au d i t o bj e c t i o n . H o n 'b l e P & H H igh Co u r t h as h e l d in CIT v s . So h a n a Wo o l le n Mi l l s ( 20 0 8 ) 2 9 6 I T R 2 3 8 (P &H ) t h at m er e au d it o b je ct i on c an no t l e ad to an i n f e r e nc e th at th e o r d er of th e L d. AO i s e r r on e o u s o r p r e j ud i c i a l t o t h e i n t e r e s t o f t he R e ve n u e .

16 . S in ce th e o r d e r o f th e L d . A O is b as e d o n t h e de c is io n o f th e H on ' bl e S u pr e m e C o u r t i n Gh an s hy a m H UF ( s u p r a) o n t he i ss u e o f t ax ab i l i t y o f in t e r e st r ec e iv e d by t he ass e s se e u nd e r se c t io n 2 8 o f L an d A cq u i s it io n A c t, i t c an a t b e s t b e s a id t o be a de b at ab l e i ss u e o n w h i ch tw o v i ew s ar e p o s s i b le an d t h e L d . AO ac ce p ts o ne of th e v ie w s. I n t h i s v ie w o f t he m at t er t o o , t he L d. PC IT c an no t as s u me r e v is io n a l jur i s d ic ti o n as h e l d b y t he H o n 'b le D e l h i H i gh C o ur t in C IT v s . H in d u st a n C oc a C o la Be v e r ag es P L td. ( 20 11 ) 3 3 1 I T R 1 92 ( D e l .)

17 . A c co r di ng ly , o n t he f ac t s a nd in t he c ir c um st an c e s of t h e cas e a s se t o u t a bo v e , we ho l d t h at t he o r de r o f th e L d . P C IT is no t s u st ai n ab le . A c co r d in g ly , w e al l ow th e a p p e a l of t h e as s e s se e an d qu a sh t he i m p u g n e d or de r o f th e L d . P C I T .

18 . I n t he r e s u l t, a p p e a l o f t he as s e ss e e i s a llo w ed . ”