The Commissioner of Income Tax vs Smt. Prabha Singh

Adarsh Kumar Goel, J.—This appeal has been preferred by the revenue u/s 260A of the Income Tax Act, 1961 (in short, ''the Act'') against the order dated 7.7.2008 of the Income Tax Appellate Tribunal, Chandigarh Bench (B) Chandigarh passed in ITA No. 684/CHANDI/2007, for the assessment year 2004-05, proposing to raise following questions of law:

Whether on the facts and in the circumstances of the case, the Hon''ble ITAT was right in setting aside the order of the learned Assessing officer on the addition on account of enhanced compensation ignoring the fact that the compensation is received by the assessee and retained in A.Y.2004-05 within the meaning of Section 45(5) of the IT Act, 1961?

Whether the learned ITAT was right in setting aside the addition of Rs. 20,09,712/-on account of interest income received and not refunded and liable to be assessed in A.Y. 2004-05 on accrual basis and not in year of receipt, keeping in view the fact that relates to "income from Other sources" and not "Capital Gain" within the meaning of Section 45(5) of the Income Tax Act, 1961?"

The assessee was awarded compensation in lieu of land which was acquired. In respect thereof, assessment was made by the Assessing Officer. The CIT (A) set aside the order of the Assessing Officer on the ground that the enhanced amount of compensation was to be taxed in the year in which it was finally settled. At the instance of the revenue, the Tribunal remanded the matter for reconsideration in the light of observations made in the order.

Contention raised in this appeal is that enhanced compensation was liable to be taxed in the year in which it was received even if the issue was pending in further proceedings.

It has been now pointed out that during pendency of this appeal, the Hon''ble Supreme Court has clarified the law in Commissioner of Income Tax, Faridabad Vs. Ghanshyam (HUF), to the effect that enhancement is deemed to be income of previous year in which it is received even if the matter is pending in further proceedings. Learned Counsel for the appellant states that in view of above development, it will be appropriate that the matter is decided afresh by the Tribunal in the light of judgment of the Hon''ble Supreme Court.

Learned Counsel for the assessee points out that order of the Tribunal does not take note of the fact that for the assessment year in question, matter was earlier decided on 19.4.2007 against which appeal was preferred to this Court culminating in SLP (C) No. 713 of 2009 in Hon''ble Supreme Court and thus, these proceedings are superfluous. Since we propose to remand the matter to the Tribunal, this aspect can also be looked into by the Tribunal.

Accordingly, we allow this appeal, set aside the order of the Tribunal and direct the Tribunal to pass a fresh order after hearing the parties.

The parties are directed to appear before the Tribunal for further proceedings on 23.12.2009.