ORDERRIYAZ S. PADVEKAR, J.M. NOTE In case of Chandi Ram & Ors. vs. CIT (2008) 4 DTR (P&H) 25, Punjab & Haryana High Court, setting aside Special Bench decision of Tribunal in Dy. CIT vs. Padam Prakash (HUF) (2006) 104 TTJ (Del)(SB) 989 has held that enhanced compensation is chargeable to tax under s. 45(5)(b) only in year in which assessee receives same in pursuance of final award/order of Tribunal, Court or any other authority increasing compensation. If any amount is received after stay of award, in pursuance of any interim order, as payment subject to final result, it will not be amount received as enhanced compensation under s. 45(5)(b). Provisions of s. 45(5)(c) and s. 155(16) inserted by Finance Act, 2003 are only prospective in operation applicable to asst. yr. 2004-05 and subsequent years. ORDER In this group of appeals, assessee has challenged impugned orders of CIT (A)-I, Kochi, all dt. 16th Dec., 2004 for asst. yrs. 1987-88, 1988- 89, 1990-91, 1991-92 and 1992-93. facts as well as issues are identical in all these appeals, hence these appeals were heard together and are being disposed of by this common order for sake of convenience. 2. assessee has filed concise grounds in all appeals as original grounds were consisting of lot of facts and arguments also. We will take up first issue regarding year of assessment of enhanced compensation which arises in asst. yr. 1992-93 in ITA No. 330/Coch/2005. 3 . facts in brief can be stated as under : Government of Kerala has acquired assessee s immovable property consisting of approximately 80 cents of land and 5500 sq. ft. of building under Land Acquisition Act. Government acquired said property on 10th July, 1986 and taken possession on 10th Sept., 1986. Tehsildar passed land acquisition (LA) award on 10th July, 1986 fixing compensation of Rs. 4,20,970 which was later on reduced to Rs. 3,67,516. There was some dispute in respect of ownership over property and hence competent authority deposited amount of award in sub-Court of Calicut. assessee filed petition for enhancement of compensation before sub-Court and by judgment dt. 22nd Oct., 1990, sub-Court enhanced compensation by Rs. 17,53,887.50. sub-Court also awarded interest at rate of 9 per cent for one year and 15 per cent till payment of said sum. State Government challenged judgment of sub-Court by filing appeal in Hon ble High Court of Kerala being LAA No. 281 of 1992. State Government deposited amount of Rs. 23,47,886 which included interest also in sub-Court, Kozhikode, in 1991. assessee also filed petition before sub-Court, Calicut for getting said enhanced compensation. sub-Court ordered release of said amount of Rs. 23,43,886 to assessee on production of bank guarantee. assessee filed bank guarantee for sum of Rs. 23,43,886 for period of three years which was issued by Catholic Syrian Bank, Kozhikode on, 19th Sept., 1991 in sub-Court and on basis of bank guarantee filed by assessee, sub-Court released and paid amount of Rs. 23,43,886 in month of September, 1991. said amount was kept in bank by investing in FD and in December, 1993 and January, 1994, assessee was paid amount originally deposited in Court by land acquisition Tehsildar together with interest. controversy is in respect of enhanced compensation of Rs. 17,53,887 as AO assessed said enhanced compensation as capital gain in asst. yr. 1992-93 and worked out interest on enhanced compensation on accrual basis as per judgment of sub-Court, Kozhikode and brought to tax in asst. yrs. 1987-88 to 1992- 93 as income under head Income from other sources . 4. assessee challenged order of AO bringing to tax capital gain on enhanced compensation in asst. yr. 1992-93 before CIT(A) but some strange observation was made by CIT(A) on this issue by stating that capital gain on enhanced compensation is not assessed in asst. yr. 1992-93. Now assessee is in appeal before us. 5. We have heard learned senior counsel, Shri P. Balachandran for assessee and learned Departmental Representative Smt. A.S. Bindhu for Revenue. learned senior counsel has filed written summary of his Revenue. learned senior counsel has filed written summary of his arguments advanced at Bar which is two-fold and is as under : In first stage, it was submitted that in case of Keshav Mills Ltd. vs. CIT (1953) 23 ITR 230 (SC), Hon ble Supreme Court laid down proposition of law that receipt of income refers to first occasion when recipient gets money under his control. It was contended that release of money by sub-Court on bank guarantee cannot constitute receipt in asst. yr. 1992-93 as money has not come under assessee s control then. It was further contended that assessee was not free to make investments as provided under ss. 54, 54F etc., as money was not under his control. receipt could at best be said to have occurred when bank guarantee expired, i.e., 19th Sept., 1994, i.e., in asst. yr. 1995-96 as result of which amount assessed in hands of assessee in asst. yr. 1992-93 is legally wrong. It is further argued that State Government had gone in further appeal against entire award of sub-Court in LAA 281 of 1992 and that appeal was finally decided only on 7th Jan., 2003 and hence, capital gains on enhanced compensation could be taxed only for asst. yr. 2003-04 in view of proposition of law laid down by Hon ble Supreme Court in CIT vs. Hindustan Housing & Land Development Trust Ltd. (1986) 58 CTR (SC) 179 : (1986) 161 ITR 524 (SC) and P. Mariappa Gounder vs. CIT (1998) 149 CTR (SC) 322 : (1998) 232 ITR 2 (SC). Relying on decision of Hon ble Karnataka High Court in case of Chief CIT vs. Smt. Shantavva (2004) 188 CTR (Kar) 162 : (2004) 267 ITR 67 (Kar), learned senior counsel argued that when reference Court determines compensation and such determination becomes final, amount received in pursuance of interim order will be finally determined and will become income chargeable under head Capital gains . learned counsel for assessee further argued that mere fact, that some amounts had been received by furnishing security, in pursuance of interim orders, pending final determination, would not make amounts received by assessee compensation or consideration that could be subjected to tax under s. 45(5)(b). learned counsel relied on following precedents : (i) CWT/CIT vs. Smt. T. Girijaammal (2006) 203 CTR (Mad) 501 : (2006) 282 ITR 614 (Mad); (ii) CWT vs. T. Girijammal (2006) 284 ITR 482 (Mad); (iii) Jehangir P. Vazifdar vs. ITO (1992) 42 ITD 67 (Bom). It was submitted that in case of Jehangir P. Vazifdar (supra), Tribunal held that word received in cl. (b) of sub-s. (5) of s. 45 would mean when it has come finally receivable or same is received unconditionally. 5.1 learned senior counsel vehemently submitted that decision of Special Bench of Tribunal in case of Dy. CIT vs. Padam Prakash (HUF) (2006) 104 TTJ (Del)(SB) 989 : (2007) 288 ITR 1 (Del)(SB)(AT) is not in accordance with law and he made following submissions : It was argued that legislature while inserting sub-s. (5) in s. 45 through Finance Act, 1987 w.e.f. 1st April, 1988 did not provide for cases where enhanced compensation was reduced by any Court, Tribunal or other authority. Clause (c) to sub-s. (5) was, therefore, inserted to take care of situation. It was inserted by Finance Act, 2003 w.e.f. 1st April, 2004. learned senior counsel pointed out that Explanatory Memorandum accompanying Finance Bill, 2003 relating to changes made in s. 45(5) of IT Act are as follows : "The assessees in some cases are facing hardship when such compensation or consideration is subsequently reduced by any Court, Tribunal or other authority since there is no existing provision providing for re-computing of capital gain charged in year of receipt of compensation or consideration. With view to mitigate this hardship, it is proposed to amend sub-s. (5) by inserting new cl. (c) to provide that where such amount of compensation or consideration is subsequently reduced by any Court, Tribunal or other authority, capital gain of that year, in which compensation or consideration received was taxed, shall be computed accordingly. It is proposed to insert new sub-s. (16) in s. 155 to provide that AO shall amend order of assessment to revise computation of said capital gain of that year by taking compensation or consideration so reduced by Court, Tribunal or any other authority to be full value of consideration. These amendments will take effect from 1st April, 2004 and will, accordingly, apply in relation to asst. yr. 2004-05 and subsequent years." [(2003) 180 CTR (St) 180 : (2003) 260 ITR (St) 191, 217] learned senior counsel submitted that three things are clear from above Explanatory Note which are as under : (a) There is no existing provision to mitigate hardship of assessee when compensation is subsequently reduced. (b) It is proposed to amend sub-s. (5) by inserting new cl. (c); and (c) These amendments will take effect from 1st April, 2004 and will apply to asst. yr. 2004-05 and subsequent years. learned counsel contended that judgment of Special Bench of Tribunal in case of Padam Prakash (HUF) (supra) is primarily based on this sub-clause and proceeded on footing that it is declaratory in nature and contention of assessee, if accepted would render cl. (c) has not been given any retrospective effect in express terms. On other hand, legislature itself thought that Explanation should work only prospectively w.e.f. 1st April, 2004. Hence cl. (c) cannot be taken to be declaratory or clarificatory in nature and whole reasoning of Tribunal fails on these grounds. Relying on decision of Hon ble Supreme Court in case of CIT vs. Varas International (P) Ltd. (2006) 204 CTR (SC) 119 : (2006) 283 ITR 484 (SC), learned counsel submitted that five-Member Constitution Bench of Hon ble Supreme Court has held that for amendment of statute to be construed as being retrospective, amended provision itself should indicate either in terms or by necessary implication that it is to operate retrospectively. learned counsel further relying on decision of Hon ble Supreme Court in case of Sakuru vs. Tanoji AIR 1985 SC 1279, submitted that it was held by Hon ble Supreme Court that in absence of clear words indicating that Amending Act is declaratory, it would not be so construed. Making reference to decision of jurisdictional High Court in cases of CIT vs. S.R. Patton (1991) 92 CTR (Ker) 197 : (1992) 193 ITR 49 (Ker) and CIT vs. Kerala Electric Lamp Works Ltd. (2003) 183 CTR (Ker) 182 : (2003) 261 ITR 721 (Ker), learned counsel submitted that it has been held in above decisions that Explanation has no retrospective effect when it says that it has come into force with effect from particular date. 5.2 learned counsel further submitted that there are three decisions of Karnataka and Madras High Courts wherein amended provisions to s. 45(5) were considered. In Smt. Santavva s case (supra), AO brought to tax amount received by assessee by furnishing security under s. 45(5)(b) of Act treating it as income of year in which amounts were received. However, Tribunal held that amounts were not liable to tax as receipts had condition attached to it and absolute right had not accrued to assessee. On appeal, it was held by High Court that sum of Rs. 8 lakhs was received by assessee not as enhanced compensation but as payment in pursuance of interim orders of Court and Supreme Court by furnishing security to satisfaction of Court. mere fact that some amounts have been received by furnishing security in pursuance of interim orders pending final determination would not make amounts received by assessee compensation or consideration that could be subjected to tax under s. 45(5)(b). learned counsel submitted that same view was taken in case of T. Girijammal (supra). learned counsel further submitted that in decision of Hon ble Bombay High Court in case of CIT vs. Smt. Godavaridevi Saraf (1978) 113 ITR 589 (Bom), it was held that Tribunal sitting anywhere in country, has to respect law laid down by High Court, though of different State, so long as there is no contrary decision of another High Court on that question. It was further submitted that in decision in case of Tej International (P) Ltd. vs. Dy. CIT (2000) 69 TTJ (Del) 650, it has been held that authority higher than Tribunal, i.e., High Court has expressed opinion on issue, Tribunal is no longer at liberty to rely upon earlier decisions of Tribunal even if it were party to them or including even by Special Bench. Such High Court being non-jurisdictional High Court does not alter position. It was further submitted that in case of Shriram Transport Finance Co. Ltd. vs. Asstt. CIT (1999) 70 ITD 406 (Mad), it has been held that unless and until there are reasons compelling Tribunal to take different view, decision of any High Court in country on particular issue must be followed and could not be ignored only for reason that Tribunal does not come under territorial jurisdiction of that particular High Court. learned counsel further argued that in case of Rupa Ashok Hurra vs. Ashok Hurra (2002) 4 SCC 388, Supreme Court has held that under Art. 141 of Constitution, law declared by Supreme Court is law of land; it is precedent for itself and for all Courts/Tribunals and authorities in India. learned counsel, therefore, contended that decision of Special Bench of Tribunal in case of Padam Prakash (HUF) (supra) as also of Third Member in Dy. CIT vs. Bhim Singh Lather (2006) 100 TTJ (Del)(TM) 170 : (2006) 282 ITR 151 (Del)(TM)(AT) as regards taxability of enhanced compensation on receipt basis is totally against law laid down by Hon ble Supreme Court as also High Courts of Karnataka and Madras cited above. 6 . Per contra, learned Departmental Representative placed heavy reliance on decision of Special Bench of Tribunal in case of Padam Prakash (HUF) (supra). learned Departmental Representative submitted that as far as precedents relied on by learned senior counsel are concerned, those precedents are prior to introduction of cl. (c) to s. 45(5) of Act. Special Bench has taken into consideration legislative intent in bringing cl. (c) on statute book just to remove practical difficulties of Department wherever in future if compensation awarded by lower authorities is further reduced. Though there was direction in s. 155(7A) of Act, but still it was not possible to keep track of unending litigation between assessees and Government. learned Departmental Representative vehemently submitted that Hon ble Special Bench of Tribunal has considered entire case law on this issue, whether enhanced compensation is to be assessed on receipt basis or whether assessment of enhanced compensation should be deferred to year in which dispute i n relation enhanced compensation has reached finality. learned Departmental Representative submitted that cl. (c) of s. 45(5) was not available in decisions relied on by learned senior counsel and Special Bench has correctly taken view that it is declaratory or clarificatory in nature and it is having retrospective effect from 1st April, 1988, though same was introduced by Finance Act, 2003 w.e.f. 1st April, 2004. learned Departmental Representative supported order of AO. 7 . We have heard rival submissions of parties. We have also carefully considered facts as per material placed before us. We have also carefully considered precedents relied on both by learned counsel as well as by learned Departmental Representative. We would like to clarify here that there is no dispute in respect of facts between assessee as well as Revenue. It is admitted position that original compensation in respect of award passed by Tehsildar dt. 10th July, 1986 was enhanced by sub- Court by judgment dt. 22nd Oct., 1990 by amount of Rs. 17,53,887. sub-Court also awarded interest to assessee. State Government challenged judgment of sub-Court in Hon ble High Court of Kerala by filing appeal being LAA No. 281 of 1992 and Hon ble High Court dismissed appeal filed by State Government by judgment dt. 7th Jan., 2003. In meantime, assessee filed petition in sub-Court for releasing amount and sub-Court directed assessee to file bank guarantee and on filing of bank guarantee Court directed to release amount to assessee on 19th Sept., 1991. contention of assessee is that though amount of Rs. 23,47,887 was released and paid to assessee only that was conditional payment on furnishing bank guarantee as security and amounts received by assessee were put in bank in FD on 19th Sept., 1991. release of said sum by Court does not constitute receipt of assessee as sum has not come under control of assessee as amount was under control and supervision of sub-Court, Calicut as said amount was deposited with Catholic Syrian Bank for obtaining bank guarantee. 7.1 bank guarantee furnished by assessee expired on 19th Sept., 1994 and at best said amount can be assessed in asst. yr. 1995-96 as assessee was deprived from taking benefit of s. 54 or 55 as no liquid cash was available with him for investment purpose. learned counsel has placed heavy reliance on following precedents to support his contention : (a) Hindustan Housing & Land Development Trust s case (supra); (b) P. Mariappa Gounder s case (supra); (c) Bhim Singh Lather s case (supra). learned counsel also vehemently submitted that law laid down by Special Bench in case of Padam Prakash (HUF) (supra) is not correct law as Hon ble Special Bench has not considered following precedents : (a) Smt. Shantavva s case (supra); (b) T. Girijammal s case (supra). learned counsel also placed reliance on decision of Constitution Bench of Hon ble Supreme Court in case of Varas International (P) Ltd. (supra) on contention that whether any particular amendment is having retrospective or prospective operation then that amended provision itself should indicate either in terms or by necessary implication that it operates retrospectively. 7.2 There is no dispute regarding binding force of legal principles laid down by Hon ble Supreme Court as well as by Hon ble High Court. There is no dispute in this case in respect of charging capital gain on enhanced compensation but only dispute is in respect of year in which it should be charged to tax and in our opinion, sub-s. (5) of s. 45 is relevant on issue. Sub-s. (5) in s. 45 was inserted by Finance Act, 1987 to provide for taxation of additional compensation in year of receipt instead of year of transfer of said capital asset. It was further provided that additional compensation will be deemed to be income in hands of recipient even if actual recipient happens to be person different from original transferor. For this purpose, cost of acquisition in hands of recipient of additional compensation was provided to be nil. Moreover, compensation awarded in first instance would continue to be chargeable as income under head Capital gain in previous year in which transfer took place. In this context, reference may be made to CBDT Circular No. 495 dt. 22nd Sept., 1987. 7.3 new cl. (c) was inserted in s. 45(5) by Finance Act, 2003 which 7.3 new cl. (c) was inserted in s. 45(5) by Finance Act, 2003 which was effective from 1st April, 2004. It will be helpful to refer to extract of Explanatory Memorandum accompanying Finance Bill, 2003 in which purpose of insertion of cl. (c) to s. 45(5) was clarified as under : "Recomputation of capital gains in case of reduction in compensation. existing provisions of sub-s. (5) of s. 45, provide for method of computation of capital gains arising from transfer of capital asset, being transfer by way of compulsory acquisition under any law, or transfer consideration for which was determined or approved by Central Government or Reserve B n k of India, and where compensation or consideration for such transfer is enhanced or further enhanced by any Court, Tribunal or other authority. said sub-section provides that capital gain shall be computed by taking compensation or consideration or enhanced compensation or consideration, as case may be, as full value of consideration and such capital gain shall be chargeable as income of previous year in which such compensation or consideration is received by assessee. assessee in some cases are facing hardship when such compensation o r consideration is subsequently reduced by any Court, Tribunal or authority, since there is no existing provision providing for re-computation of capital gain charged in year of receipt of compensation or consideration. With view to mitigate this hardship, it is proposed to amend sub-s. (5), by inserting new cl. (c) to provide that where such amount of compensation or consideration is subsequently reduced by any Court, Tribunal or other authority, capital gain of that year, in which compensation or consideration received was taxed, shall be recomputed accordingly. It is proposed to insert new sub-s. (16) in s. 155 to provide that AO shall amend order of assessment to revise computation of said capital gain of that year by taking compensation or consideration so reduced by Court, Tribunal or any other authority to be full value of consideration. These amendments will take effect from 1st April, 2004 and will, accordingly, apply in relation to asst. yr. 2004-05 and subsequent years." 7.4 In case of Padam Prakash (HUF) (supra) following questions were framed for consideration of Special Bench : "1. Whether, on facts and in circumstances of case, enhanced compensation and interest is to be taxed in year of receipt, notwithstanding that order under which compensation and interest is received, is challenged before higher Courts and litigation is pending ? 2. Whether, on facts and in circumstances of case, will it make any difference to taxability of compensation and interest if same are received on furnishing of security ?" As far as facts relating to case of Padam Prakash (HUF) (supra) are concerned, those are more or less identical to facts of assessee s case before us. There also contention of assessee was that, unless issue of enhanced compensation has reached finality, same cannot be taxed on receipt basis. In that case also, Court of Addl. District Judge released amount and AO brought to tax same on receipt basis. Special Bench was concerned with interpretation of s. 45(5) of Act and it was more concerned with consequences of insertion of cl. (c) to sub-s. (5) of s. 45. Special Bench referred to following precedents which were cited at Bar by parties : (i) Hindustan Housing & Land Development Trust Ltd. s case (supra); (ii) CIT vs. Laxman Das (2000) 246 ITR 622 (All); (iii) CIT vs. Abdul Mannan Shah Mohammed (2001) 248 ITR 614 (Bom); (iv) CIT vs. National Electric Supply & Trading Corporation (P) Ltd. (2000) 164 CTR (Del) 599 : (2001) 248 ITR 794 (Del); (v) CIT vs. Orissa State Financial Corpn. (2003) 180 CTR (Ori) 171 : (2003) 262 ITR 350 (Ori); (vi) Smt. Santavva s case (supra); (vii) T. Girijammal s case (supra). 7.5 After exhaustively dealing with relevant provisions of Act on issue, Hon ble Special Bench of Tribunal in case of Padam Prakash (HUF) (supra) held as under : "Clause (c) to sub-s. (5) was inserted by Finance Act, 2003, but it has to be held to be retrospective in operation and taken to be introduced w.e.f. 1st April, 1988. picture without insertion of above cl. (c) was incomplete as section did not deal with situation where enhanced compensation is reduced in further appeal by Courts or Tribunal. provision was made to obviate hardship and unintended consequences of sub-s. (5) of s. 45. clause was inserted to make entire scheme workable and to supply obvious omission in provision. situation envisaged as per cl. (c) above was required to be given reasonable construction to accomplish purpose and object of enactment. principle of reasonable construction by treating provision as retrospective, on ground that such construction would make whole enactment workable, was applied by their Lordships of Supreme Court in case of Allied Motors (P) Ltd. vs. CIT (1997) 139 CTR (SC) 364 : (1997) 224 ITR 677 (SC). aforesaid principle is fully applicable to interpretation of cl. (c) and we accordingly hold that it is retrospective in operation. Having held that as per sub-s. (5) of s. 45 of IT Act, enhanced, or further enhanced compensation is to be taxed on receipt basis, as per scheme of sub-s. (5) of s. 45, we are of view that it does not make any difference whether compensation is received as per interim order or on certain conditions or without any condition. This simple answer follows from obvious and plain language. What is required to be considered is that compensation had been paid and received. If for any reason, it subsequently reduced then assessment is required to be modified to take reduced compensation of income. Thus statutory provision leaves no scope for not taxing compensation on receipt basis under any situation. There is no way to read in clear language of statute that receipt, if conditional or allowed as per interim order of High Court is no receipt of compensation and would not be taxed in year of receipt. If arguments of counsel for assessee and interveners are adopted, it would tantamount to adopting narrow and pedantic construction and reduce legislation to futility. Therefore, we do not find any substance in arguments advanced on behalf of assessees and interveners. There is no doubt that in case of CIT vs. Hindustan Housing & Land Development Trust Ltd. (1986) 58 CTR (SC) 179 : (1986) 161 ITR 524 (SC), it was laid down by their Lordships of Supreme Court that there is no accrual of income unless right to receive compensation is finally determined. Such view had been taken by several High Courts and by several Benches of Tribunal, following aforesaid decision of Hon ble Supreme Court. case law in which aforesaid scheme of legislation to tax compensation and enhanced compensation on receipt basis and its object and purpose were not considered, have no application. We have given sufficient reasons to hold why enhanced compensation or further enhanced compensation is to be taxed on receipt basis in year of receipt. Therefore, cases in which this changed scheme was not considered at all have no application. Some decisions of Benches wherein even after introduction of sub-s. (5) of s. 45, it was held that there has to be right to receive compensation in our humble opinion, do not lay down correct law, and should be taken to be overruled. It will not be out of place to state that cl. (c) of aforementioned sub-section would be redundant if arguments of assessee are accepted. In fact all clauses would be redundant if capital gain is to be brought to tax only when compensation attains finality. Sub-s. (5) of s. 45 has no purpose to serve if above contention is accepted. assessee wishes to apply only sub-s. (1) of s. 45 in total disregard of statutory provision of sub-s. (5). Further after insertion of sub-s. (5), scheme of assessment of enhanced or further enhanced compensation is to be taxed only in year of receipt. If it is not taxed in that year, but is held to be taxed in year in which amount of compensation is finally determined, then there is no provision to charge it to tax otherwise than in year of receipt. Therefore, special provision relating to taxability of amount is year of receipt, cannot be disregarded. For aforesaid reasons also arguments advanced on behalf of assessees cannot be accepted." 7.6 learned senior counsel argued that in case of Padam Prakash (HUF) (supra), Hon ble Special Bench of Tribunal has not considered decision of Hon ble Karnataka High Court in case of Smt. Santavva (supra) and decision of Hon ble Madras High Court in case of T. Girijammal (supra). In our opinion, argument of learned senior counsel is not sustainable as Hon ble Special Bench has also by reference considered said decisions; while arriving at final conclusion. In present case also, enhanced compensation was paid to assessee in September, 1991. In our opinion, on receipt basis, AO has rightly brought to tax capital gain on said enhanced compensation. In our further opinion, principle laid down by Hon ble Special Bench of Tribunal in case of Padam Prakash (HUF) (supra) are squarely applicable to facts of present case. We are, therefore, of opinion that AO has rightly brought to tax amount of enhanced compensation in asst. yr. 1992-93. We, therefore, decide this issue against assessee. 8. next issue is regarding assessment of interest on enhanced compensation, whether it should be assessed on accrual basis or receipt basis. We have already narrated relevant facts pertaining to issue of enhanced compensation and said facts are applicable to this issue also. Hence to avoid repetition, we are not reproducing same. We have heard learned senior counsel for assessee and learned Departmental Representative for Revenue on this issue. summary of arguments of learned senior counsel are as under : learned senior counsel submitted that this issue is involved in ITA Nos. 325 to 330/Coch/2005 for asst. yrs. 1987-88 to 1992-93. AO worked out interest on compensation at Rs. 87,358, Rs. 2,16,088, Rs. 2,63,083, Rs. 2,63,080, Rs. 2,63,080 and Rs. 1,17,487 respectively for all assessment years from 1987-88 to 1992-93 and included same to total income under head Other sources as per paras 11,11.6, 4, 4 and 8 of respective assessment orders. CIT(A) confirmed assessment of interest as per paras 4, 3, 4, 3, 3 of respective appellate orders relying on decision of apex Court in case of K.S. Krishna Rao vs. CIT (1990) 84 CTR (SC) 144 : (1990) 181 ITR 408 (SC). learned counsel submitted that assessee had filed petition for enhancement of compensation before sub-Court Kozhikode in LD. AR. 72/1987 and by judgment dt. 22nd Oct., 1990 Court enhanced compensation by Rs. 17,53,887.50. Interest at 9 per cent for one year and 15 per cent till payment was also allowed on this amount by Court. Against said order State filed appeal before High Court in LAA 281 of 1992. bank guarantee for sum of Rs. 23,47,886 was given by Catholic Syrian Bank on 19th Sept., 1991 on security of deposit of sum which was directed by Court to be paid on bank guarantee for three years. learned counsel contended that as State Government filed appeal before High Court and same was pending AO went wrong in bringing to tax interest on enhanced compensation without considering pendency of appeal before High Court. learned counsel submitted that proposition of law with regard to this issue is laid down by apex Court in case of Hindustan Housing & Land Development Trust Ltd. (supra) and P. Mariappa Gounder s case (supra) as also Jehangir P. Vazifdar s case (supra) to effect that when litigation is pending no interest accrues and therefore, there is no reason or logic in assessing interest income for asst. yrs. 1987-88 to 1992-93 especially when Court s judgment awarding enhanced compensation is dt. 22nd Sept., 1990. In this connection, learned counsel relied on decision of Delhi Bench of Tribunal in case of Bhim Singh Lather (supra) wherein after elaborate consideration of several judicial pronouncements, Hon ble Third Member concurred with JM and held that interest on additional compensation is taxable only in year of final adjudication of dispute and when there are pending proceedings there is no accrual of interest and it is taxable only in year of final adjudication. learned counsel further contended that interest on enhanced compensation is taxable only in asst. yr. 2003-04, when order of High Court in LAA 281 of 1992 was pronounced. It was further contended that decision in case of Padam Prakash (HUF) (supra) is in conformity with decision of Third Member in case of Bhim Singh Lather (supra) and it was held that in case dispute relating to interest payable on enhanced compensation is pending before Court of law and has not attained finality, same will not accrue and not liable to tax. It was further argued that only after it is finally determined, same can be subjected to tax and hence interest on additional compensation is taxable only on final adjudication of dispute and when there are pending proceedings there is no accrual of interest. learned counsel further contended that it has also been so held in case of T. Girijammal (supra) and in case of Sajjansinh N. Chauhan vs. ITO (2000) 67 TTJ (Ahd) 657 : (2000) 73 ITD 38 (Ahd). It was further argued that case of Krishna Rao (supra) relied on by CIT(A) is on different footing from assessee s case on following three grounds among others : (i) There are no fetters imposed by Court in that case. Here, assessee got money only on bank guarantee being furnished for entire enhanced sum to sub-Court, Calicut. guarantee was on security of amount released by Court and amount was hence under control and supervision of sub-Court. (ii) In that case it was assessee who had taken contention that amount should be spread over years. (iii) If State appeal had been allowed, assessee would have had to refund entire amount. learned senior counsel, therefore, submitted that interest on enhanced compensation may be taxed in lump sum only in asst. yr. 2003-04. 9. Per contra, learned Departmental Representative submitted that CIT(A) confirmed assessment of interest following decision of apex Court in case of K.S. Krishna Rao (supra). It was further argued that judgment of Hon ble Supreme Court in case of K.S. Krishna Rao (supra) is on different footing from assessee s case due to following reasons : assessee s argument that since there are no fetters imposed by Court, assessee s case is distinguishable is only very simplistic argument. As far as assessee s argument that in that case, it was assessee who had taken view that interest income should be spread over years, learned Departmental Representative submitted that what is important to note is principle embedded in judgment. learned Departmental Representative further submitted that it is pertinent to note here that in that particular case, Hon ble Supreme Court treated petition for special leave to appeal from order of High Court refusing to call for statement of case as one directly from appellate order of Tribunal, since question stood concluded by decision in case of Smt. Rama Bai vs. CIT (1990) 84 CTR (SC) 164 : (1990) 181 ITR 400 (SC). learned Departmental Representative further submitted that another important fact is that Andhra Pradesh High Court in case of CIT vs. Smt. M. Sarojini Devi (2001) 250 ITR 759 (AP) has laid down that AO need not wait for final disposal of case by apex Court to tax interest. assessee can claim refund if he succeeds in appeal to Supreme Court and if at any stage decision comes which is against assessee, assessee can always claim refund from Department. It was further submitted by learned Departmental Representative that most important judgment regarding this issue is case of Mrs. Rama Bai (supra) wherein matter was finally settled by Hon ble Supreme Court. That was case where reference to Supreme Court was made through President of Tribunal wherein Hon ble Supreme Court held that interest cannot be taken to have accrued on date or order of Court granting enhanced compensation but has to be taken as having accrued year after year from date of delivery of possession of lands till date of such order. According to learned Departmental Representative, said judgment laid to rest question of taxing interest on enhanced compensation. learned Departmental Representative relied on precedent in case of K.S. Krishna Rao (supra) which was also relied on by CIT(A). 10. We have heard rival submissions of parties. We have also carefully considered facts which are otherwise not disputed in this case on issue also. We have also carefully considered principles laid down in precedents relied on by parties. argument of learned senior counsel is that judgment of sub-Court awarding enhanced compensation and interest was challenged by State Government by filing appeal before Hon ble High Court and assessee was permitted to withdraw amount by sub-Court only on furnishing of bank guarantee and it was not unfettered right of assessee to get interest as said subject-matter was in further appeal to Hon ble High Court and hence AO went wrong in bringing to tax interest of enhanced compensation without considering pendency of appeal before High Court. In paper book filed by assessee xerox copy of judgment of Hon ble High Court of Kerala in (LAA No. 281 of 1992 dt. 7th Jan., 2003) is placed at pp. 34 to 38. Hon ble High Court dismissed appeal filed by State Government challenging judgment of sub-Court. Hence, finality to litigation has been reached only after Hon ble High Court dismissed appeal filed by State on 7th Jan., 2003. contention of assessee is that assessee has not asked for spread over of interest and assessee is following cash system, hence entire interest amount on enhanced compensation should be taxed in lump sum only in asst. yr. 2003-04. 10.1 In case of Hindustan Housing & Land Development Trust Ltd. (supra) and Smt. Rama Bai s case (supra), principles regarding assessability of interest on enhanced compensation has been laid down by Hon ble Supreme Court. interest is to be assessed on accrual basis f r o m year to year. Moreover, contention of learned Departmental Representative that assessee is following cash system of accounting and hence same should be assessed in year when Hon ble High Court finally dismissed appeal filed by State Government has no force. In dictum of Hon ble Supreme Court cited above principles of taxability of interest on enhanced compensation have been settled that interest on enhanced compensation should be taxed on accrual basis from date of delivery of possession of land and such interest cannot be assessed to income-tax in one lump sum in year in which order is made. 10.2 Here, we would like to refer to decision of Special Bench of Tribunal in case of Padam Prakash (HUF) (supra) wherein after considering principles laid down in case of Hindustan Housing & Land Development Trust Ltd. (supra) and Rama Bai s case (supra) it is held as under : "That as far as question of interest income on enhanced compensation is concerned, legislature had made no change in statutory provision and, therefore, decision of Supreme Court in case of CIT vs. Hindustan Housing & Land Development Trust Ltd. (1986) 58 CTR (SC) 179 : (1986) 161 ITR 524 (SC) as also decision of Smt. Rama Bai vs. CIT (1990) 84 CTR (SC) 164 : (1990) 181 ITR 400 (SC) would apply. interest is to be assessed on accrual basis from year to year. However, question of assessment of such interest on accrual basis would not arise unless it is finally determined. In case dispute relating to interest payable on enhanced compensation is pending before Court of law and has not attained finality, same will not accrue and not liable to tax. Only after it is finally determined, same can be subjected to tax, in light of decisions of Hon ble Supreme Court, referred to above." After carefully considering principles laid down in different precedents relied on by learned counsel, we are of opinion that AO has rightly brought to tax interest on enhanced compensation on accrual basis. 10.3 learned counsel submitted that there is no proper quantification of interest. learned counsel has also filed in his written argument working of excess amount of interest assessed by AO in asst. yrs. 1987-88 to 1992-93 which is as under : Interest on Asst. Enhanced enhanced Total yr. compensation compensation 1987- 87,358 - 87,358 88 1988- 2,16,088 - 2,16,088 89 1989- 2,63,083 - 2,63,083 90 1990- 2,63,080 - 2,63,080 91 1991- 2,63,083 - 2,63,083 92 1992- 1,17,487 17,53,887 18,71,374 93 12,10,179 17,53,887 29,64,066 Total amount assessed as above 29,64,066 Less : Amount received 23,47,886 Excess amount assessed as interest on enhanced 6,16,180 compensation In our opinion, correct working of interest needs reconsideration by AO. We, therefore, restore this issue to file of AO to examine year-wise working of interest on enhanced compensation brought to tax after considering order of sub-Court granting interest to assessee. Only for limited purpose of correctly verifying working of interest assessed under head Income from other sources , this issue is restored to AO. If necessary AO should modify order. AO should of course give reasonable opportunity of being heard to assessee as per principles of natural justice. We, therefore, decide issue of assessability of interest on enhanced compensation against assessee. 11. next issue is regarding estimation of domestic expenses in asst. yrs. 1987-88 and 1988-89. There was search action against late Shri K.T. Thomas, original assessee. On basis of statement recorded under s. 132 (4), AO made following additions as unexplained family and legal expenses : Sr. No. Asst. yr. Addition 1. 1987-88 Rs. 1,80,000 2. 1988-89 Rs. 1,80,000 It is not disputed in this case that this addition is made on basis of statement recorded during course of search under s. 132 (4) in year 1995. copy of said statement is placed in paper book at page Nos. 2 to 21. relevant portion of statement is at p. 9 of paper book. assessee objected by filing written explanation stating that all explanations given in s. 132 (4) statement are in year 1995 and assessing alleged income for all seven years prior to said statement is illogical and baseless since assessee was not incurring such huge expenses during year 1987 and that situation prevalent during year 1987 was having no relation to statement given in 1985. assessee also explained that he had sufficient money also in 1986-87. AO made addition based on admission of assessee in sworn statement recorded during course of search that his family expenses were about Rs. 4,000 per month and also incurred heavy expenses on legal matters. In respect of expenses regarding legal charges paid to his son, it was contended that his son is enrolled as advocate in year 1992, so there is no question of payment of any legal charges to his son in year 1986 when he was not advocate. Finally, AO made above addition. 1 2 . assessee challenged said addition before CIT(A). CIT(A) was of opinion that said household expenses are estimated on basis of statement of deceased assessee at time of search in year 1995 but there is no basis for working out amount of Rs. 1,80,000 and estimate is only pure assumption and it is not based on material relating to assessment year concerned. CIT(A) therefore, restricted estimation to Rs. 1 lakh. Now, assessee challenged said estimation before us. 13. We have heard parties. In this case, said additions are made which are based on some of admissions or statements of deceased assessee during course of search action under s. 132 . CIT(A) himself has come to conclusion that said additions are not based on any material and are only on pure assumption. CIT(A) has also given finding that that AO has not made any attempt to quantify household expenses for year when statement was made. CIT(A) has further given finding that there is merit in assessee s contention that estimate is illogical and baseless. Revenue has not challenged this finding of CIT(A) before us. 13.1 We find substance in argument of learned senior counsel that merely on basis of some of admissions and statements of deceased assessee which were recorded during course of search under s. 132 estimation or addition cannot be made. When CIT(A) himself has come to conclusion that said estimation is only on assumption and AO has not given any reason for quantifying amount of Rs. 1,80,000 per year, we find that CIT(A) has also sustained Rs. 1 lakh without giving any reasons and that is also on assumption. It is not case of AO that any incriminating document or material was found during course of search. Having regard to these facts, we do not find any justification to uphold addition sustained by CIT(A). We, therefore, direct AO to delete entire addition of Rs. 1 lakh sustained by CIT(A) relating to alleged household expenses and legal expenses. This issue is decided in favour of assessee. 14. In result, assessee s appeals ITA Nos. 325 and 326/Coch/ 2005 are partly allowed, ITA Nos. 328, 329 and 330/Coch/2005 are dismissed. *** MRS. CATHERINE THOMAS v. DEPUTY COMMISSIONER OF INCOME TAX