1 IN SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.13053/2017 [@ SLP (C) No.751/2009] COMMISSIONER OF INCOME TAX FARIDABAD COMMISSIONER Petitioner(s) VERSUS CHET RAM (HUF) Respondent(s) WITH CIVIL APPEAL NO.13054/2017 [@SLP(C) No.752/2009 (IV-B)] WITH CIVIL APPEAL NO.13055/2017 [@ SLP(C) No.761/2009 (IV-B)] WITH CIVIL APPEAL NO.13056/2017 [@ SLP(C) No.759/2009 (IV-B)] WITH CIVIL APPEAL NO.13057/2017 [@ SLP(C) No.756/2009 (IV-B)] WITH CIVIL APPEAL NO.13058/2017 [@ SLP(C) No.753/2009 (IV-B)] WITH CIVIL APPEAL NO.13059/2017 [@ SLP(C) No.754/2009 (IV-B)] WITH CIVIL APPEAL NO.13060/2017 [@ SLP(C) No.757/2009 (IV-B)] WITH CIVIL APPEAL NO.13061/2017 [@ SLP(C) No.755/2009 (IV-B)] ORDER Leave granted. In present appeals, only question that arises for consideration is as to whether respondents-assessees who Signature Not Verified have received some amount of enhanced compensation as also Digitally signed by ASHA SUNDRIYAL Date: 2017.09.20 16:20:26 IST Reason: interest thereon under interim order passed by High Court in pending appeals relating to land acquisition matter are liable to be assessed for income tax in year in which 2 it has been received or not. We have heard Ms. Pinky Anand, learned Additional Solicitor General appearing for appellant herein. She has brought attention of this Court to decision in case of Commissioner of Income Tax, Faridabad v. Ghanshyam (HUF) reported in (2009) 8 SCC 412 wherein provisions of Section 45(5) of Income Tax Act, 1961 were considered and this Court in paragraphs 53 to 56 has held that in view of Amendment in Income Tax Act, person who has received enhanced compensation and interest thereon even by interim order passed by Court would be assessed to tax for that enhanced compensation. Paragraphs 53 to 56 of above judgment read as under: 53. scheme of Section 45 (5) of 1961 Act was inserted w.e.f. 1-4-1988 as overriding provision. As stated above, compensation under LA Act, 1894, arises and is payable in multiple stages which does not happen in cases of transfers by sale, etc. Hence, legislature had to step in and say that as and when assessee claimant is in receipt of enhanced compensation it shall be treated as deemed income and taxed on receipt basis. Our above understanding is supported by insertion of clause (c) in Section 45 (5) w.e.f. 1-4-2004 and Section 155(16) which refers to situation of subsequent reduction by Court, tribunal or other authority and recomputation/amendment of assessment order. 54. Section 45(5) read as whole [including 3 clause (c)] not only deals with reworking as urged on behalf of asseess but also with change in full value of consideration (computation) and since enhanced compensation/consideration (including interest under Section 28 of 1894 Act) becomes payable/paid under 1894 Act at different stages, receipt of such enhanced compensation/consideration is to be taxed in year of receipt subject to adjustment, if any, under Section 155 (16) of 1961 Act, later on. Hence, year in which enhanced compensation is received is year of taxability. Consequently, even in cases where pending appeal, Court/tribunal/authority before which appeal is pending, permits claimant to withdraw against security or otherwise enhanced compensation (which is in dispute) same is liable to be taxed under Section 45(5) of 1961 Act. This is scheme of Section 45(5) and Section 155 (16) of 1961 Act. We may clarify that even before insertion of Section 45(5)(c) and Section 155(16) w.e.f. 1-4-2004, receipt of enhanced compensation under Section 45(5)(b) was taxable in year of receipt which is only reinforced by insertion of clause (c) because right to receive payment under 1894 Act is not in doubt. 55. It is important to note that compensation, including enhanced compensation/consideration under 1894 Act, is based on full value of property as on date of notification under Section 4 of that Act. When court/tribunal directs payment of enhanced 4 compensation under Section 23(I-A), or Section 23(2) or under Section 28 of 1894 Act it is on basis that award of Collector or Court, under reference, has not compensated owner for full value of property as on date of notification. 56. Having settled controversy going on for last two decades, we are of view that in this batch of cases which relate back to Assessment Years 1991-1992 and 1992-1993, possibly proceedings under LA Act, 1894 would have ended. In number of cases we find that proceedings under 1894 Act have been concluded and taxes have been paid. Respectfully following above decision, we allow these Civil Appeals, set aside orders of High Court as also Income Tax Appellate Tribunal and hold that respondents are liable to pay tax on enhanced amount of compensation and interest received by them during year in question. Civil Appeals are allowed in above terms. Parties to bear their on costs. J. [R.K. AGRAWAL] J. [DR. D.Y. CHANDRACHUD] NEW DELHI; SEPTEMBER 12, 2017. 5 ITEM NO.12 COURT NO.8 SECTION IV-B SUPREME COURT OF INDIA RECORD OF PROCEEDINGS Petition for Special Leave to Appeal (C) No.751/2009 (Arising out of impugned final judgment and order dated 16-05-2007 in ITA No.361/2005 passed by High Court Of Punjab & Haryana At Chandigarh) COMMISSIONER OF INCOME TAX FARIDABAD COMMISSIONER Petitioner(s) VERSUS CHET RAM (HUF) Respondent(s) WITH SLP(C) No. 752/2009 (IV-B) SLP(C) No. 761/2009 (IV-B) SLP(C) No. 759/2009 (IV-B) SLP(C) No. 756/2009 (IV-B) SLP(C) No. 753/2009 (IV-B) SLP(C) No. 754/2009 (IV-B) SLP(C) No. 757/2009 (IV-B) SLP(C) No. 755/2009 (IV-B) Date : 12-09-2017 These appeals were called on for hearing today. CORAM : HON'BLE MR. JUSTICE R.K. AGRAWAL HON'BLE DR. JUSTICE D.Y. CHANDRACHUD For Petitioner(s) Ms. Pinky Anand, ASG Mrs. Anil Katiyar, AOR For Respondent(s) Dr. Kailash Chand, AOR UPON hearing counsel Court made following ORDER Leave granted. Civil Appeals are allowed in above terms. Pending application(s) stand(s) disposed of. (ASHA SUNDRIYAL) (CHANDER BALA) COURT MASTER COURT MASTER (Signed order is placed on file) Commissioner of Income-tax, Faridabad Commissioner v. Chet Ram (HUF)