Commissioner of Income Tax, Andhra Pradesh, Hyderabad Vs. M. Sarojini Devi - Court Judgment

Excerpt:

.....and (5) of rule 5 are solely dependent on compliance with sub-rule (3) by the tenant. the payment or deposit of rent under section 11 read with sub-rule (6) of rule 5 arises only in respect of a tenant who did not take recourse to section 8 or section 9 before an application for eviction has been made against him in respect of any rent in arrears by date of that application, whereas in respect of rent that becomes subsequently due since date of application for eviction, the tenant is bound to pay or deposit regularly until termination of proceedings in order to enable him to contest the application. any violation of section 11(1) to (3) and sub-rule (6) of rule 5 makes the tenant liable for the adverse consequences under sub-section (4) of section 11. thus, the provisions of section 11 and sub-rule (6) of rule 5 are intended only to ensure the payment and deposit of rent including arrears during pendency and till termination of proceedings for eviction. the forfeiture of right of tenant to contest in case of default is to protect the rights and interests of landlord pending such an application for eviction, but not to confer any right on tenant to plead that all defaults..........upon the same judgment. thereafter at the instance of the revenue, the following question has been framed and referred to this court:'whether on the facts and in the circumstances of the case, the interest on compensation the assessment year for which the interest should be brought to tax is the one in which it was awarded or the year in which issue of quantum of compensation becomes final?'2. we have given the facts of the case somewhat in detail only because we have found that the question is not happily framed. the question, which needed to be answered, is 'whether the assessing officer has to wait till the final disposal by the final court in an acquisition matter before the interest accrued is taxed?' therefore, we are refraining the question in the above mentioned phraseology and we find that the question is already answered by the supreme court in rama bai v. cit : [1990]181itr400(sc) . the fact that the compensation was enhanced by the high court in an appeal and the interest accruing to it was received by the assessee makes him liable to pay the tax. however, it will be spread over the period for which it accrued to him, in accordance with the supreme court judgment. in.....

Judgment:

ORDER

Bilal Nazki, J.

1. Lands belonging to the assessee have been acquired by the Government in the year 1966 and compensation was awarded by the Land Acquisition Officer. On reference, compensation at higher rate was awarded. The assessee was held to be entitled to an interest of Rs.43,642/- for the period 18-5-1966 to 9-12-1975. The State Government went in appeal against the enhancement made in the appeal. The appeal before the Supreme Court was pending. The Income Tax Officer held that the entire amount of interest on enhanced compensation should be brought to tax for the assessment year 1976-77. The orderwas challenged by way of appeal. The Appellant Assistant Commissioner held that as the matter had not become final and an appeal was before the Supreme Court, the amount of interest received by the assessee could not be taxed. He relied on a judgment of this Court in CIT v. Smt Sankari Manickyamma : [1976]105ITR172(AP) . On further appeal before the Tribunal, the same view was upheld relying upon the same judgment. Thereafter at the instance of the Revenue, the following question has been framed and referred to this Court:

'Whether on the facts and in the circumstances of the case, the interest on compensation the assessment year for which the interest should be brought to tax is the one in which it was awarded or the year in which issue of quantum of compensation becomes final?'

2. We have given the facts of the case somewhat in detail only because we have found that the question is not happily framed. The question, which needed to be answered, is 'Whether the assessing officer has to wait till the final disposal by the final Court in an acquisition matter before the interest accrued is taxed?' Therefore, we are refraining the question in the above mentioned phraseology and we find that the question is already answered by the Supreme Court in Rama Bai v. CIT : [1990]181ITR400(SC) . The fact that the compensation was enhanced by the High Court in an appeal and the interest accruing to it was received by the assessee makes him liable to pay the tax. However, it will be spread over the period for which it accrued to him, in accordance with the Supreme Court judgment. In any case, if the judgment enhancing the compensation in favour of the assessee is reversed by the Supreme Court, then the assessee, even after payment of the tax on the accrued interest, would not be remediless. He can always seek the refund of the tax so paid, by makingappropriate application for rectification of the assessment. The Tribunal relied on judgment in Smt. Sankari Manickyamma (supra) that obviously stands reversed in view of the judgment of the Supreme Court judgment in Rama Bai (supra).

3. For all these reasons, we answer the question in favour off the Revenue as indicated above and against the assessee.