Rakesh Kumar Garg, J.

1. The assessee has filed the present appeal under Section 260A of the Income Tax Act, 1961 (for short "the Act") against the order dated January 31, 2007 (annexure A-3) passed by the Income Tax Appellate Tribunal, Delhi Bench "F", New Delhi (for short "the Tribunal"), in I.T.A. No. 5370/Del/04 for the assessment year 2001-02.

2. The assessee-firm is a co-operative society and its main object is to acquire land and build houses on that land. The land acquired by the society was compulsorily acquired by the Government. During the year under consideration, the society has received enhanced compensation of Rs. 9,45,32,917, from the reference court comprising of additional compensation of Rs. 6,40,00,000 and interest of Rs. 3.08 crores thereon. The assessee declared a capital loss of Rs. 2,52,55,221 carried forward to next year on long-term capital gain of Rs. 12.32 lakhs. The assessee also declared net income of Rs. 30,89,258 on account of interest received. Accordingly, the assessee declared a returned income of Rs. 18,56,620.

3. The Assessing Officer, vide his order dated February 27, 2004, passed under Section 143(3) of the Act held that the entire amount of Rs. 9.56 crores on account of the enhanced compensation is taxable in the assessment year 2001-02 only. The amount of Rs. 5.29 crores was held to be a receipt under Section 45(5)(b) of the Act and interest of Rs. 4.27 crores was ordered to be taxed under the head "Income from other sources". The conclusions drawn by the Assessing Officer are reproduced as under:

(i) The fact that the enhanced compensation of Rs. 9.46 crores including interest is very much taxable, is not disputed by the assessee and therefore, this amount is held to be taxable.

(ii) The only point raised by the assessee is the year in which the said amount shall be taxed, i.e., the year when the issue of enhanced compensation is finally decided and there is no appeal filed by the State Government against such final order of the honble High Court or the year in which the enhanced compensation has been received.

(iii) The assessee has relied upon the decision of the honble Supreme Court in CIT v. Hindustan Housing and Land Development Trust ltd. : [1986] 161 ITR 524. [LQ/SC/1986/239] For the assessment year 1956-57 which has been further followed by the Patna and Delhi Income Tax Appellate Tribunal Benches mentioned by the assessee.

(iv) However it is very important to note that the Government of India duly considered all these judicial pronouncements and made consequential amendments in the Income Tax Act. As per the latest position of law in Clauses (a), (b) and (c) of Section 45(5) of the Income Tax Act, there remains no ambiguity and the receipt of compensation, its enhanced or reduction by any court thereafter has been separately considered. Therefore, the enhanced compensation is to be taxed in the year of such receipt. The assessed interest of reduction by any court later on, as pointed out by the honble Supreme Court, have been duly safeguarded as per Clause (c) of Section 45(5) that the assessment can be re-computed that the same in the year of any such reduction later on.

(v) Therefore, it is held that the entire amount of Rs. 9.56 crores on account of the enhanced compensation is taxable in the assessment year of 2001-02 only. The amount of Rs. 5.29 crores shall be taxed under the head Income from other sources.

4. The assessee filed an appeal before the Commissioner of Income Tax (Appeals), Faridabad challenging the order dated February 27, 2004 passed by the assessing authority.

5. The Commissioner of Income Tax (Appeals), vide his order dated October 4, 2004, accepted the appeal and the addition made on account of the enhanced compensation and the interest thereon was deleted holding that the enhanced compensation and the interest thereon cannot be charged to tax until the same had attained finality from the highest court. The Commissioner of Income Tax (Appeals) while allowing the appeal found that in the present case, the assessee had not acquired any absolute right on the enhanced compensation received as the same was received with conditions and since the assessee did not acquire any right over the enhanced compensation and the interest thereon, the same cannot be charged to tax in the hands of the assessee.

6. Not satisfied with the order of the Commissioner of Income Tax (Appeals), the Revenue filed the appeal before the Income Tax Appellate Tribunal, Delhi Bench "F", New Delhi challenging the abovesaid order. However, it was conceded by the Revenue before the Tribunal that the issue involved in the present case was covered by the Special Bench decision of the Tribunal in the case of Deputy CIT v. Padam Prakash (HUF) : [2007] 288 ITR 1 [LQ/SC/2006/1284] : 104 TTJ (Del) 989, wherein it has been held that enhanced compensation for acquisition of land is chargeable to tax in the year in which such compensation is received. However, interest on the enhanced compensation is to be assessed on accrual basis from year to year and it can be subjected to tax only after it is finally determined.

7. In view of the stand taken by the Revenue, the Tribunal directed the Assessing Officer to tax the compensation in the year of receipt and the interest on enhanced compensation in the assessment year relevant to the previous year in which it is finally determined. In spite of the fact that the Revenue has conceded before the Tribunal over the issues involved in the case, yet the present appeal has been filed raising the following questions of law:

(i) Whether in the facts and circumstances of the present case the impugned orders A-l and A-3 are legally sustainable in the eyes of law

(ii) Whether in the facts and circumstances of the present case the Income Tax Appellate Tribunal was right in law in holding that the amount of interest on the enhanced compensation in consequence upon the judgment of the District Judge and the amount having been utilized/invested in discretion of the assessee, was not includible in the total of the assessee

8. We have heard learned Counsel for the parties.

9. Shri Akshay Bhan, advocate, learned Counsel for the assessee has argued that the point in issue is covered in favour of the assessee by a decision of this Court in I.T.A. No. 427 of 2005 decided on February 25, 2008 in the case of Chandi Ram v. CIT and I.T.A. No. 490 of 2007 CIT v. Hardwari Lal (HUF) decided on March 26, 2008, : [2009]312 ITR 151 [LQ/PunjHC/2008/889] (P&H).

10. In support of the appeal, Shri Akshay Bhan, advocate has also argued that the issue involved has been authoritatively settled by the honble Supreme Court of India, while dismissing the SLP filed by the Revenue against the decision of the Bombay High Court in the case of CIT v. Abdul Mannan Shah Mohammed : [2001] 248 ITR 614. [LQ/BomHC/2000/194] Besides the above, the learned Counsel has also placed reliance upon a judgment of the Karnataka High Court in the case of Chief CIT v. Smt. Shantavva : [2004] 267 ITR 67. [LQ/KarHC/2004/137]

11. On the other hand, Shri Yogesh Putney, advocate, learned Counsel for the Revenue/respondent has argued to support the order of the Assessing Officer on the ground that no remedy will be available to the Revenue if the enhanced compensation as well as interest are finally upheld after the prescribed time of issue of notice under Section 148 of the Act. He further argued that in view of the clear provisions of Section 45(5) of the Income Tax Act, the amount of enhanced compensation and the interest thereon received by the appellant-assessee is liable to be taxed in the year of its receipt.

12. We find force in the argument raised by Shri Akshay Bhan, advocate, learned Counsel for the assessee/appellant. The point in issue is squarely covered by our judgment in I. T. A. No. 427 of 2005 Chandi Ram v. CIT and I. T. A. No. 490 of 2007 CIT v. Hardwari Lal (HUF) : [2009] 312 ITR 151 (P&H) [LQ/PunjHC/2008/889] . Not only this, the same view has also been taken by this Court in I. T. A. No. 177 of 2005 decided on November 14, 2005. The issue regarding the taxability on enhanced compensation thereon has also been clearly dealt with by the Bombay High Court in the case of CIT v. Abdul Mannan Shah Mohammed : [2001] 248 ITR 614 [LQ/BomHC/2000/194] against which the SLP filed by the Revenue has been dismissed by the honble Supreme Court of India. The relevant part of the judgment is reproduced here below (page 614):

The agricultural lands owned by the assessee was acquired by the Government in 1989 under the Land Acquisition Act. The assessee filed a civil suit. An award of Rs. 33,80,172 was made in favour of the assessee. Being aggrieved, the State Government moved the High Court against the decision of the reference court. At this stage, it may be mentioned that the said amount of Rs. 33,80,172 included an amount of Rs. 13.50 lakhs as interest on the additional compensation. Pending the appeal, the assessee was permitted to withdraw the amount on giving security. The question which arises for determination is whether the additional compensation which was deposited in the court and permitted to be withdrawn was taxable at that stage. Secondly, whether the said amount could be taxed when it was specifically deposited by the Government in appeal to the High Court. In the case of CIT v. Hindustan Housing and Land Development Trust Ltd. : [1986] 161 ITR 524 [LQ/SC/1986/239] , the Supreme Court has held that when the Government has appealed against the award and the additional amount of compensation was deposited in the court, it was not taxable at that stage as the additional compensation would not accrue as income when it was specifically disputed by the Government in appeal. In view of the said judgment of the Supreme Court, there is no merit in this appeal. No substantial question of law arises. The judgment of the Supreme Court, on facts, squarely applies to the facts of the present case. Hence, the appeal is dismissed.

13. In view of the above settled proposition of law, the questions raised by the assessee are answered in the negative, i.e., against the Revenue and in favour of the assessee. Thus, the appeal filed by the assessee is allowed.