ORDER
Deepak R. Shah, A.M.
1. This appeal by the Revenue is directed against the Order of the learned CIT(A), Rohtak, dt. 25th May, 2007 in pursuance of a direction of Tribunal, Delhi Bench “SMC-H” in its Order dt. 14th Sept., 2004 in ITA Nos. 374 and 375/Del/2003 for the asst. yrs. 1992-93 and 1996-97.
2. The Revenue has raised the following ground in this appeal:
The learned CIT (A) has erred in law and on the facts of the case in directing the AO not to charge interest under Sections 234A and 234B observing that interest income on compensation/enhanced compensation is taxable only when the dispute pertaining to acquisition of land is finally settled on 30th July, 1996 and the assessee filed return of income only on 15th March, 2002.
3. In this case the assessment was framed under Section 143(3) r/w Section 147 of the Act on 21st March, 2002. The assessee amongst other grounds also challenged levy of interest under Sections 234A and 234B of the Act. The assessee received the amount of compensation in respect of land acquired by the Government. The amount of compensation was enhanced in legal process. Certain amount which also included interest, was received by the assessee. It was stated that the dispute still continues and had not attained finality. However, in pursuance to notice under Section 148 the assessee filed return of income on 15th March, 2002. The AO accepted the returned income but also levied interest under Sections 234A and 234B of the Act from the due date till the completion of assessment
4. The learned CIT(A) held that as per the Special Bench of Tribunal in the case of Dy. CIT v. Padam Prakash (HUF)(2006) 104 T.T.J. (Del)(SB) 989 : (2006) 10 S.O.T. 1 (Del)(SB), the interest income on compensation/enhanced compensation is taxable only when the dispute pertaining to the acquisition of land is finally settled and hence till that date charging of interest under Sections 234A and 234B is not in Order. Since the dispute was finally settled on 30th July, 1996 i.e. much after the due date of filing of return of income and due date for deposit of advance tax, levy of interest under Sections 234A and 234B was cancelled. The Revenue is in further appeal before the Tribunal.
5. The learned Departmental Representative Shri Rahul Garg submitted that since the dispute was finally settled on 30th July, 1996 but the return was filed only on 15th March, 2002, there is a delay not only in filing of return of income but also in payment of tax thereafter. Thus the interest for the delayed period after the dispute was settled, should be charged.
6. The learned Counsel for the assessee Shri Ashwani Taneja on the other hand, strongly supported the appellate Order. He submitted that the assessment pertains to asst. yr. 1992-93. Since the dispute continued and was finally settled on 30th July, 1996, the assessee cannot visualize either payment of advance tax during the relevant financial year i.e. 1991-92 or file his return of income before the due date which is 30th June, 1992. Even the extended time limit under Section 139(4) expired prior to finality of the dispute. Thus the assessee is precluded from filing any return of income before the due date. Hence, until the notice under Section 147 is being issued, the assessee is incapacitated from filing his return of income. After issue of notice under Section 148, the return was filed which is within the time allowed in the notice and has also paid the taxes due along with the return. Thus the interest is not exigible. The assessee cannot be expected to do any impossibility. Thus the Order of the learned CIT(A) needs to be upheld.
7. I have considered the rival submissions. I am in agreement with the submissions by the learned Counsel for the assessee. Interest under Section 234A is chargeable provided the assessee who is required to file his return of income has failed to do so before the due date prescribed under Section 139(1) of the Act. Similarly interest under Section 234B is chargeable provided the assessee fails to pay advance tax as required under Section 208 of the Act. However, the fact in the present case revealed that prior to settlement of dispute, the assessee had not earned any income subject to taxation except the interest on compensation/enhanced compensation receivable from Land Acquisition Officer. The dispute was settled only on 30th July, 1996. Thus the assessee is neither liable to file return of income nor required to pay advance tax on the due date for asst. yr. 1992-93. In the circumstances, the assessee cannot be saddled with liability of interest under Section 234A as well as interest under Section 234B. It is to be noted that in compliance to notice under Section 148 the return was filed within the time mentioned in the notice. Thus, there is no default under Section 234A of the Act. The assessee has also paid taxes due with the return of income. Accordingly, interest under Section 234B is also not chargeable. The assessee could not have visualized in financial year 1991-92 that the dispute will be resolved and any additional compensation will be received which is liable for taxation. In the circumstances, there was no current income within the meaning of Section 208 on which the assessee can pay advance tax. Accordingly, interest under Section 234B is not chargeable. We, therefore, uphold the Order of the learned CIT(A).
In the result, the appeal is dismissed.