Law:

Section:

Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interests of revenue - Certain land belonging to assessee were acquired by State Government on payment of compensation - Amount of compensation was subsequently enhanced and interest awarded - ITO held that interest was taxable on accrual basis from year to year and not in year of receipt - Whether ITO's order was rightly set aside by Commissioner holding that it was prejudicial to interests of revenue - Held, on facts, yes - Whether of High Court or Supreme Court in another case, which deals with any issue arising in such case can be said to be part of record of only another case for purpose of section 263 - Held, no Facts The assessee was a firm carrying on business of developing residential colonies. Certain parcels of land belonging to the assessee were acquired by the State Government. The Collector awarded compensation to the assessee which was enhanced and interest was awarded on the enhanced amount from the date of acquisition by the State Government to the date of enhancement of compensation. The assessee received the amount of interest in the ensuing year. The ITO upheld the claim of the assessee that the amount of interest received on additional compensation was taxable on the accrual basis from year to year and it was not accordingly taxable in the year of receipt. Acting under section 263, the Commissioner set aside the ITO's order holding that amount of interest was taxable in the assessment year relevant to the accounting year in which interest was awarded. On appeal, the Tribunal observed that the Commissioner came to the conclusion that the order of the ITO was erroneous after the decision of the High Court in the case of CIT v. H.H. Maharaja Yashwant Rao Pawar [1981] 127 ITR 650 while the relevant assessment order was passed before the said was pronounced. From this fact the Tribunal observed that on the date of passing of the relevant assessment order, the relied upon by the Commissioner was not in existence and, hence, it could not be held that on the basis of the material on record, the order of assessment passed by the ITO was erroneous. The Tribunal, therefore,…

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