1999 (11) TMI 16 - HC - Income Tax

High Court rules on taxability of interest on land compensation under Land Acquisition Act, emphasizing distinction between disputed and admitted rights.

Commissioner Of Income-Tax Versus Laxman Dass

Commissioner Of Income-Tax Versus Laxman Dass - [2000] 246 ITR 622 Issues involved: Taxability of interest accrued on additional compensation under section 45 of the Income-tax Act and applicability of Supreme Court judgments.Summary:The case involved multiple Income-tax Applications directed against orders passed by the Income-tax Appellate Tribunal regarding the taxability of interest accrued on additional compensation under the Land Acquisition Act, 1894. The main question was whether the Tribunal's decision, based on the Supreme Court's ruling in CIT v. Hindustan Housing and Land Development Trust Ltd., was legally correct, considering the subsequent amendment to section 45 of the Income-tax Act and the decision in Rama Bai v. CIT.The respondents had received additional compensation and interest on acquired agricultural land, which was subject to pending appeals by the Government. The Tribunal, citing the Hindustan Housing case, held that the interest was not taxable until the dispute was resolved, following the Supreme Court's precedent. The Commissioner argued for taxability based on the Rama Bai case, which dealt with interest on enhanced compensation accruing yearly from the date of possession. However, the Tribunal found the matter sub-judice and aligned with the Hindustan Housing judgment, emphasizing the distinction between disputed and admitted rights to payment.Ultimately, the High Court rejected the applications, stating that the controversy had been settled by the Supreme Court's previous judgment, and no referable question of law arose. The decision highlighted the importance of distinguishing cases where the right to receive payment is in dispute versus cases where the right is admitted, clarifying the tax implications in such scenarios.