Apportioning interest income among co-owners in land acquisition case

The appellate tribunal upheld the order of the Ld. CIT(A) in a case involving the addition of interest received for delay in payment of compensation for land acquisition. The tribunal agreed with the assessee's argument that the interest income should be apportioned among the co-owners and assessed under the head income from other sources. The revenue's appeal was dismissed, and the CO filed by the assessee was also dismissed as infructuous.

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Issues:
1. Addition of interest received for delay in payment of compensation for land acquisition.

Analysis:
The case involved the revenue's appeal against the order of Ld. CIT(A)-XI Ahmedabad deleting the addition of interest received for delay in payment of compensation for land acquisition. The AO found that the assessee had only declared net agricultural income despite receiving significant interest income. The interest income was received from the office of the Executive Engineer N P Canal Division No. 7, Gandhinagar. The AO added the interest income to the total income of the assessee as the assessee did not respond to the show cause notice.

Ld. CIT(A) considered the submission of the assessee and deleted the addition after analyzing the case. The assessee argued that the interest received should be trifurcated among the three co-owners and assessed on an accrual basis year to year, citing relevant Apex Court judgments. The AR distinguished a decision regarding chargeability to capital gains and contended that the interest income should be assessed under the head income from other sources. Ld. CIT(A) agreed with the contentions and directed the AO to apportion the interest among the co-owners, assessing the share of interest accruing to the appellant for the year under consideration.

During the hearing, no faults were found with Ld. CIT(A)'s findings, and no contrary binding decision was presented by the revenue. Hence, the appellate tribunal upheld the order passed by Ld. CIT(A), dismissing the revenue's appeal. The CO filed by the assessee in support of Ld. CIT(A)'s order was dismissed as infructuous. Consequently, both the appeal filed by the revenue and the CO by the assessee were dismissed.

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