Enhanced compensation principle preserves section 28 receipt as compensation, defeating revision under section 263.

Interest received under section 28 of the Land Acquisition Act, 1894 was treated as part of enhanced compensation where binding Supreme Court law so required. On that basis, the Tribunal held that the Assessing Officer was bound to follow the Supreme Court position and that the assessment could not be said to be erroneous or prejudicial merely because the revisional authority preferred a contrary later view. The order under section 263 of the Income-tax Act, 1961 was therefore unsustainable and was set aside.

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Issues: Whether interest received under section 28 of the Land Acquisition Act, 1894 on enhanced compensation was liable to be assessed as income from other sources, and whether the revisional order under section 263 of the Income-tax Act, 1961 could be sustained on that basis.

Analysis: The assessee had treated the amount received under section 28 of the Land Acquisition Act, 1894 as part of enhanced compensation. The revisional authority invoked section 263 of the Income-tax Act, 1961 on the premise that the amount was taxable as income from other sources in view of section 56(2)(viii), section 57(iv) and section 145A(b) of the Income-tax Act, 1961 and the later High Court view. The Tribunal held that the Supreme Court had reiterated the principle in Ghanshyam (HUF) in a later decision, and that while determining taxability the Assessing Officer was bound to follow that position. Since the amount under section 28 was to be treated as compensation in the light of the binding Supreme Court position, the assessment order could not be regarded as erroneous and prejudicial to the interests of the Revenue.

Conclusion: The revisional order under section 263 of the Income-tax Act, 1961 was unsustainable and was set aside.

Final Conclusion: The assessees succeeded because the receipt under section 28 of the Land Acquisition Act, 1894 was treated as compensation in accordance with the binding Supreme Court position, leaving no basis for revision under section 263 of the Income-tax Act, 1961.

Ratio Decidendi: Interest received under section 28 of the Land Acquisition Act, 1894 retains the character of enhanced compensation when the binding Supreme Court law so declares, and an order of assessment following that view cannot be revised as erroneous and prejudicial to the interests of the Revenue merely because of a contrary later view of another authority.

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