Section 28 land acquisition interest treated as enhanced compensation, not separately taxable as income from other sources.

Interest awarded under section 28 of the Land Acquisition Act, 1894 on enhanced compensation was treated as an integral part of the compensation and not as a separate revenue receipt. The Tribunal followed the settled position that such section 28 interest retains the character of compensation, and held that the insertion of section 56(2)(viii) of the Income-tax Act, 1961 did not alter that position on the facts before it. The addition was deleted, and the assessee's relief was upheld.

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Issues: Whether interest received under section 28 of the Land Acquisition Act, 1894 on enhanced compensation was taxable as income from other sources under section 56(2)(viii) of the Income-tax Act, 1961, or formed part of compensation and was not separately taxable.

Analysis: The issue turned on the character of interest awarded under section 28 of the Land Acquisition Act, 1894. The Tribunal followed the settled position that such interest is an integral part of the enhanced compensation and not a separate revenue receipt. It noted that the later insertion of section 56(2)(viii) did not dislodge the principle applied to section 28 interest in the facts before it, and relied on the continuing effect of the Supreme Court's treatment of such receipts as compensation.

Conclusion: The interest received under section 28 was held to be part of the compensation and not taxable separately as income from other sources; the addition was rightly deleted.

Final Conclusion: The Revenue's challenge failed and the order granting relief to the assessee was affirmed.

Ratio Decidendi: Interest awarded under section 28 of the Land Acquisition Act, 1894 is to be treated as part of the enhanced compensation and not as a separate taxable receipt under the head income from other sources.

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