Character of section 28 land acquisition receipt must be verified before taxing it as income from other sources.

A receipt described as interest under section 28 of the Land Acquisition Act, 1894 must be examined on its true factual character before deciding whether it forms part of enhanced compensation or taxable income under the head income from other sources. The ITAT Delhi held that the nature of the receipt required verification by the Assessing Officer in light of the applicable Supreme Court directions, so the matter was restored for fresh adjudication after giving the assessees a reasonable opportunity. No final tax treatment was determined at this stage, and the appeals succeeded only for statistical purposes.

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Issues: Whether the amount received under section 28 of the Land Acquisition Act, 1894 was to be treated as interest taxable under the head income from other sources or as part of enhanced compensation.

Analysis: The appeals raised the same question across all assessees, namely whether the amount described as interest under section 28 of the Land Acquisition Act, 1894 retained the character of compensation. The Tribunal noted the reliance placed on the law governing compensation and the effect of the Supreme Court rulings cited before it, but found that the factual determination whether the receipt actually represented compensation or interest required verification by the Assessing Officer. The matter was therefore restored to the Assessing Officer to examine the nature of the receipt and to decide the issue after giving reasonable opportunity to the assessees and following the applicable Supreme Court directions.

Conclusion: The issue was remanded to the Assessing Officer for fresh adjudication, and no final determination was made on the taxability of the receipt at this stage.

Final Conclusion: The assessee's appeals succeeded only for statistical purposes, with the substantive question of tax treatment left open for fresh decision by the Assessing Officer.

Ratio Decidendi: A receipt described as interest under section 28 of the Land Acquisition Act, 1894 must be tested on its true character on facts before deciding whether it forms part of compensation or taxable income.

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