Section 28 land acquisition interest treated as not taxable under income from other sources where jurisdictional precedent governs.

Interest awarded under section 28 of the Land Acquisition Act, 1894 on compensation was treated as not taxable as income from other sources under section 56(2)(viii) of the Income-tax Act, 1961. The Tribunal noted the competing authorities on the tax character of such interest, including the effect of sections 56(2)(viii) and 145B(1), but applied the binding jurisdictional High Court precedent governing the assessee's territorial facts. On that basis, the contrary Revenue view was not followed, and the interest remained outside tax in the assessee's hands unless the controlling precedent is reversed or modified.

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Issues: Whether interest received under section 28 of the Land Acquisition Act, 1894 on land acquisition compensation was taxable under section 56(2)(viii) of the Income-tax Act, 1961 as income from other sources.

Analysis: The appeal turned on the character of interest awarded under section 28 of the Land Acquisition Act, 1894. The Tribunal noted the competing lines of authority, including the effect of the statutory insertion of section 56(2)(viii) and section 145B(1) of the Income-tax Act, 1961, but held that the decisive factor was the binding jurisdictional precedent applicable to the assessee's case. Since the assessee and the assessing authority fell within the territorial jurisdiction of the Bombay Bench jurisdictional High Court decision relied upon, that view was treated as controlling over the contrary view urged by the Revenue.

Conclusion: The interest received under section 28 of the Land Acquisition Act, 1894 was held not taxable under section 56(2)(viii) of the Income-tax Act, 1961 in the assessee's hands, and the ground was decided in favour of the assessee.

Ratio Decidendi: Where binding jurisdictional precedent applicable on territorial facts governs the issue, interest awarded under section 28 of the Land Acquisition Act, 1894 cannot be brought to tax under section 56(2)(viii) of the Income-tax Act, 1961 unless that precedent has been reversed or modified.

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