Taxability of interest on land acquisition compensation changed after amendment, making the interest component subject to deduction at deposit.

The amendment to the Income-tax Act was treated as bringing interest on additional land acquisition compensation within the tax net from April 2010, thereby overriding the earlier position that such interest on enhanced compensation was not taxable. On that basis, the interest component on the additional award was regarded as subject to income tax and deductible at the time of deposit.

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Issues: Whether interest on the additional award in land acquisition compensation is taxable after the amendment to the Income-tax Act.

Analysis: The review was sought on the ground that the earlier orders had not taken note of the amendment which brought the interest component on additional compensation within the tax net. The amendment, stated to operate from April 2010, was held to have statutorily abrogated the earlier position that interest on enhanced compensation was not taxable.

Conclusion: The interest on the additional award was held to be taxable under income tax and deductible at the time of deposit.

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