Taxability of interest on enhanced compensation cannot be duplicated where the HUF has already declared and paid tax on that income.

Interest on enhanced compensation was treated by the Assessing Officer as the individual income of the assessee under section 56(2)(viii), with deduction under section 57(iv). The Tribunal accepted the assessee's contention that the income belonged to the Hindu undivided family and noted that the relevant HUF had already declared the income and paid tax under the disclosure scheme. On those facts, the same income could not again be assessed in the individual's hands, and the addition was deleted.

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Issues: Whether the interest on enhanced compensation was taxable in the assessee's individual hands or belonged to the Hindu undivided family, and whether the addition made by the Assessing Officer could be sustained after the HUF had declared the income and paid tax thereon.

Analysis: The addition had been made by treating the interest on enhanced compensation as the assessee's individual income under section 56(2)(viii) of the Income-tax Act, 1961, with deduction under section 57(iv). The Tribunal noted that the assessee's case was that the income actually belonged to the HUF and that the relevant HUFs had subsequently made declaration and paid tax under the disclosure scheme. On the facts of the case, the Tribunal accepted that the tax liability had already been discharged by the HUF and that the correct share of income had been declared.

Conclusion: The addition was not sustainable and was directed to be deleted. The issue was decided in favour of the assessee.

Ratio Decidendi: Where the income has been duly declared and tax paid by the HUF to which it belongs, an addition of the same income in the hands of the individual assessee cannot be sustained.

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