Taxability of land acquisition interest depends on whether it falls under section 28 or section 34 of the Land Acquisition Act.

Interest on land acquisition compensation depends on its statutory character: interest under section 28 of the Land Acquisition Act is treated as part of enhanced compensation and is not taxable, while interest under section 34 for delayed payment is taxable as a revenue receipt. Because the record did not clearly show under which provision the interest was granted, the matter required limited factual verification by the Assessing Officer to determine the correct tax treatment.

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Issues: Whether interest received on enhanced compensation under the Land Acquisition Act was taxable in the assessee's hands, and whether the matter required verification as to whether the interest fell under section 28 or section 34 of that Act.

Analysis: The dispute turned on the character of the interest received on acquisition compensation. The controlling distinction, as applied by the Tribunal, was that interest received under section 28 of the Land Acquisition Act is to be treated as part of enhanced compensation and is not taxable in the assessee's hands, whereas interest under section 34 for delayed payment is taxable. The record did not clearly establish under which provision the interest was granted, and the issue therefore required factual verification by the Assessing Officer.

Conclusion: The issue was restored to the Assessing Officer for limited verification of whether the interest was received under section 28 or section 34 of the Land Acquisition Act. If it was under section 28, it would not be taxable; if under section 34, it would be taxable.

Ratio Decidendi: The taxability of interest on land acquisition compensation depends on whether it is interest under section 28, which is part of enhanced compensation and not taxable, or interest under section 34, which is taxable as revenue receipt.

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