Taxability of interest on enhanced land acquisition compensation treated as income from other sources after statutory amendment.

Interest received on enhanced compensation under section 28 of the Land Acquisition Act, 1894 was treated as taxable after the insertion of section 56(2)(viii) and section 57(1)(v) with effect from 01.04.2010, which settled its taxation as income from other sources. The Tribunal followed earlier binding and jurisdictional decisions and accepted that a proposed review petition did not affect the force of existing precedent. It therefore upheld the CIT(A)'s reliance on the latest Supreme Court and High Court rulings and sustained taxability of the amount.

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Issues: (i) Whether the interest received on enhanced compensation under section 28 of the Land Acquisition Act, 1894 was taxable in the hands of the assessee and could be brought to tax as capital gains or income from other sources.

Analysis: The amount in dispute represented interest on enhanced compensation under section 28 of the Land Acquisition Act, 1894. The Tribunal noted that the issue had already been considered in earlier binding and later jurisdictional decisions, and that after the amendment to the Income-tax Act by insertion of section 56(2)(viii) and section 57(1)(v) with effect from 01.04.2010, the taxability of such interest as income from other sources stood settled. The Tribunal also accepted the view that the Department's reference to a proposed review petition did not displace the binding effect of the existing law, and it found no infirmity in the CIT(A)'s reliance on the latest Supreme Court and High Court decisions.

Conclusion: The interest on enhanced compensation was held to be taxable and the deletion of the addition by the CIT(A) was upheld.

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