Revision under section 263 fails where interest on enhanced land acquisition compensation may form part of compensation under settled Supreme Court law.

The Principal Commissioner's revision under section 263 was found unsustainable because the assessment could not be treated as erroneous on the footing that interest received under section 28 of the Land Acquisition Act, 1894 on enhanced compensation was taxable as income from other sources. The Tribunal noted that the assessee relied on Ghanshyam (HUF) and the later reaffirmation in Hari Singh, which require the Assessing Officer to consider section 28 and determine whether the receipt partakes of compensation. In light of that legal position, the revisional authority's premise did not justify interference, and the assessee succeeded.

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Issues: Whether the Principal Commissioner was justified in revising the assessment under section 263 on the footing that interest received under section 28 of the Land Acquisition Act, 1894 on enhanced compensation was taxable as income from other sources.

Analysis: The assessment was revised because the Principal Commissioner treated the interest on enhanced compensation as taxable under the amended provisions of section 56(2)(viii), section 57(iv) and section 145A(b) of the Income-tax Act, 1961. The Tribunal noted that the assessee had relied on the Supreme Court's view in Ghanshyam (HUF), and further on the later reaffirmation in Hari Singh, which directed that while examining compensation arising from acquired agricultural land, the Assessing Officer must keep in mind section 28 of the Land Acquisition Act and the law declared in Ghanshyam (HUF) to determine whether the amount received under that provision partakes of compensation. In view of that reaffirmation, the Tribunal held that the assessment order could not be treated as erroneous on the premise adopted by the revisional authority.

Conclusion: The revision under section 263 was not sustainable and the assessee succeeded.

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