Section 28 enhanced compensation is treated as part of compensation, not separate interest income, for agricultural land acquisitions.

Amounts awarded under section 28 of the Land Acquisition Act, 1894, on enhanced compensation are treated as part of the compensation itself and not as separate interest income. Applied to acquisition of agricultural land, the receipt is considered in the context of capital gains and the exemption under section 10(37) of the Income-tax Act, 1961. Following the settled coordinate-bench view, the Tribunal treated the section 28 amount as compensation in the assessee's hands rather than taxable interest.

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Issues: Whether the amount received under section 28 of the Land Acquisition Act, 1894, on enhanced compensation was taxable as interest or was to be treated as part of compensation and hence exempt in the assessee's hands.

Analysis: The receipt arose from acquisition of agricultural land. The governing principle applied was that interest awarded under section 28 of the Land Acquisition Act forms part of the enhanced compensation and does not assume the character of separate interest income. The Tribunal followed the settled position that such receipt is to be considered in the context of capital gains and the agricultural land exemption under section 10(37) of the Income-tax Act, 1961. On the facts before it, the earlier coordinate-bench view on the same issue was followed.

Conclusion: The amount received under section 28 of the Land Acquisition Act, 1894, was held to be part of compensation and not taxable as interest in the assessee's hands.

Ratio Decidendi: Amounts awarded under section 28 of the Land Acquisition Act, 1894, on enhanced compensation are to be treated as part of the compensation itself, and where the acquisition pertains to agricultural land, the resulting receipt is not taxable as separate interest income.

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