Taxability of interest on enhanced land acquisition compensation confirmed despite exemption claim under section 10(37).

Interest received on enhanced compensation under section 28 of the Land Acquisition Act was treated as a revenue receipt taxable under the Income-tax Act as income from other sources. The reasoning followed the larger Bench view that such interest is distinct from exempt compensation, and the later authority relied on by the assessee did not displace that position. The amended provisions specifically taxing interest on compensation or enhanced compensation were applied to the receipt, so the assessee's claim to exemption under section 10(37) failed and the addition was sustained.

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Issues: Whether interest received on enhanced compensation under section 28 of the Land Acquisition Act was taxable in the assessee's hands as income from other sources under the Income-tax Act, 1961.

Analysis: The disputed receipt was treated as interest on enhanced compensation and not as part of exempt compensation. The reasoning followed the larger Bench view that such interest is a revenue receipt taxable under the Income-tax Act, and that the later decision relied on by the assessee did not displace that position. The amended provisions taxing interest on compensation or enhanced compensation were held applicable to the receipt in question, and the assessee's reliance on exemption under section 10(37) did not succeed against that statutory treatment.

Conclusion: The interest on enhanced compensation was held taxable and the assessee's challenge to the addition failed.

Ratio Decidendi: Interest awarded on delayed payment or enhanced compensation under the Land Acquisition Act is a revenue receipt taxable under the Income-tax Act, and where statutory provisions specifically bring such interest to tax, exemption claims cannot prevail unless expressly provided.

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