Taxability of interest on enhanced land-acquisition compensation upheld under amended income-tax provisions for other sources.

Interest received on enhanced compensation for compulsory acquisition of land is taxable as income from other sources under the amended scheme of section 56(2)(viii), read with section 145A(b). The interest here arose under section 28 of the Land Acquisition Act, 1894, and the later statutory amendment was applied to bring such receipts within the taxable head, rather than treating them under the earlier section 45(5) framework. The addition made by the Assessing Officer was therefore sustained, and the receipt was held taxable in the hands of the assessee.

---

---

Issues: Whether interest received on enhanced compensation for compulsory acquisition of land is taxable as income from other sources under section 56(2)(viii) of the Income-tax Act, 1961, and whether the addition made by the Assessing Officer was sustainable.

Analysis: The interest amount was received on enhanced compensation under section 28 of the Land Acquisition Act, 1894. The amended statutory scheme under section 56(2)(viii), read with section 145A(b), brings interest received on compensation or enhanced compensation within the head of income from other sources. Earlier treatment under section 45(5) was distinguished in light of the later amendment and the binding High Court decisions relied upon.

Conclusion: The interest on enhanced compensation was rightly assessed as income from other sources and the addition was correctly sustained against the assessee.

Ratio Decidendi: Interest received on compensation or enhanced compensation for compulsory acquisition is taxable as income from other sources under the amended income-tax provision governing such receipts.

---