Interest on enhanced compensation is taxable as income from other sources under the amended income tax provision.

After insertion of section 56(2)(viii) of the Income-tax Act, 1961, interest received on compensation or enhanced compensation from compulsory land acquisition is chargeable as income from other sources. The Tribunal followed later High Court decisions and distinguished pre-amendment authorities, holding that the tax treatment applies whether the interest is referable to section 28 or section 34 of the Land Acquisition Act, 1894. The assessee's challenge therefore failed, and the assessment sustaining tax on the interest was upheld.

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Issues: Taxability of interest received on enhanced compensation arising from compulsory acquisition of land under section 56(2)(viii) of the Income-tax Act, 1961.

Analysis: The interest received on compensation or enhanced compensation fell within the statutory inclusion inserted by section 56(2)(viii), which treats such interest as income chargeable under the head "Income from Other Sources". The prior line of authority dealing with pre-amendment years was distinguished, and the later High Court decisions were followed to hold that interest on compensation, whether relatable to section 28 or section 34 of the Land Acquisition Act, 1894, is taxable in the hands of the assessee under the amended provision.

Conclusion: The issue was decided against the assessee and in favour of the Revenue; the interest on enhanced compensation was held taxable.

Final Conclusion: The assessment order sustaining tax on interest received on enhanced compensation was upheld and the appeal failed.

Ratio Decidendi: After insertion of section 56(2)(viii) of the Income-tax Act, 1961, interest received on compensation or enhanced compensation is chargeable as income from other sources.

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