Taxability of Section 28 land acquisition interest resolved in favour of the assessee under the ambiguity rule.

Interest awarded under Section 28 of the Land Acquisition Act, 1894 was examined for taxability as income from other sources under Section 56(2)(viii) of the Income-tax Act, 1961. In the absence of any contrary jurisdictional High Court ruling, non-jurisdictional High Court decisions were relied on and ambiguity in taxing provisions was resolved in favour of the assessee. The interest was therefore treated as not taxable under the impugned head.

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Issues: Whether interest received under Section 28 of the Land Acquisition Act, 1894 is taxable as income from other sources under Section 56(2)(viii) of the Income-tax Act, 1961.

Analysis: The dispute turned on the characterisation of interest awarded under Section 28 of the Land Acquisition Act, 1894. The assessee relied on non-jurisdictional High Court decisions taking the view that such interest does not fall to be taxed against the assessee in the manner adopted by the lower authorities. In the absence of any contrary jurisdictional High Court ruling, the rule that ambiguity in taxing provisions must be resolved in favour of the assessee was applied.

Conclusion: The interest under Section 28 of the Land Acquisition Act, 1894 was held not taxable against the assessee under the impugned head, and the issue was decided in favour of the assessee.

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