TaxTMI Login
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →Just a moment...
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether interest received under section 28 of the Land Acquisition Act, 1894 on enhanced compensation is taxable under section 56(2)(viii) read with section 57(iv) and section 145A(b) of the Income-tax Act, 1961 for A.Y.2016-17; (ii) Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 can be sustained where the interest was claimed as exempt in the return.
Issue (i): Whether interest under section 28 of the Land Acquisition Act, 1894 on enhanced compensation is taxable under section 56(2)(viii) of the Income-tax Act, 1961.
Analysis: The issue was examined in light of precedent including CIT v. Ghanshyam (HUF) (315 ITR 1), the Gujarat High Court decision in Movaliya Bhikhubhai Balabhai, and tribunal decisions of the Pune Bench which interpret interest under section 28 as accretion to enhanced compensation and not as stand-alone income under section 145A(b) or section 56(2)(viii). The factual record shows compulsory acquisition of agricultural land in 1986, enhancement by civil court order, and receipt of interest under section 28 which was claimed as exempt under the provisions applicable to compensation for compulsory acquisition of agricultural land.
Conclusion: Interest received under section 28 of the Land Acquisition Act, 1894 on enhanced compensation is not taxable under section 56(2)(viii) of the Income-tax Act, 1961; Ground No.1 is allowed in favour of the assessee.
Issue (ii): Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 is sustainable where the interest was claimed as exempt.
Analysis: The interest was claimed as exempt in the return of income and, having held that such interest is not taxable as per Issue (i), the foundation for penalty for concealment is absent. There is no material to show deliberate concealment of income when the assessee disclosed and claimed the interest as exempt.
Conclusion: Penalty under section 271(1)(c) of the Income-tax Act, 1961 is not sustainable and is deleted; the penalty appeal is allowed in favour of the assessee.
Final Conclusion: The appeals are allowed, resulting in deletion of the assessed tax on the impugned interest component and deletion of the penalty, and thereby providing complete tax relief to the assessee on the issues decided.
Ratio Decidendi: Interest payable under section 28 of the Land Acquisition Act, 1894 forms part of enhanced compensation for compulsory acquisition of agricultural land and, on that basis, does not fall within the expression of taxable interest under section 56(2)(viii) or section 145A(b) of the Income-tax Act, 1961.
TaxTMI 
TaxTMI 
