Interest on enhanced land acquisition compensation is taxable on receipt and not exempt under section 10(37).

Interest received on enhanced land acquisition compensation was treated as taxable income from other sources in the year of receipt under section 56(2)(viii) of the Income-tax Act, 1961. The Tribunal followed the coordinate bench view that interest under section 28 of the Land Acquisition Act forms part of taxable income and does not qualify for exemption under section 10(37). As no distinguishing facts or contrary binding precedent were shown, the Assessing Officer's addition was upheld and the assessee's challenge failed.

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Issues: Whether interest received on enhanced compensation for acquisition of land is taxable as income from other sources in the year of receipt, and whether such receipt is exempt under section 10(37) of the Income-tax Act, 1961.

Analysis: The Tribunal followed the coordinate bench decision on an identical question and applied the settled view that interest received under section 28 of the Land Acquisition Act forms part of taxable income under section 56(2)(viii) of the Income-tax Act, 1961, to be assessed in the year of receipt. It further noted that the amount does not qualify for exemption under section 10(37) of the Income-tax Act, 1961, and no distinguishing feature or contrary binding precedent was shown to warrant a different view.

Conclusion: The addition made by the Assessing Officer was upheld and the assessee's challenge failed; the issue was decided against the assessee and in favour of the Revenue.

Ratio Decidendi: Interest received on enhanced compensation is taxable as income from other sources in the year of receipt and is not exempt under section 10(37) of the Income-tax Act, 1961.

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