2009 (10) TMI 494

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....ursing the payment of enhanced compensation against award No. 3 of February 28, 1995. A further demand of Rs. 8,79,116 has also been raised by respondent No. 3, vide letter dated March 13, 2008 (P-1), which, according to the petitioners, is illegal and arbitrary. 2. The brief facts of the case are that in the year 1994 the agricultural land of the petitioners was acquired by the State of Haryana for construction of Yamuna Canal at Village Dhanwapur, Tehsil and District Gurgaon. On February 28, 1995, award No. 3 was passed granting compensation to the petitioners. They filed reference under section 18 of the Land Acquisition Act, 1894., The Additional District Judge, Gurgaon, enhanced the compensation, vide the award dated November 24, 19....

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....st is regarded as revenue receipt attracting the charging section of the Act or it could be described as damages or compensation in lieu of the owners right to retain possession. The controversy had erupted before hon'ble the Supreme Court in the case of Dr. Sham Lal Narula v. CIT [1964] 53 ITR 151 ; AIR 1964 SC 1878.  The Supreme Court after considering the concept of interest laid down by the Privy Council and many other judgments has held as under (page 158) : 'In a case where title passes to the State, the statutory interest provided thereafter can only be regarded either as representing the profit which the owner of the land might have made if he had the use of the money or the loss he suffered because he had not ....

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....he acquisition of the immovable property under the Acquisition Act would not be exigible to income-tax ? It is seen that this court has consistently taken the view that it is a revenue receipt. The amended definition of "interest" was not intended to exclude the revenue receipt of interest on delayed payment of compensation from taxability. Once it is construed to be a revenue receipt, necessarily, unless there is an exemption under the appropriate provisions of the Act, the revenue receipt is exigible to tax. The amendment is only to bring within its tax net, income received from the transaction covered under the definition of interest. It would mean that the interest received as income on the delayed payment of the compensation determined....