TaxTMI 
TaxTMI 
2017 (1) TMI 326
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....onal District Judge, Sangareddy, who granted a decree fixing the rate at 19 per sq. yd., vide decree dt. 31-12-1979. Not satisfied with the award, assessee approached the Hon'ble High Court for enhancement of compensation. The Hon'ble High Court of A.P. vide Appeal No. 1054/80 dt. 18-04-2003 granted following enhancement of compensation allowed by the Additional District Judge, Sangareddy: i. Market value of the land was determined at 19 per sq. yd; ii. Assessee was allowed statutory benefits like solatium etc., and granted interest at 4% from the date of notification till 30-04-1982 and thereafter @ 9%; iii. Assessee was eligible for additional market value u/s. 23(1A) of the Land Acquisition Act; 2.1. Hon'ble High Court also granted interest @ 15% from 01-05-1983 till the payment of order. The matter was further carried to the Hon'ble Supreme Court and the Hon'ble Supreme Court in Civil Appeals Nos. 1661 & 1662 and 2982/04 has confirmed the order of the Hon'ble High Court and allowed the parties to draw the amounts. Consequent to that, the Additional District Judge, Sangareddy, has issued Memo dt. 11-02-2011 sanctioning the compensation to assessee which included the ....
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....stating as under: "4.4. However, the assessee's contentions are not acceptable as it is seen from record that the compensation awarded to the assessee includes interest component of Rs. 1,45,03,226/-. I have also perused the High Court order dt. 18.04.2003 in appeal no. 1054 of 1980 where in it is clearly held that "the claimants apart from other statuary benefits are entitled to interest at 4% from the date of notification to 30.04.1982 and 9% interest for a period of one year and thereafter 15%" from this it is clearly evident that the amount of Rs. 1,45,03,227/- represents interest paid for delay in payment of enhanced compensation. Therefore, the assessee's contention that it does not amount to interest is not correct. The assessee's reliance on the case of Sri Ghanshyam Das Vs. CIT (SC) also cannot be accepted as the Assessing Officer has clearly stated in the assessment order that the judgement in this case was delivered on 16.07.2009 but subsequently in the Finance Act 2009, the IT Act has been specifically amended to bring to tax interest received on compensation or enhanced compensation in the year of receipt. A plain reading of the sections 145A(b) and 56(2)(vii) also ....
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....nces of the case section 145A or 56 would not have any application. 6. The Hon'ble CIT(A) ought to have observed that even for argument it is agreed that the interest on compensation was liable for tax the same should be brought to tax on accrual basis in the light of preamendment provisions i.e. provisions standing earlier to 01.04.2010 and settled legal position as the acquisition and accrual of interest took place during that period. 7. Without prejudice to the above, the Hon'ble CIT(A) ought to have observed that the applicability of amendments to section 145A and 56 with effect from 01.04.2010 is prospective only and cannot be applied for interest receivable on compensation for the period earlier to 01.04.2010". Ground Nos. 1 & 8 are general in nature. 5. Ld. Counsel referring to the judgement of the Hon'ble Supreme Court in the case of CIT Vs. Ghanshyam HUF [315 ITR 1] (supra) and subsequent judgment of the Hon'ble Gujarat High Court in the case of Movaliya Bhikhubhai Balabhai Vs. ITO [138 DTR (Guj) 223 & 2016-TIOL-854-High Court-AHM-IT] submitted that the amount sanctioned u/s. 28 of the Land Acquisition Act partakes the character of compensation, which i....
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....f receipt u/s. 145A rws 56(2)(vii). But that can only apply to interest u/s. 34 of the Land Acquisition Act but not to the interest u/s. 28 under the Land Acquisition Act which becomes part of Compensation. The principles laid down by the Hon'ble Supreme Court in the case of CIT Vs. Ghanshyam HUF [315 ITR 1] (supra) have not been amended. The same contention was considered by the Hon'ble Gujarat High Court in the case of Movaliya Bhikhubhai Balabhai Vs. ITO [138 DTR (Guj) 223 & 2016-TIOL-854-High Court-AHM-IT] (supra). In that case the assessee was the original claimant in Land Reference Case No.1737/1999 which was decided by the Principal Senior Civil Judge by an award dated 23rd March, 2011 whereby the reference was partly allowed and additional compensation was awarded at the rate of Rs. 41.60 per square metre for the irrigated lands and Rs. 33.28 per square metre for non-irrigated lands along with other benefits under the Land Acquisition Act, 1894. Pursuant to the award passed by the Reference Court, the Executive Engineer, Irrigation Scheme Division submitted a calculation sheet which showed an amount of interest of Rs. 20,74,157/- and the amount of TDS to be deducted as per ....
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....of the Act of 1894 is enhanced compensation, as a necessary corollary, therefore, the contention that payment made under section 28 of the Act of 1894 is interest as envisaged under section 145A of the I.T. Act and has to be treated as income from other sources, deserves to be rejected; it has been vehemently contended on behalf of the first respondent that the above decision has been rendered prior to the substitution of section 145A of the I.T. Act by Finance (No.2) Act, 2009 with effect from 1st April, 2010, and hence, would have no applicability to the facts of the present case. Thus, the substitution of section 145A by Finance (No.2) Act, 2009 was not in connection with the decision of the SC in Ghanshyam (HUF) but was brought in to mitigate the hardship caused to the assessee on account of the decision of SC in Smt. Rama Bai v. CIT, (1990) 181 ITR 400 (SC) whereby it was held that arrears of interest computed on delayed or enhanced compensation shall be taxable on accrual basis. Therefore, when one reads the words "interest received on compensation or enhanced compensation" in section 145A, the same have to be construed in the manner interpreted by the SC in Ghanshyam (HUF....