AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (9) TMI 1468
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....interest received u/s 28 of the L.A Act in case of compulsory acquisition of agricultural land is in the nature of interest income or it is a part of enhanced compensation. 3. The Ld.CIT(A) has erred in treating the receipt u/s 28 of the L.A Act as interest income taxable under I.T Act in contravention of the judgment of Hon'ble Supreme Court in case of Union of India & ors Vs. Hari Singh & Ors in Civil Appeal No. 15041 of 2017. 4. The Ld.CIT(A) has erred in confirming the addition of Rs. 47,84,031/- which may kindly be deleted. 5. The Ld.CIT(A) has erred in deciding the appeal on the basis of service of hearing notices issued in the name of dead person. 3. Return of income declaring income of Rs. 1,99,500/- along with refund of ....
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....est income. 6. The Ld. DR relied upon the order of the Assessing Officer as well as of the CIT(A). 7. We have heard both the parties and perused the material available on record. It is not a case of Revenue that the assessee has not received interest u/s 28 of the Land Acquisition Act, 1894. This issue has been decided by the Hon'ble Apex Court in case of Union of India Vs. Hari Singh (Supra) wherein it is held that on agricultural Land no tax is payable when the compensation/enhance compensation is received by the assessee as their land was agricultural land. The compensation was received in respect of agricultural land belonging to the assessee which had been acquired by the state government. Therefore, the same comes under the purview ....
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.... awarded additional compensation of Rs. 5,01,846/- in favour of the petitioner together with other statutory benefits. Pursuant to such award, the second respondent calculated the amount payable to the petitioner and in terms of the statement showing the amount of compensation to be deposited in the court, computed an amount of Rs. 20,74,157/- as payable to the petitioner by way of interest under section 28 of the Act of 1894. The petitioner made an application under section 197(1) of the Income Tax Act, 1961 (Act) for deciding the tax liability of interest and to issue a certificate as to NIL tax liability. The application was rejected on the ground that the interest amount on the delayed payment of ITA Nos. 1747 & 1750/Bang/2017 compens....
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.... the I.T. bears the heading "Method of accounting in certain cases". Section 145A(b) provides that notwithstanding anything to the contrary contained in section 145, interest received by an assessee on compensation or on enhanced compensation, as the case may be, shall be deemed to be the income of the year in which it is received. Clause (viii) of sub-section (2) of section 56 of the I.T. Act provides for income by way of interest received on compensation or on enhanced compensation referred to in clause (b) of section 145A which is chargeable as income from other sources. The first respondent Income Tax Officer seeks to tax the interest received by the ITA Nos. 1747 & 1750/Bang/2017 petitioner under section 28 of the Act of 1894 as inco....
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....ment made in section 56(2) by Act 33 of 2009 have been elaborated in the following portion of the departmental circular No. 5/2010, dated 3.6.2010, as follows: "Rationalizing the provisions for taxation of interest received on delayed compensation or on enhanced compensation.- 46.1 The existing provisions of Income Tax Act, 1961, provide that income chargeable under the head "Profits and gains of business or profession" or "Income from other sources", shall be computed in accordance with either cash or mercantile ITA Nos. 1747 & 1750/Bang/2017 system of accounting regularly employed by the assessee. Further the Hon'ble Supreme Court in the case of Smt. Rama Bai v. CIT (1990) 84 CTR (SC) 164 : (1990) 181 ITR 400 (SC) has held that ar....
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....hanced compensation" in section 145A of the I.T. Act, the same have to be construed in the manner interpreted by the Supreme Court in Ghanshyam (HUF)'s case (supra)." ITA Nos. 1747 & 1750/Bang/2017 13. The Hon'ble Gujarat High Court finally concluded, as follows: "13. The upshot of the above discussion is that since interest under section 28 of the Act of 1894, partakes the character of compensation, it does not fall within the ambit of the expression "interest" as contemplated in section 145A of the I.T. Act. The first respondent - Income Tax Officer was, therefore, not justified in refusing to grant a certificate under section 197 of the I.T. Act to the petitioner for non8 deduction of tax at source, inasmuch as, the petitio....