2019 (5) TMI 676

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....the assessee is an agriculturist and inherited land from his parents as an agricultural property. Such land was acquired by the Government and the assessee had received enhanced compensation of Rs. 6,19,31,108/- including interest thereon and claimed exemption u/s 10(37) of the Income-tax Act, 1961 ("the Act") and claimed refund of Rs. 32,75,862/- in the return of income. Learned AO found that as per Form D issued by the Land Acquisition Officer, Panchkula, the assessee had received enhanced compensation of Rs. 7,74,13,335/- which includes principal amount of Rs. 4,46,02,790/- and interest amount of Rs. 3,28,10,545/- from the LAO, Panchkula, during the year and on the enhanced compensation received, TDS amounting to Rs. 1,54,82,777/- was de....

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....received u/s 57(iv) of the Act read with Section 145A of the Act whereas the interest on enhanced compensation has been held by the Hon'ble Apex court as part of the compensation and is not interest income as has been treated by the AO. Assessee, therefore, prayed before the learned CIT(A) that the levy of tax on the interest received u/s 28 of the Land Acquisition Act is illegal and has to be deleted. 5. Learned CIT(A) clearly found that this is a case of receipt of interest on enhanced compensation u/s 28 of the Land Acquisition Act. However, learned CIT(A) held that the decision of the Hon'ble Supreme Court in the case of Gobind Bhai Mamaiya (supra) vide para 8 holds that the interest earned u/s 28 of the Land Acquisition Act is on en....

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.....com 317 (Bom), the it was held that interest has to be taxed in the year of receipt and not to be spread over the years on actual basis and the enhanced compensation with interest thereon received under the interim order passed by the High Court in pending appeals relating to the land acquisition has to be assessed for tax not in the year in which the said amount had been received. Learned DR further submitted in the case of Ghanshyam (supra) the Hon'ble Apex Court held that even in cases where appeal is pending, the forum permits claimant to withdraw against security or otherwise, enhanced compensation, which is in dispute, the same is liable to be taxed u/s 45(5) in the year of receipt. Basing on this, he argued that the matter is square....

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....at the compensation was received in respect of the agricultural land, the tax deposited with the Income-tax Department shall be refunded to the assessee. Hon'bleSupreme Court gave the above direction after noticing the decision in the case of Ghanshyam (supra). 9. In this set of circumstances, it does not admit of any doubt as to the nature of receipt by way of interest u/s 28 of the Land Acquisition Act in the hands of the assessee or the applicability of the Income-tax Act to sch amount. When the Hon'ble Supreme Court specifically directs in the case of Hari Singh (supra), the learned AO shall examine the facts of the case and then apply the law as contained, CIT(A) has not stated that such an amount shall be brought to tax u/s 45(5) w....