TaxTMI 
TaxTMI 
2018 (7) TMI 2051
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....is appeal of the assessee was dismissed by this Tribunal in limine for non prosecution vide order dated 2.8.2017, which was recalled by the Tribunal vide order dated 16.1.2018 in M.A.No.96/Chd/2017 In pursuance of the same, the present appeal has been heard. 2. Grounds of appeal raised by the assessee read as under: "(1). That learned Commissioner of Income-Tax (Appeal) gravely erred on facts and law in upholding order passed by Assessing Officer liable to tax on 'interest' received on enhanced compensation awarded under section 28 of the Land Acquisition in respect of his agricultural land and ignoring the law laid down in Commissioner of Income-tax, Faridabad v. Ghanshyam (HUF) 315 ITR 1 (SC) that "interes....
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....cer, Urban Estate, Panchkula amounting to Rs. 9,46,356/- which included interest of Rs. 3,99,156/- and which amount was taxable in the impugned year. Subsequently, in pursuance to the directions of the CIT the Assessing Officer completed assessment u/s 143(3) of the Act making addition of the impugned interest of Rs. 3,99,156/- as interest taxable u/s 56 of the Act. 5. Before the Assessing Officer, the assessee had contended that the interest had been received u/s 28 of the Land Acquisition Act, 1894 and was, therefore, part of compensation liable to be taxed u/s 45(5) of the Act and was exempt from capital gain tax u/s 10(37) of the Act. The assessee relied upon the decision of the Hon'ble Apex Court in the case of CIT Vs. Gha....
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....o tax in the impugned year. 6. Aggrieved by the same, the assessee has come up in appeal before us. During the course of hearing before us the Ld. counsel for assessee stated that the decision of the Hon'ble Apex Court in the case of Ghanshyam, HUF (supra) had been reiterated by the Hon'ble Apex Court in the case of CIT Vs. Gobind Bhai Mamaiya, 367 ITR 498 and further in the case of Union of India & Others Vs. Hari Singh & Others in Civil Appeal No.1504 of 2017 dated 15.9.2017. The Ld. counsel for assessee pointed out that the aforesaid decisions were rendered by the Hon'ble Apex Court subsequent to the decision of the Hon'ble Jurisdictional High Court in the case of Manjeet Singh(HUF) (supra) which was passed on 14.1.201....
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....tion is concerned, that is also covered by another judgment of this Court in Commissioner of Income Tax, Faridabad vs. Ghanshyam (HUF) reported in (2009) 8 SCC 412, 6 albeit, in favour of the Revenue. In that case, the court drew distinction between the "interest" earned under Section 28 of the Land Acquisition Act and the "interest" which is under Section 34 of the said Act. The Court clarified that whereas compensation given to the assessee of the land acquired would be 'income', the enhanced compensation/consideration becomes income by virtue of Section 45(5)(b) of the Income Tax Act. The question was whether it will cover "interest" and if so, what would be the year of taxability. The position in this respect is explained in par....
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....ction 23(2) of the 1961 Act forms part of enhanced compensation under Section 45(5)(b) of the 1961 Act." 8. It is clear from the above that whereas interest under Section 34 is not treated as a part of income subject to tax, the interest earned under Section 28, which is on enhanced compensation, is treated as a accretion to the value and therefore, part of the enhanced compensation or consideration making it exigible to tax. After holding that interest on enhanced compensation under Section 28 of 1894 Act is taxable, the Court dealt with the other aspect namely, the year of tax and answered this question by holding that it has to be tested on receipt basis, which means it would be taxed in the year in which it is received. It woul....