TaxTMI 
TaxTMI 
TaxTMI 
2020 (3) TMI 1115
X X X X Extracts X X X X
X X X X Extracts X X X X
.... involved in narrow circumference is "whether after the insertion of Sections 56(2)(viii) and 57(iv) of the Act w.e.f. 1.4.2010, can the assessee claim that interest received under Section 28 of the Land Acquisition Act, 1894 (for short, 'the 1894 Act') will part take the character of the compensation and would fall under the head "Capital gains" and not "Income from other sources"?" CWP No. 17971 of 2019 The relevant facts are that the land of the petitioner was acquired in the assessment years 2007-08 and 2008-09. The enhanced compensation was received on 21.3.2016. The petitioner filed income tax return for the assessment year 2016-17 treating the interest received under Section 28 of the 1894 Act as income from other sources ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....om other sources. 56(2) In particular, and without prejudice to the generality of the provisions of sub-section (1), the following incomes, shall be chargeable to income-tax under the head "Income from other sources", namely:-- xx xx xx (viii) income by way of interest received on compensation or on enhanced compensation referred to in clause (b) of Section 145A. Section 57(iv) of the 1961 Act Deductions. 57. The income chargeable under the head "Income from other sources" shall be computed after making the following deductions, namely:- xx xx xx (iv) in the case of income of the nature referred to in clause (viii) of sub-section (2) of Section 56, a deduction of a sum equal to fifty per cent of such income and no de....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... argued that there is no amendment in Section 10(37) of the 1961 Act and by insertion of Sections 56(2)(viii) and 57(iv), the nature of interest under Section 28 of the 1894 Act will remain that of compensation. To fortify the submission, he relies upon the decision of the Supreme Court in Commissioner of Income-tax v. Ghanshyam (HUF), (2009) 315 ITR 1. The contention is that as per the decision of the Apex Court, the interest under Section 28 of the 1894 Act is not compensatory for delay but would be treated akin to compensation. He buttresses his contention by relying upon Central Board of Direct Taxes Circular No. 5 of 2010 to contend that the amendment brought in 2010 was to remove the hardships created by the decision of the Supreme Co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessed as "income from other sources" in the year in which it is received. 46.4 Applicability- This amendment has been made applicable with effect from 1st April, 2010, and will accordingly apply in relation to assessment year 2010-11 and subsequent assessment years." Section 45 of the 1961 Act deals with capital gains. By Finance Act, 1987, sub-section (5) was inserted in Section 45 and as per its clause (b), the enhanced compensation shall be chargeable under the head "Capital gains" of the previous year in which the amount is received by the assessee. This issue came up before Apex Court in Ghanshyam's case (supra). Considering Sections 45(5) and 155(16) of the 1961 Act, it was held that enhanced compensation received under the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ndment carried out under Section 10(37) of the 1961 Act will not change the position. Section 10 deals with deductions and subsection (37) thereof deals with capital gains arising from transfer of agricultural land, it no where provides as to what is to be included under the head "Capital gains". The argument raised is not well founded. Learned counsel has relied on Circular No. 5 of 2010 by merely reading clause 46.1. The said clause talks about undue hardship being caused as arrears of interest being taxable on accrual basis. Clause 46.2 states that Section 145A is amended to overcome the difficulty, by deeming the income for the year in which it is received. Clause 46.3 has been ignored in which Section 56(2)(viii) is dealt with that i....