2024 (4) TMI 880

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....6.10.2022. 2. The background facts, in brief, are that the assessee received an additional compensation of Rs. 3,49,58,790/- (including interest at Rs. 1,13,59,249) in respect of his share in agricultural land sold by him along with others during the previous year relevant to AY 2010-11, and exemption on income arising on which had been claimed u/s. 10(37) of the Act and allowed in assessment for that year. While accepting the assessee's claim, like-wise, for the current year, the Assessing Officer (AO) brought to tax 50% of the interest, i.e., Rs. 56,79,625, u/s. 56(2)(viii) r/w s. 57(iv) of the Act vide assessment u/s. 143(3) dated 22.12.2017. The assessee moved the AO on 15.12.2018, seeking rectification of his assessment inasmuch as ....

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.... or on enhanced compensation referred to in clause (b) of section 145A; 57. Deductions.- The income chargeable under the head "Income from other sources" shall be computed after making the following deductions, namely:- (i) ... (iii) (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 deduction shall be allowed under any other clause of this section. 3.2 The facts as narrated above are not in dispute. Further, even as there is nothing on record to exhibit that the interest received by the assessee falls u/s. 28 of LAA; the assessee on the last occasion the case came up for hearing rely....

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....ned interest to tax. Even as observed by the Bench during hearing, it is only where a Constitutional Court declares the same as ultra vires the Act (i.e., on a view that interest u/s. 28 of LAA is capital in nature), that would entitle the assessing authority to disregard the same. The Hon'ble Apex Court per it's Constitutional Bench decision in Punjab Distilling Industries Ltd. v. CIT [1965] 57 ITR 1 (SC) explained that there is no conflict between a receipt being capital in nature and, by fiction of law, an income chargeable to tax under the Act. That is, the nature of the receipt as capital, which is the purport of the decision in Ghanshyam (HUF) (supra), would not per se preclude interest from being, at the same time, subject to tax....