TaxTMI 
TaxTMI 
2025 (7) TMI 103
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.... total compensation awarded to the assessee is of Rs. 1,87,94,001/-. Out of this compensation it is certified that total amount of Rs. 1,02,69,536/- is awarded as interest and balance amount of Rs. 85,24,465/- as enhance compensation in respect of agricultural land situated at village Rajapur Dist. Panipat. The assessee has claimed that entire interest received of Rs. 1,02,69,536/- is to be treated as exempt as per the decision of the Hon'ble Supreme Court in the case of CIT vs. Ghanshyam (HUF) [2009[ 182 Taxman 368. AO proceeded to hold that interest component of Rs. 1,02,69,536/- is taxable. Hence, addition of Rs. 1,02,69,536/- was made. Upon assessee's appeal Ld. CIT(A) referred certain decision of ITAT and decided the issue in favour of the assessee. 3. Against the above order, Revenue is in appeal before us. 4 None appeared on behalf of the assessee, despite issue of notice for hearing, hence, we are proceeding exparte qua the assessee, after hearing the Ld. DR and perusing the records. 5. We have heard the ld. DR and perused the records. Ld. DR submitted that this issue is squarely covered by the judgement dated 08.04.2024 of the Hon'ble Jurisdictional High Court in ....
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....f 1894 stipulates that the Collector shall award interest on the compensation at the rate of 9% per annum from the date of taking possession. It further lays down the condition that in case of non-payment despite expiry of a period of one year, the said interest on the amount of compensation which remains unpaid, shall be awarded at the rate of 15% per annum, calculable from the date of such expiry. 21. It is the contention of the respondent-assessee that the interest awarded under Section 28 of the Act of 1894, as discussed above, shall constitute a part of the compensation itself. The ITAT has also drawn strength from the observation of the Hon'ble Supreme Court in the case of Ghanshyam (supra) and the relevant paragraph of the said decision reads as under:- "35. To sum up, interest is different from compensation. However, interest paid on the excess amount under Section 28 of the 1894 Act depends upon a claim by the person whose land is acquired whereas interest under Section 34 is for the delay in making payment. This vital difference needs to be kept in mind in deciding this matter. Interest under Section 28 is part of the amount of compensation whereas inter....
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....ourt in the case of CIT v. Govindbhai Mamaiya [(2014) 16 SCC 449], which relies upon the case of Ghanshyam (supra) to hold that the interest on enhanced compensation received under Section 28 of the Act of 1894 is exigible to tax on receipt basis. However, a deeper analysis of the decision in Govindbhai Mamaiya (supra) would show that it does not deal with any issue pertaining to the change in the taxability, put in place through the concerned amendment of 2010. Therefore, the said decision lacks any applicability in the facts and circumstances of the present case. 26. Notably, a three-Judges Bench of the Hon'ble Supreme Court in the case of Sham Lal Narula (Dr.) v. CIT [(1964) 53 ITR 151], while considering the interest under Section 28 of the Act of 1894 to be analogous to the interest under Section 34 of the Act, took the view that the same did not form part of compensation. The relevant extract of the said decision is culled out as under:- "9. --- As we have pointed out, earlier, as soon as the Collector has taken possession of the land either before or after the award the title absolutely vests in the Government and thereafter the owner of the land s....
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....to income tax. It is true that in amending the definition of "interest" in Section 2(28-A), interest was defined to mean interest payable in any manner in respect of any money borrowed or debt incurred including a deposit, claim or other similar right or obligation and includes any service, fee or other charges in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised. It is seen that the word "interest" for the purpose of the Act was interpreted by the inclusive definition. A literal construction may lead to the conclusion that the interest received or payable in any manner 17:00:34 in respect of any moneys borrowed or a debt incurred or enumerated analogous transaction would be deemed interest. That was explained by the Board in the circular referred to hereinbefore." [Emphasis supplied] 28. In the case of Puneet Singh (supra), the High Court of Punjab and Haryana, while enunciating the effect of Section 145A(b) and Section 56(2)(viii) of the Act, has held as under:- "19. The cumulative effect of section 145A(b) and section 56(2)(viii) would be that any interest received on compensation or on enhanced ....