TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 298
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....56(2)(viii) r.w.s 145B(i) of the Act in the computation of total tax payable without assigning proper reasons and justification. 3) The NFAC, Delhi failed to appreciate that the provisions in Section 56(2)(viii) of the Act had no application to the present facts and in circumstances of the case, thereby vitiating the findings in relation thereto. 4) The NFAC, Delhi failed to appreciate that the pre-requisite conditions required for making an addition in terms of Section 56(2)(viii) of the Act were absent in the present case and in circumstances, thereby negating the findings in relation thereto 5) The NFAC, Delhi failed to appreciate that the interest component received was inextricably related to the compensation received from Special Tahsildar on account of compulsory Acquisition and ought to have appreciated that the quantification of the said amount being part of the order of the competent authority, there cannot be any scope for bifurcating the total amount as (exempt) compensation and interest income (taxable), thereby vitiating the disputed addition made in its entirety. 6) The NFAC, Delhi failed to appreciate that, in any event, having no....
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.... in terms of Section 143(3) of the Act dated 26.12.2019 in bringing to tax 50% (Rs. 22,46,610/-) of interest on enhanced compensation (Rs. 44,93,229/-) as income of the assessee by invoking the Section 56(2)(viiii) r.w.s 145B(i). 7. The assessee being aggrieved by the said assessment, had challenged the same in filing appeal before the Ld. CIT(Appeals) and the assessee during the course of first appeal had submitted that the compensation received, including interest on enhanced compensation, could not be brought to tax under the provisions of the Act, as the same was received in terms of Section 28 of the Land Acquisition Act, 1984. 8. Further, the assessee had contended that the agricultural land in question is situated beyond 8 kilometers from the municipal limits of Salem, and therefore, the same would not qualify as a capital asset for the purpose of levying tax there on in as much the assessee contended that the action of the AO in bringing to tax 50% of the interest on enhanced compensation as income of the assessee in terms of Section 56(2)(viii) of the Act was wrong and not sustainable in law. 9. However, the Ld.CIT(Appeals) observed that the provisions in Section ....
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....ion received from Special Tahsildar on account of compulsory Acquisition and any attempt by the AO in bifurcating the total amount as exempt and taxable would not stand the test of law. 15. Further, the Ld. AR argued that the insertion of Section 145A, Section 145B, Section 56(2)(viii) & Section 57(iv) by the Finance (No.2) Act. 2009 did not change the character of interest u/s. 28 of the Land Acquisition Act from capital receipt forming part of enhanced compensation as envisaged in section 45(5) of the Act to revenue receipt' chargeable to tax as income from other sources. 16. It was also argued that the Hon'ble Supreme Court in the case of Commissioner of Income-tax, Faridabad v. Ghanshyam (HUF), reported in 315 ITR 1, after analysing the provisions in Section 28 and 34 of Land Acquisition Act had held that interest is different from compensation. However, interest paid on the excess amount u/s. 28 would depend upon a claim by a person whose land is acquired whereas interest u/s. 34 is for delay in making payment. The Interest u/s. 28 is part of the amount of compensation whereas interest u/s. 34 is only for delay in making payment after the compensation amount is d....
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.... compensation for compulsory acquisition of his landed property would be treated as income under the head of 'Capital Gains' for the purposes of the I.T. Act. If the said compensation amounts are received in relation to agricultural property, then by virtue of the provisions of Section 10(37) of the I.T. Act, the amounts would stand excluded from the total income of the assessee for the purposes of the I.T. Act. As for the interest amounts received by an assessee in terms of Section 28 or Section 34 of the LAA, it is debatable as to whether the said interest would qualify as interest for the purposes of the I.T. Act as well going by the definition of the term under Section 2(28A) of the I.T. Act. This is because there are conflicting precedents on the issue as to whether the interest paid to an assessee for delayed payment of compensation for compulsory acquisition of his land partakes the character of the compensation itself or merely that of an interest payment [Dr. Sham Lal Narula v. Commissioner of Income-Tax [1964] 53 ITR 151 (SC)]; Puneet Singh v. CIT, Karnal [2019] 110 taxmann.com 116/415 ITR 215 (Punjab & Haryana); Mahender Pal Narang v. CBDT, New Delhi [2020] 120 t....
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....n, though not expressly included in Article 300A, can be inferred from that Article since the court has recognized the right to property as a basic human right. That apart, recently in Kolkata Municipal Corporation v. Bimal Kumar Shah [(2024) 10 SCC 533] the court, while rejecting the contention of the Corporation that it had effectively acquired the property of a citizen, drew a distinction between a statutory provision that confers a power of acquisition to the Corporation and other provisions that dealt with the procedure to be followed in the exercise of that power. The court found that Article 300A of the Constitution, that prohibited the deprivation of property of a citizen save as authorized by law, conferred on a citizen seven sub-rights viz. (i) the right to a notice of the proposed acquisition, (ii) the right to be heard on the objections if any to such proposal (iii) the right to a reasoned decision thereon (iv) the right to insist that the acquisition could only be for a public purpose (v) the right to restitution or fair compensation (vi) the right to an efficient and expeditious process and (vii) the right to a conclusion of the proceedings. In essence, the court saw ....