2025 (12) TMI 1106

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....18/10082399 has erred in passing order dtd. 28/02/2025 in contravention of provisions of S. 250 of the Income Tax Act, 1961 (hereinafter referred to as "Act"). 2. That on facts, circumstances and legal position of the case, Worthy CIT(A) has erred in upholding the action of Ld. AO in holding that the interest on enhanced compensation of Rs. 1,08,12,000/- awarded on compulsory acquisition of agricultural land is taxable. 3. That on facts, circumstances and legal position of the case, the order passed by Ld. AO and then by Worthy CIT(A) deserves to be quashed since the same have been passed without affording reasonable opportunity of being heard to the appellant. 4. That the appellant craves leave for any addition, ....

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....e had received interest on enhanced compensation within the meaning of Section 56(2)(viii) of the Income-tax Act and had claimed the entire amount as exempt. The AO issued a show-cause notice dated 09.10.2020, proposing to treat 50% of the interest amount i.e. Rs. 1,08,12,000/- as taxable income after allowing deduction under Section 57(iv). The assessee placed reliance on several judicial precedents, contending that such interest formed part of compensation and was therefore exempt. However, the AO rejected the assessee's contentions, referred to the amended statutory provisions concerning taxability of interest on enhanced compensation, and held that the interest received was taxable under the head 'Income from Other Sources'. Accordingly....

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....uthority also referred to several rulings of the Hon'ble Punjab & Haryana High Court, including Manjeet Singh (HUF), which consistently affirmed that interest under Section 28 of the Land Acquisition Act is taxable, particularly after the introduction of Section 56(2)(viii) and the corresponding deduction under Section 57(iv) by Finance Act, 2009. 5.2 Accordingly, the CIT(A) held that the AO was correct in treating 50% of the interest as taxable income and that the assessee was not entitled to exemption under Section 10(37) for such interest. The addition made by the AO at Rs. 1,08,12,000 was upheld. 6. The Ld. AR submitted that the interest granted u/s 28 is in the nature of enhanced compensation and is therefore exempt u/s 10(37). R....