TaxTMI 
TaxTMI 
2026 (1) TMI 988
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of agricultural land u/s 28 of the Land Acquisition Act, 1894. 4. We have heard the ld. DR and have perused the detailed written submissions made by the assessee and relevant material on record. The brief fact is that the assessee had received interest of Rs 82,88,672/- u/s 28 of the Land Acquisition Act, 1984 during the year on enhanced compensation for acquisition of land which was claimed as exempt in its return filed in response to notice u/s 148. The AO, in the reassessment proceedings, accepted the claim of the assessee vide his order dated 21.03.2023. 5. The PCIT, Faridabad found that the AO did not conduct proper enquiry in terms of law laid down by Supreme Court and Punjab & Haryana High Court as well law provided in the Act in terms of section 56(2)(viii) r.w. 57(iv) read with section 145A. The PCIT further found that the AO did not make any inquiry with regard to the eligibility of the assessee for claiming exemption u/s 10(37). The PCIT therefore, invoking his revisional powers under Explanation 2 of section 263(1) of the Act, held that the AO has made an assessment order which is erroneous and prejudicial to the interest of the revenue. 6. In the present case....
X X X X Extracts X X X X
X X X X Extracts X X X X
....centum per annum shall be payable from the date of expiry of the said period of one year on the amount of compensation or part thereof which has not been paid or deposited before the date of such expiry." 16. The taxability of interest on delayed payment of compensation u/s 34 of LAA was not under dispute. The controversy raised is with regard to the taxability of the interest received on enhanced compensation u/s 28 of LAA. This issue of taxability of interest received on enhanced compensation u/s 28 of LAA came up for consideration, way back in 1964, by a three judge bench of the hon'ble Supreme Court in the case of Sham Lal Narula (Dr.) v. CIT [(1964) 53 ITR 151]. The hon'ble Court considered the interest under Section 28 of the Act of 1894 to be analogous to the interest under Section 34 of the Act, and held 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 so acquired ceases to have an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....04.2010. 20. It was in 2010, to align the law with the legislative intent, the Parliament brought in an amendment into clause (viii) of sub- Section 2 to Section 56 of the Act, vide Finance (No.2) Act, 2009 (with effect from 01.04.2010) and section 145B(1) of the Income Tax Act to bring the interest on compensation or on enhanced compensation as taxable as 'income from other sources'. The relevant provisions for deciding this case are extracted hereunder: "56. Income from other sources: - (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: -- (viii) income by way of interest received on compensation or on enhanced compensation referred to in [sub-section (1) of Section 145-B]." Section 145B of the Act reads as under: - "[145B. Taxability of certain income: - (1) Notwithstanding anything to the contrary contained in Section 145, the interest received by an assessee on any compensation or on enhanced compensation, as the case may be, shall be deemed to be the income of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....), the following incomes shall be chargeable to income tax under the head "Income from other sources", namely:- *** [(viii) income by way of interest received on compensation or on enhanced compensation referred to in [sub-section (1) of Section 145-B].]" 23. For the sake of clarity, Section 145-B of the Act is reproduced as under:- "[145-B. Taxability of certain income.-(1) Notwithstanding anything to the contrary contained in Section 145, the interest received by an assessee on any compensation or on enhanced compensation, as the case may be, shall be deemed to be the income of the previous year in which it is received. (2) Any claim for escalation of price in a contract or export incentives shall be deemed to be the income of the previous year in which reasonable certainty of its realisation is achieved. (3) The income referred to in sub-clause (xviii) of clause (24) of Section 2 shall be deemed to be the income of the previous year in which it is received, if not charged to income-tax in any earlier previous year.]" 24. A conjoint reading of the aforementioned provisions i.e., Sections 56(2)(viii) and 145-B of the A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as held that interest under Section 28 of the Act of 1894 was in the nature of a revenue receipt and hence, the same was considered to be taxable. The relevant paragraphs of the said decision read as under:- "8. The controversy is no longer res integra. This question was considered elaborately by this Court in Sham Lal Narula (Dr) v. CIT [(1964) 53 ITR 151 : AIR 1964 SC 1878]. Therein, K. Subba Rao, J., as he then was, considered the earlier case-law on the concept of "interest" laid down by the Privy Council and all other cases and had held at p. 158 as under: "In a case where title passes to the State, the statutory interest provided thereafter can only be regarded either as representing the profit which the owner of the land might have made if he had the use of the money or the loss he suffered because he had not that use. In no sense of the term can it be described as damages or compensation for the owner's right to retain possession, for he has no right to retain possession after possession was taken under Section 16 or Section 17 of the Act. We, therefore, hold that the statutory interest paid under Section 34 of the Act is interest paid for the delayed ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....be computed after making the following deductions, namely : . . . (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." 21. The Assessing Officer in I. T. A. No. 132 of 2018 where the assessee had received Rs. 11,30,561 as interest income, held that the interest payment received on compensation/enhanced compensation to the tune of Rs. 5,65,280 (50 per cent. of Rs. 11,30,561) is taxable as income from other sources as per provisions of sections 56(2)(viii) read with 57(iv) and section 145A(b) of the Act for the assessment year 2010- 11. The Commissioner of Income-tax (Appeals) and the Tribunal had upheld the order of the Assessing Officer in that regard. 22. No illegality or perversity could be pointed out by learned counsel for the assessee in the concurrent findings of fact recorded by the authorities below which may warrant interference by this court. No question of law, much less, substantial question of law arise in these appeals. 23. Accordingly, fin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n shall be considered as income from other sources and shall be exigible to Income Tax........... The language of section 56(2)(viii) and 57(iv) of the Act is plain, simple and unambiguous. There is no scope of taking outside aid for giving an interpretation to newly inserted sub sections and clauses. Therefore, in view of the decision in the case of Sham Lal Narula (supra), we are of the considered opinion that the decision in the case of Ghanshyam HUF (supra) is not applicable after the substitution of Sections 145A, 145B, 56(2)(viii) and 57(iv) by Finance (No.2) Act, 2009. In view of the above, it is evident that the interest on compensation or interest on enhanced compensation is chargeable to tax under the head "income from other sources‟ from 01.10.2010 onwards. Therefore, the decision of the Hon'ble Supreme Court in the case of Ghanshyam HUF (supra), which was passed in the year 2009, in our considered opinion, is not applicable in the facts of the present case". 25. The decisions of the coordinate benches of the ITAT based on Ghanshyam HUF (supra) and relied upon by the Ld. Counsel, have not considered the decision of the Supreme Court's earlier three bench j....