TaxTMI 
TaxTMI 
2025 (9) TMI 1756
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....ication u/s 4 of the Land Acquisition Act, 1894 on 23.08.2001 proposing to acquire 18.98 Acres of land situated in village Devinagar, Hadbast No. 384 for public purpose, namely, for the development and utilization of land as recreational and commercial area. Ultimately, after fulfilling the procedure contemplated u/s 5, 6 & 9 of the Land Acquisition Act, this land was acquired and an Award was issued by the Land Acquisition Collector vide which Rs.6 lacs per acre was granted as a compensation to the land owners. 4. Dissatisfied with this, the land owners have filed references u/s 18 of the Land Acquisition Act for adjudication of their claims by the District Judge and accordingly, these land acquisition cases have been decided by the District Judge, Panchkula vide his order dated 28.02.2006. The ld. Addl. District Judge has granted relief as under : "RELIEF 30. In view of my findings recorded on issue no.1, all the ten L.A. References are accepted and the petitioners re awarded compensation of the acquired land at the rate of Rs.440/- per square yard instead of Rs.6 lacs per acre as awarded by the Land Acquisition Collector. 31. The petitioners are not....
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....rd carefully. In the case of CIT Faridabad Vs Ghanshyam, HUF, Hon'ble Supreme Court has construed the meaning and interpreted Section 28 of Land Acquisition Act as well as Section 45(5) of the Income Tax Act and propounded that as per Section 28 of Land Acquisition Act, the interest is part of enhanced value of the land, hence to be treated at par with the compensation/enhanced compensation. We take note of Section 28 of the Land Acquisition Act which reads as under : "28. Collector may be directed to pay interest on excess compensation. - If the sum which, in the opinion of the court, the Collector ought to have awarded as compensation is in excess of the sum which the Collector did award as compensation, the award of the Court may direct that the Collector shall pay interest on such excess at the rate of [nine per centum] per annum from the date on which he took possession of the land to the date of payment of such excess into Court." 9.1 The Hon'ble Supreme Court while discussing the Scheme of compensation under the Land Acquisition Act, 1894 has explained the meaning of this clause and we deem it appropriate to take note of the finding of the Hon....
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....hort, Section 23(2) talks about solatium. Award of solatium is mandatory. Similarly, payment of additional amount under Section 23(1A) is mandatory. The award of interest under Section 28 of the 1894 Act is discretionary. Section 28 applies when the amount originally awarded has been paid or deposited and when the Court awards excess amount. In such cases interest on that excess alone is payable. Section 28 empowers the Court to award interest on the excess amount of compensation awarded by it over the amount awarded by the Collector. The compensation awarded by the Court includes the additional compensation awarded under Section 23(1A) and the solatium under Section 23(2) of the said Act. This award of interest is not mandatory but is left to the discretion of the Court. Section 28 is applicable only in respect of the excess amount, which is determined by the Court after a reference under Section 18 of the 1894 Act. Section 28 does not apply to cases of undue delay in making award for compensation [See: Ram Chand & others etc v. Union of India & Ors. - 1994(1) SCC 44]. In the case of Shree Vijay Cotton & Oil Mills Ltd. v. State of Gujarat - (1991) 1 SCC 262, this Court has held th....
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....y 4850 sq.yard of land in an acre. If this rate is applied on the area, then District Court granted compensation @ Rs. 21,34,000/- per acre, plus statutory benefits i.e. Solatium, Interest etc. as against Rs.6 lacs granted by the Land Acquisition Collector. In order to compensate the assessee, interest u/s 28 has also been granted which provides that Land Acquisition Collector would pay interest on such excess compensation @ 9% per annum from the date it took possession of the land to the date of payment of such excess, thus on the difference of Rs.21,40,000/- minus (-) Rs.6 lacs, interest was required to be calculated @ 9% from the date of possession till the payment. The Hon'ble Supreme Court construed this interest u/s 28 of the Land Acquisition Act considered towards insufficiency of compensation in comparison of value of land. This interest u/s 28 is not for delay in making payment, rather to compensate a land owner qua lower compensation granted by the Land Acquisition Collector. Thus, the alleged interest u/s 28 granted to the assessee deserves to be treated as compensation and not simpliciter interest as construed by the Income Tax Department u/s 2(28A) of the Income Ta....
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....lts in payment of additional compensation. 32. The issue to be decided before us - what is the meaning of the words "enhanced compensation/consideration" in Section 45(5)(b) of the 1961 Act? Will it cover "interest"? These questions also bring in the concept of the year of taxability. 33. It is to answer the above questions that we have analysed the provisions of Sections 23, 23(1A), 23(2), 28 and 34 of the 1894 Act. As discussed hereinabove, Section 23(1A) provides for additional amount. It takes care of increase in the value at the rate of 12 % per annum. Similarly, under Section 23(2) of the 1894 Act there is a provision for solatium which also represents part of enhanced compensation. Similarly, Section 28 empowers the court in its discretion to award interest on the excess amount of compensation over and above what is awarded by the Collector. It includes additional amount under Section 23(1A) and solatium under Section 23(2) of the said Act. Section 28 of the 1894 Act applies only in respect of the excess amount determined by the court after reference under Section 18 of the 1894 Act. It depends upon the claim, unlike interest under Section 34 which depends ....
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....ompensation it shall be treated as "deemed income" and taxed on receipt basis. Our above understanding is supported by insertion of clause (c) in Section 45(5) w.e.f. 1.4.04 and Section 155(16) which refers to a situation of a subsequent reduction by the Court, Tribunal or other authority and recomputation/amendment of the assessment order. Section 45(5) read as a whole (including clause "c") not only deals with re- working as urged on behalf of the assessee but also with the change in the full value of the consideration (computation) and since the enhanced compensation/consideration (including interest under Section 28 of the 1894 Act) becomes payable/paid under 1894 Act at different stages, the receipt of such enhanced compensation/consideration is to be taxed in the year of receipt subject to adjustment, if any, under Section 155(16) of the 1961 Act, later on. Hence, the year in which enhanced compensation is received is the year of taxability. Consequently, even in cases where pending appeal, the Court/Tribunal/Authority before which appeal is pending, permits the claimant to withdraw against security or otherwise the enhanced compensation (which is in dispute), the same is lia....
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....income chargeable under the head "Capital gains" arising from the transfer of agricultural land, where- (i) such land is situate in any area referred to in item (a) or item (b) of sub-clause (iii) of clause (14) of section 2; (ii) such land, during the period of two years immediately preceding the date of transfer, was being used for agricultural purposes by such Hindu undivided family or individual or a parent of his; (iii) such transfer is by way of compulsory acquisition under any law, or a transfer the consideration for which is determined or approved by the Central Government or the Reserve Bank of India; (iv) such income has arisen from the compensation or consideration for such transfer received by such assessee on or after the 1st day of April, 2004. Explanation.- For the purposes of this clause, the expression "compensation or consideration" includes the compensation or consideration enhanced or further enhanced by any court, Tribunal or other authority; 11. It was contended before us that Section 2(14) provides the definition of Capital Asset. It excluded agriculture land where agriculture activ....