2026 (7) TMI 349

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.....2021. Basic Facts : 2. This is a second round of appeal. In this case, return of income was filed by the assessee on 28.02.2014 electronically for AY 2013-14. Assessee's case was selected for scrutiny. During the assessment proceedings, it was noted that assessee had received compensation of Rs. 2,77,61,035/- on account of compulsory acquisition of his agricultural land at Village Arvi, Taluka-Latur. It is mentioned in the assessment order that the land was used for agricultural activities when it was acquired by the Government. Assessee claimed entire amount as exempt u/s 10(37) of the Act. Assessing Officer in the assessment order dated 29.01.2016 held that out of total compensation Rs. 96,31,167/- was interest and it was taxable u....

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....the claim of assessee is rejected and interest received on compensation to extent Rs. 96,31,167/-(50% of Rs. 1,92,63,234/- is added to total income of assessee. (Addition of Rs. 96,31,167/-)" 2.1 Aggrieved by the assessment order, the assessee filed an appeal before the Ld. CIT(A) who confirmed it. 2.2 Aggrieved by the order of the Ld. CIT(A), the assessee filed an appeal before the Tribunal. Submission of Ld. AR 3. Ld. AR filed paper book. The Ld. AR submitted that the ITO had erred in not following the direction of the ITAT. The Ld. AR submitted that on identical facts in the case of assessee's father Mr. Radhakishan Devkinandan Brijwasi, the Assessing Officer held that interest is not taxable which was received on enhanced co....

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....f not having the use of the principal compensation amount at the time when it fell due. We cannot lose sight of the fact that compensation amounts paid to a person towards compulsory acquisition of his property traces its roots to the constitutional obligation to pay such compensation under Article 300A of the Constitution. .............. 10. In the light of the discussion above, we hold that interest amounts received by an assessee in respect of delayed payment of compensation under the LAA will be treated as accruals to the principal compensation amount and be classified as "Capital Gains' for the purposes of the I.T. Act. Consequently, the interest amounts will also get the benefit of Section 10 (37) of the I.T. Act if the land ....