TaxTMI 
TaxTMI 
2026 (7) TMI 1572
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....ate condonation applications along with affidavits explaining the reasons for such delay. In all the affidavits it has been mentioned that they have not received the order of the Ld. CIT(A) / NFAC but came to know of passing of such order only after the Assessing Officer initiated recovery proceedings. Thereafter, immediately after coming to know of passing of such order by the Ld. CIT(A) / NFAC the respective assessee's have taken immediate steps and filed the appeals which caused the delay. However, if the period from the date of receipt of recovery notice till the date of filing of the appeals is considered, there is no delay in filing of the appeals before the Tribunal. Relying on various decisions the Ld. Counsel for the assessee submitted that the delay in filing of the appeals before the Tribunal should be condoned. 3. The Ld. DR on the other hand strongly opposed the condonation applications filed by the assessee. 4. We have heard the rival arguments made by both the sides on the issue of delay in filing of the appeals and considered the contents of the condonation applications filed along with the affidavits of the assessee. There is no dispute to the fact that there....
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.... and claimed the same as exempt from tax. The return was processed u/s. 143(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') accepting the returned income. Subsequently the Assessing Officer received specific information that during the financial year 2012-13 relevant to assessment year 2013-14 the assessee has received interest on enhanced compensation from SLAO which is subject to tax to the extent of Rs. 33,13,299/- apart from others. The Assessing Officer accordingly reopened the assessment as per the provisions of section 147 of the Act and notice u/s. 148 of the Act dated 10.06.2016 was issued and served on the assessee requiring him to furnish the return of income within 30 days. The assessee vide letter dated 18.07.2016 stated that the return filed on 24.04.2013 u/s. 139(1) of the Act may be treated as return in response to the notice and compliance thereof. He also asked the Assessing Officer to supply the reasons recorded for issuing notice u/s. 148 of the Act. The Assessing Officer supplied the reasons and also disposed off the objections raised by the assessee challenging the reopening of the assessment. Subsequently notice u/s. 143(2) of th....
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.... of exemption u/s. 10(37) of the Act. However, the interest received by the assessee against the compulsory acquisition of his agricultural land is taxable as 'Income from other sources as per the provisions of section 56(2)(viii) subject to deduction u/s. 57(iv) of the Act. Since the assessee has claimed interest received as exempt, he confronted the same to the assessee. Rejecting the various explanations given by the assessee, the Assessing Officer made addition of Rs. 33,13,299/- as 'Income from other sources' by observing as under: 15. In view of the above discussion and facts of the case, interest income of Rs. 33,13,299/- [Interest received of Rs. 66,26,598/- on compensation /enhanced compensation on compulsory acquisition of land of the assessee minus Rs. 33,13,299/- (50 % deduction u/s. 57(iv)] is added to the total income under the head 'Income from other Sources'. Penalty proceedings u/s. 271(1)(c) of the I.T. Act, 1961 are separately initiated for furnishing inaccurate particulars of income thereby evading taxes. 12. In appeal the Ld. CIT(A) / NFAC upheld the action of the Assessing Officer by observing as under: 6.18 I have give....
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.... year under consideration is AY 2013-14 and, therefore, the amended provisions of section 56(2)(viii) rws 145A(b) of the Act, which came into effect from 01.04.2010, are squarely applicable. Accordingly, I am of the considered opinion that the issue under dispute is required to be adjudicated by applying the provisions of section 56(2)(viii) rws 145A(b) of the Act. 6.23 Keeping in view the relevant facts of the case and the judicial precedents relied upon by the assessee as well as the AO, it is observed that in connection with taxability of interest on enhanced compensation, while supporting the rival view points, both the assessee and the AO have placed reliance upon various decisions, including the decisions of the Hon'ble Supreme Court, which were rendered while dealing with various AYs prior to insertion of the amended provisions of section 56(2)(viii) rws 145A(b) of the Act by the Finance (No. 2) Act, 2009. 6.24 At this juncture, it may be noted that, upto AY 2009-10, there was dispute with regard to treatment of interest on enhanced compensation received by the assessee u/s. 28 of the L.A. Act i.e., whether or not the same would partake the nature of co....
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....red by the assessee to bring the goods to the place of its location and condition as on the date of valuation. Explanation .- For the purposes of this section*, any tax, duty, cess or fee (by whatever name called) under any law for the time being in force, shall include all such payment notwithstanding any right arising as a consequence to such payment; (b) interest received by an assessee on compensation or on enhanced compensation, as the case may be, shall be deemed to be the income of the year in which it is received." Section 56(2)(viii) of the Act: "Income from other sources. 56. (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 clause (b) of section 145A." Section 57(iv) of the Act: "Deductions. 57. The income chargeable under the head "Income from other sources" shall be computed after making the following deductions, namely :....
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....he case of an assessee, being an individual or a Hindu undivided family, any 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. Section 56(2)(viii) (inserted by Finance (No. 2) Act 2009 w.e.f. 1-4-2010. Income from other sources. 56(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 oth....
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....2009] 182 Taxman 368/315 ITR 1. The contention is that as per the decision of the Apex Court, the interest under section 28 of the 1894 Act is not compensatory for delay but would be treated akin to compensation. He buttresses his contention by relying upon Central Board of Direct Taxes Circular No. 5 of 2010 to contend that the amendment brought in 2010 was to remove the hardships created by the decision of the Supreme Court in Rama Sai v. CIT [1991] 54 Taxman 496/[1990] 181 ITR 400. Reliance is placed upon the decision of Gujarat High Court in Movaliya Bhikhubhai Balabhai v. ITO [2016] 70 taxmann.com 45/388 ITR 343. 7. Before dealing with the contentions, relevant portion of the circular is quoted below: '46. Rationalizing the provisions of taxation of interest received on delayed compensation or on enhanced compensation. 46.1 The existing provisions of Income-tax Act provide that income chargeable under the head "Profits and gains of business or profession" or "Income from other sources", shall be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. Further, the Hon'ble Supreme Court in ....
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....on 2(viii), whereby the interest received on compensation or enhanced compensation, as referred to in clause (b) to section 145A has been included under the head 'Income from other sources'. In clause (iv) to section 57, deduction of fifty per cent is provided on interest received on compensation or enhanced compensation. 10. In view of the amendments, the decision of Apex Court in Ghanshyam's case (supra) does not come to the rescue of the petitioner to claim that interest received under section 28 of the 1894 Act is to be treated as compensation and to be dealt with under "Capital gains". The fact that there is no amendment carried out under section 10(37) of the 1961 Act will not change the position. Section 10 deals with deductions and sub-section (37) thereof deals with capital gains arising from transfer of agricultural land, it no where provides as to what is to be included under the head "Capital gains". The argument raised is not well founded. 11. Learned counsel has relied on Circular No. 5 of 2010 by merely reading clause 46.1. The said clause talks about undue hardship being caused as arrears of interest being taxable on accrual basis. Clau....
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.....28 As seen from the above, it has been categorically held by the Hon'ble High Court that the interest received on compensation or enhanced compensation is to be treated as "Income from other sources" and not under the head "Capital gains". However, in the case laws relied upon by the assessee, there was no occasion to consider the decision of the Hon'ble High Court of Punjab & Haryana dated 04.03.2021 6.29 Further, the above decision of the Hon'ble High Court of Punjab & Haryana was subject matter of appeal before the Hon'ble Supreme Court by way of SLP filed by the assessee and the same was dismissed by the Hon'ble Supreme Court in the case of Mahender Pal Narang vs. CBDT [2021] 126 taxmann.com 105 (SC). While doing so, the Hon'ble Supreme Court has upheld the ruling of the Hon'ble High Court that interest received on compensation or enhanced compensation under Land Acquisition Act, 1894, is to be treated as 'Income from other sources' and not under the head 'Capital gains'. 6.30 Also, reliance is placed on the decision of Hon'ble jurisdictional ITAT, Pune, in the case of Madhav Pandharanath Kande vs. ITO (2022) 14....
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....le Supreme Court in the case of CIT v/s Ghanshyam HUF [2009] 315 ITR 1. 4. The learned CIT(A)-NFAC failed to appreciate while confirming the action of the AO that the Gross Interest at Rs. 66,26,598/- (50% assessed at Rs. 33,13,299/-) awarded u/s. 28 of the Land Acquisition Act, 1894 was Capital Receipt but not chargeable as capital gain u/s. 45(5) as the compulsorily acquired agricultural land was Rural Agricultural Land and therefore was not capital asset u/s. 2(14) which fact is not disputed by the learned AO and the learned CIT(A)-NFAC. 5. The learned CIT(A)-NFAC awarded u/s. 28 of the Land Acquisition Act, 1894 without appreciating that. a) The decision of Hon'ble Apex Court in the case of CIT v/s Ghanshyam HUF [2009] 315 ITR 1 still prevails and therefore the interest u/s. 28 of the Land Acquisition Act, 1894 is not coming in the ambit of taxation. b) The SLP dismissed by Hon'ble Supreme Court in the case of Mahendra Pal Narang v/s CBDT, Ministry of Finance reported at [2021] 126 taxmann.com 105 (SC) filed against the order of Hon'ble Punjab and Haryana High Court in the case of Mahendra Pal Narang v/s CBDT [2020] 120 taxmann.co....
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.... Less: Payment under 28A 0 0.00 2295000.00 Add: 12% additional amount U/Sec 23(1- A) of the Land Acquisition Act 22/5/97 to 9/12/97 0 years 275400.00 0 6 month 22950.00 137700.00 18 day 754.52 13581.37 151281.37 Add : 30% Solatuim (U/Sec. 23(2) of the Land Acquisition Act 688500.00 Sub Total 3134781.37 Less : Payment under-11 49889.00 3084892.37 3084892.37 Add : 9% interest (U/Sec. 28 of the Land Acquisition Act) 22/1/98 to 21/9/99 277640.31 277640.31 Add : 15% interest (U/Sec. 28 of the Land Acquisition Act) 22/1/99 to 12/6/12 ....
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.... date of claim petition till passing of the award or judgment would not be income chargeable to tax. While deciding the issue the Hon'ble High Court relied upon the decision of the Hon'ble Supreme Court in the case of Ghanshyam (HUF) reported in 315 ITR 1 (SC) wherein the Hon'ble Supreme Court held that the interest received u/s. 28 of the Land Acquisition Act was part of the compensation received. The Hon'ble Bombay High Court considering the said decision held that the interest received by the assessee would be part of the compensation awarded. 17. He submitted that subsequent to the decision of the Pune Bench of the Tribunal in the case of Madhav P. Kande (supra), the Co-ordinate Bench of the Tribunal in the case of Sanjay Bhimrao Patil vide ITA No. 532/PN/2017, after considering the decisions in the case of Shivajiro decided by the Hon'ble Bombay High Court Aurangabad Bench and in the case of Rupesh Rashmikant Shah decided by the Hon'ble Bombay High Court Bombay Bench as well as the Pune Bench of the Tribunal in the case of Basweshwar M. Bidwe held that the interest received u/s. 28 of the Land Acquisition Act would be part of the enhanced compensatio....
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.... 27.08.2013 g) Manjet Singh (HUF) Karta Manjeet Singh vs. Union of India & Ors vide SLP (C) No. 34642/2014 order dated 18.12.2014 h) Rupesh RAshmikant Shah vs. Union of India (2019) 417 ITR 169 (Bom) i) Mahender Pal Narang vs. CBDT (2020) 423 ITR 13 (P&H) j) Basweshwar Mallikarjun Bidwe vs. ITO vide ITA No. 1012/PUN/2017 order dated 05.10.2020 for assessment year 2013-14 k) Mahender Pal Narang vs. CBDT (2024) 462 ITR 498 (SC) l) Shri Madhav Pandharinath Kande vs. ITO vide ITA No. 2854/PUN/2016 order dated 28.04.2022 for assessment year 2013-14 m) Shri Ram Laxmanrao vs. ITO vide ITA No. 574/PUN/2020 order dated 23.11.2022 for assessment year 2013-14 n) Shri Sanjay Bhimrao Patil vs. ITO vide ITA No. 532/PUN/2017 order dated 08.02.2023 for assessment year 2013-14 o) Raghunath Budhaji Patil vs. ITO vide ITA No. 235/PUN/2023 order dated 27.04.2023 for assessment year 2015-16 p) Azizuddin Latiphoddin Kazi vs. ITO vide ITA No. 835/PUN/2023 order dated 18.08.2023 for assessment year 2013-14 q) Shri Kusum Jayram Thakur Dhutum vs. ITO vide ITA No. 1332/PUN/2023 order dated 03.05.2024 for assess....
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....regoing statutory amendment in the Act, such an interest income of enhanced land acquisition compensation is no more exempt from taxation. 4. Both the learned representatives reiterated their respective stands during the course of hearing. It transpires during the course of hearing that the Assessing Officer before us is learned ITO, Ward-3, Panvel. This being the clinching fact, it is noticed that the tribunal's recent coordinate bench(es) order in Raghunath Budhaji Patil, Uran vs. ITO ITA. No. 235/PUN./2023 decided on 27.04.2023 has already settled the issue in assessee's favour and against the department going by jurisdictional bench of hon'ble high court as under : "3. We have given our thoughtful consideration to vehement rival stands against and in support of the lower authorities findings holding the assessee's interest income received under section 28 of the Land Acquisition Act, 1894 as taxable under the head income from "Other" sources under section 56(2)(viii) of the Act. The assessee's case before us is that such an interest income is part of the land acquisition compensation itself and not taxable, therefore, in light of Ghanshyam(....
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....Supreme Court in CIT Vs. Ghanshyam (HUF) (2009) 315 ITR 1 (SC) before the Tribunal in which it has been held that interest u/s. 28 under The Land Acquisition Act, is to be taxed as part of consideration on receipt basis. This judgment was delivered on 16-07-2009. The Finance (No. 2) Act, 2009 w.e.f. 01-04-2010 inserted clause (viii) to section 56(2) providing that: "income by way of interest received on compensation or on enhanced compensation referred to in sub- section (1) of section 145B" shall be chargeable to income-tax under the head "Income from other sources". Section 145B(1) provides that: "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". Thus it is palpable that post the decision in Ghanshyam (supra), a statutory amendment has been carried out providing that income by way of interest received on compensation or on enhanced compensation shall be chargeable to income-tax under the head "Income from other sources". 5. The question of taxability of interest received ....
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....para 5 of the judgment, their Lordships found that: 'Section 34 casts obligation upon Collector to pay interest after compensation is worked out. Section 28 puts similar obligation upon the Court when the Court finds that the compensation awarded under section 11 was inadequate. Therefore, there is no change in nature of interest either u/s. 28 or section 34. Even if court hikes compensation for land and interest is awarded under Section 28 of the Act, upon such increased compensation, in the light of larger Bench judgment, the Department and Disbursing Authorities are bound to effect deduction of TDS'. On the interplay between the Hon'ble Apex Court judgments in Ghanshyam (supra) & Bikram Singh (supra), the Hon'ble Bombay High Court in para 4 found the: `issue to be squarely covered by the larger Bench judgment of the Apex court' in Bikram Singh (supra). Then it noted in para 9 of the judgment that: "We have perused para 24 and 25 of the judgment of the Apex Court in Commissioner of Income Tax Vs. Ghanshyam (supra). We find that the Hon'ble Apex Court there, was not called upon to look into the Larger Bench judgment delivered earlier in case of Bikram Singh....
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....ns of section 194LA of the I.T. Act, since the land which was acquired was agricultural land and this provision categorically mentions that in respect of agricultural land, tax at source was not to be deducted. The Hon'ble High Court directed the Income-tax Department to refund the amount to the collector and held: "that the Collector will determine whether the compensation paid is for property other than the agricultural land or otherwise and whether deduction of tax at source was permissible under other provisions of law ..... ". Aggrieved thereby, the Revenue approached the Hon'ble Supreme Court pleading that the matter should have been remitted to the AO for deciding the nature of land acquired and not the Collector as it was the AO who was to come to the conclusion whether land was agricultural or not. Accepting the contention on behalf of the Revenue, the Hon'ble Supreme Court held that the claimant should approach the concerned AO and raise the issue that no tax was payable on compensation/enhanced compensation which was received by them as their land was agricultural land. It was further observed that, while determining as to whether the compensation paid was fo....
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....risdictional high court has taken a divergent view against the taxpayer in Shivajirao and Others Vs. State Writ Petition No. 5042/2013 dated 27.08.2013(supra). 6. Faced with the situation, we are of the opinion that it is the Bombay and not Aurangabad bench of the hon'ble jurisdictional high court whose decision would prevail in the given facts and circumstances as the assessee, his land/capital asset forming subject matter of compulsory acquisition as well as "situs" of the Assessing Officer who has framed assessment before us dated 28.11.2017, are covered within its territorial jurisdiction notified from time to time. We thus quote PCIT Vs. ABC Paper Limited [2022] 447 ITR 1 (SC) and decide the instant sole substantive ground as well as the main appeal is assessee's favour. Ordered accordingly. 5. We adopt the detailed discussion mutatis mutandis "for Panvel" to accept the assessee's instant sole substantive grievance on merits." 23. We find the Co-ordinate Bench of the Tribunal in the case of Sanjay Bhimrao Patil vs. ITO reported in (2023) 200 ITD 575 (Pune-Trib.) has held that interest received by assessee under section 28 of Land Acquisition Ac....
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....x Act. Assessing Officer allowed deduction u/s. 57(iv) of the Income Tax Act and taxed Rs. 43,82,008/ -. Aggrieved by the assessment order, Assessee filed appeal before ld.CIT(A). 7. Assessee relied on the decision of Hon'ble Supreme Court in the case of CIT Vs. Ghanshyam (HUF) 315 ITR 1 and other decisions before ld.CIT(A). The ld.CIT(A) upheld the assessment order. Aggrieved by the order of the ld.CIT(A), Assessee has filed appeal before this Tribunal. 7.1 Thus, the only issue before us is that whether interest received u/s. 28 of the Land Acquisition Act on enhanced compensation is taxable under section 56(2)(viii) of the Income Tax Act or not! 8. It is an admitted fact that Assessee's Father's Agricultural Land was compulsorily acquired by the Government of Maharashtra in 1986 under the Land Acquisition Act. 9. Assessee's father has expired. Senior Division Civil Judge, District Raigad vide his order dated 13.05.2013 has enhanced the compensation paid by the State Government of Maharashtra. 9.1 Admittedly, Assessee has received interest income of Rs. 87,64,016/- under section 28 of the Land Acquisition Act, on enhance....
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....re, when one reads the words "interest received on compensation or enhanced compensation" in section 145A of the I.T. Act, the same have to be construed in the manner interpreted by the Supreme Court in Ghanshyam (HUF)'s case (supra)." 12.1 Thus, Hon'ble Gujarat High Court held that Hon'ble Supreme Court's decision in the case of CIT Vs. Ghanshyam(HUF) is applicable even after the amendment introduced from 01.04.2010. 13. No contrary decision of Hon'ble Jurisdictional High Court has been brought to our notice. 14. ITAT Pune Bench in the case of Sanjay Bhimrao Patil Vs. ITO [2023] 200 ITD 575 vide order dated 08.02.2023 has held as under : "Therefore, respectfully following the decision of Hon'ble Jurisdictional High Court of Bombay in the case of Rupesh Rashmikant Shah (supra), we hold the interest received u/s. 28 of the Land Acquisition Act would not fall within the ambit of the expression interest as envisaged u/s. 145A(b) of the Act, further, hold that the amendment by way of substitution of section 145A by Finance (No. 2) Act, 2009 w.e.f. 1-042010 and amendment by way of insertion of clause (iii) in section 56(2) by F....
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.... 92,45,118/-) awarded u/s. 28 of the Land Acquisition Act, 1894 was Capital Receipt but not chargeable as capital gain u/s. 45(5) as the compulsorily acquired agricultural land was Rural Agricultural Land and therefore was not capital asset u/s. 2(14) which fact is not disputed by the learned AO and the learned CIT(A)-NFAC. 4. The learned CIT(A)-NFAC confirmed the addition of interest awarded u/s. 28 of the Land Acquisition Act, 1894 without appreciating that: a) The decision of Hon'ble Apex Court in the case of CIT v/s Ghanshyam HUF [2009] 315 ITR 1 still prevails and therefore the interest. u/s. 28 of the Land Acquisition Act, 1894 is not coming in the ambit of taxation. b) The decision of the Non-Jurisdictional High Court cannot be applied when direct decision of Hon'ble Supreme Court is existing and without distinguishing the facts of the case as against the facts of the decision relied upon by the Assessee. c) Majority of decisions cited and relied upon by the assessee which were rendered by the Hon'ble ITAT Pune in favour of the assessee carry judicial precedence especially where there is no direct decision of jurisdictional Hig....