TaxTMI 
TaxTMI 
2026 (9) TMI 1883
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....pened. Based on the information available on AIMS module, the assessee has received cash of Rs. 35,33,013/- on account of interest under section 194A of the Income tax Act, 1961 (for short 'the Act'). Accordingly notice under section 148 was issued and served on the assessee. Subsequently, assessee filed its return of income as required under section 148 of the Act on 30.10.2021 electronically declaring total income of Rs. 1,03,687/-. Accordingly notices under section 143(2) and 142(1) were issued and served on the assessee. During assessment proceedings, AO observed that assessee has received enhanced interest income from Land Acquisition Officer of an amount of Rs. 36,33,013/- on which TDS under section 194A was deducted. He observed that....
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....ng of assessment u/s 147 of the Act, which is bad in law, void ab initio and without any independent application of mind. 3. That the Ld. CIT(A) has erred in law in upholding the reopening of assessment u/s 147 of the Act which is based on incorrect reasons to believe solely based on surmises and conjectures. 4. That the Ld. CJT(A) has erred both in law and on facts in confirming the addition of Rs. 18,16,507/- made by the Ld. AO on account of alleged interest on enhanced compensation. 5. That on the facts and circumstances of the case and in law, the Ld. AO as well as the Ld. CIT(A) have erred in not granting credit of Tax Deducted at Source (TDS) amounting to Rs. 3,63,301/- deducted by the Land Acquisition Offic....
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....eable under the head of capital gain arising from transfer of agricultural land by way of compulsory acquisition under the law is exempt from taxation. Further, as per provisions of Section 56(2) (vi) of the Act, income by way of interest received on compensation on an enhanced compensation is taxable and a deduction of a sum equal of 50% of such income is allowable u / s 57 (iv) of the Act on that interest. The interest under Land Acquisition Act, is payable under two different Sections i.e. Section 34 & Section 28 of Land Acquisitions Act. There is no dispute in so far as payment of interest u/s 34 of the Land Acquisition Act is concerned. Now, the question whether the interest paid under the provisions of Section 28 of Land Acquisition A....
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....t 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 of compensation. [Para 23."] 9. The above ratio has also been followed by the Hon'ble Supreme Court in its order dated 15/09/2017 in the case of Union of India Vs. Hari Singh & ors in Civil Appeal No. 15041/2017 wherein the Hon'ble Supreme Court has held as follows:- "While determining as to whether the compensation paid was for agricultural land or not, the AOs will keep in mind the provisions of section 28 of the Land Acquisition Act and the law laid down by thi....