INCOME TAX ACT, 1961

Sedction 10(37) Section 56(2)(viii)

Income from other sources - Taxability - Interest on enhanced compensation on compulsory acquisition of land received under section 28 of Land Acquisition Act, 1894 -

Assessee was owner of agricultural land and same was taken under compulsory acquisition by HSIDC for developing Special Economic Zones (SEZ) at Gurgaon. In consequence of the same, enhanced compensation including interest thereon was received during the relevant year under Land Acquisition Act. Assessee claimed entire enhanced compensation inclusive of interest as residual part of compulsory acquisition of agricultural land and claimed it as exempted under section 10(37). However, AO did not accept contention of assessee and held that interest income was taxable income under the head income from other sources under section 56(2)(viii).Held: Interest received under section 28 of Land Acquisition Act, 1894 unlike interest under section 34 did not partake the character of interest, rather it was an accretion to the value, hence it was a part of enhanced compensation or consideration and accordingly, was not taxable under section 10(37).

Followed:Satbir v. ITO Jind in ITA No. 1413 to 1415/CHD/2016 for the assessment years 2007-08 to 2009-10 vide Order, dated 9-7-2018, Hari Singh & Ors. in C.A. No. 15041/2017, (dated 15-9-2017) : 2017 TaxPub(DT) 4969 (SC), Govindbhai Mamaiya (2014) 367 ITR 498 (SC) : 2014 TaxPub(DT) 3935 (SC) , dated 4-9-2014, Ghanshyam (HUF) is, dated 16-7-2009 : (2009) 315 ITR 1 (SC) : 2009 TaxPub(DT) 1897 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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