INCOME TAX ACT, 1961

Section 4

Income - Chargeability - Interest under section 28 of Land Acquisition Act -

Assessee had agricultural land, which was acquired by Government and assessee received compensation for the land, solatium, interest, etc. In addition of other sums, taxation on a sum was the bone of contention during the assessment proceedings Accepting the facts that the same sum was an interest receivable/received by assessee under the provisions of section 28 of the Land Acquisition Act, 1984, the said amount was treated as taxable receipt by AO. While taxing the said receipt, AO granted deduction under section 57 at the rate of 50% instead of exemptive the entire amount in view of the legal precedent available at that point of time. Held: As decided in Dnyanoba Shajirao Jadhav [ITA No.168/PUN/2016 for the assessment year 2011-12 dated 29-1-2018 : 2018 TaxPub(DT) 1039 (Pune-Trib)] that interest receipts were not taxable as the same was covered by the provisions of section 28 of the Land Acquisition Act, 1984. Supreme Court in the case of CIT v. Ghanshyam (HUF) had clearly marked the distinction interest received under section 23(1A) and 23(2) read with section 28 of the L.A. Act vis-à-vis interest on delayed payment of compensation under section 34. However, AO and CIT(A) made an error in not complying with the judgment of Supreme Court. Therefore, AO was directed to decide the issue afresh after granting reasonable opportunity of being heard to the assessee and allow the claim after due verification

Followed:CIT v. Ghanshyam (HUF) (2009) 315 ITR 01 (SC) : 2009 TaxPub(DT) 1897 (SC); Bikram Singh & Ors. v. Land Acquisition Collector & Ors. 1997 TaxPub(DT) 0725 (SC) and Dnyanoba Shajirao Jadhav v. ITO [ITA No.168/PUN/2016 for the assessment year 2011-12 dated 29-1-2018] : 2018 TaxPub(DT) 1039 (Pune-Trib)

REFERRED :

FAVOUR : Matter remanded

A.Y. : 2012-13

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