INCOME TAX ACT, 1961

Section 56(2)(viii) Section 96

Income from other sources - Taxability - Interest on delayed payment of compensation for compulsory acquisition of land from Special Land Acquisition Officer -

Land parcel owned by assessee at Bangalore were compulsorily acquired for Railway project by Special Land Acquisition Officer. Assessee received interest for delayed payment of compensation under Land Acquisition Act and claimed the same as exempt from tax. AO held that interest received for delayed payment of enhanced compensation in respect of acquisition of immovable property was in the nature of interest liable to be taxed under section 56(2)(viii) read with section 145A(b). Held: Interest was received under new Land Acquisition Act, which came into existence from 1-4-2014 onwards. Under the new Land Acquisition Act, 2013, more particularly as per section 96 of RFCTLARR Act, 2013, no income-tax or stamp duty would be levied on any award or agreement made under the new Act, except under section 46 of the said Act. Therefore, after a new Land Acquisition Act, 2013, law has been changed, in as much as any interest received by assessee towards delayed payment of compensation for compulsory acquisition of land which was akin to compensation for compulsory acquisition of land, was exempt from income-tax by virtue of section 96 of RFCTLARR Act, 2013.

Followed:Movaliya Bhikhubhai Balabhai v. ITO (2016) 388 ITR 343 (Guj-HC) : 2016 TaxPub(DT) 2320 (Guj-HC). Distinguished:N.Bhaskar v. ITO [ITA No. 2202/Mds/2012 for assessment year 2012-13].

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2016-17

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