Interest on enhanced compensation for the acquisition of agricultural land under section 28 of the Land Acquisition Act, 1894 is not exempt under section 10(37): Delhi ITAT




Loading

Interest on enhanced compensation for the acquisition of agricultural land under section 28 of the Land Acquisition Act, 1894 is not exempt under section 10(37): Delhi ITAT

 

Interest on enhanced compensation for the acquisition of agricultural land under section 28 of the Land Acquisition Act, 1894 is not exempt under section 10(37): Delhi ITAT

 Delhi Tribunal in the case of Kanra Rani Yadav (ITA No 2695/Del/2024) has held that Interest on enhanced compensation for the acquisition of agricultural land under section 28 of the Land Acquisition Act, 1894 is not exempt under section 10(37).

Let us have a Short Overview of the case:

Issues under contention:
The assessee received interest on enhanced compensation for the acquisition of agricultural land under section 28 of the Land Acquisition Act, 1894, and claimed it as exempt under section 10(37) of the Income Tax Act.

The PCIT treated the interest as income from other sources under section 56 of the Income Tax Act and allowed a deduction under section 57, which the assessee contested.

Tribunal ruling (ex-parte – in absence of Assessee representation):
The Tribunal noted that the assessee received interest under section 28 of the Land Acquisition Act on enhanced compensation for the acquisition of agricultural land.

The Tribunal reviewed the provisions of sections 28 and 34 of the Land Acquisition Act, which deal with interest on compensation and enhanced compensation.

The Tribunal considered various judicial precedents, including the decisions of the Hon’ble Supreme Court in the cases of Sham Lal Narula (Dr.) v. CIT, Bikram Singh v. Land Acquisition Collector, and CIT v. Ghanshyam (HUF).

The Tribunal also examined the amendments to sections 56 and 145B of the Income Tax Act, which brought interest on compensation or enhanced compensation under the head “income from other sources”.

The Tribunal held that the interest received under section 28 of the Land Acquisition Act on enhanced compensation is taxable as income from other sources under section 56(2)(viii) of the Income Tax Act.

The Tribunal dismissed the assessee’s claim that the interest is exempt under section 10(37) of the Act, as this section deals with compensation and not interest on compensation.

The Tribunal upheld the order of the PCIT, directing the Assessing Officer to recompute the interest on enhanced compensation in accordance with section 56(2)(viii) and allow applicable deduction under section 57(iv) of the Income Tax Act.

The copy of the order is as under:

1737965273-M3JrhJ-1-TO




Menu