Interest received either on delayed compensation enhanced compensation is chargeable as “income from other sources”
Interest received either on delayed compensation under Section 34 or on enhanced compensation under Section 28 of the Land Acquisition Act, 1894 (“LA Act”) is chargeable to tax under the head “income from other sources” under Section 56(2)(viii) read with Section 145-B of the Income-tax Act, 1961. Such interest on enhanced compensation cannot form part of the compensation itself – Delhi High Court in the case of Principal Commissioner of Income-tax v. Inderjit Singh Sodhi (HUF) (ITA 769/2023 & CM APPL 65057/2023)
The Hon’ble Court set aside the order the Hon’ble Tribunal, wherein the appeal of the taxpayer was allowed on the ground that interest on enhanced compensation under Section 28 of the LA Act forms part of the compensation itself.
The Tribunal relied heavily on the judgment of the Hon’ble Apex Court in the case of CIT v. Ghanshyam (HUF) [(2009) 315 ITR 1 (SC)] while rendering the impugned decision and didn’t appreciated the amendments made by Finance (No.2) Act, 2009.
The High Court, while ruling in favor of Revenue, relied upon the following judgments:
~ Sham Lal Narula (Dr.) v. CIT [(1964) 53 ITR 151] ~ Bikram Singh v. Land Acquisition Collector [(1997) 10 SCC 243] ~ Puneet Singh v. CIT [2018 SCC OnLine P&H 7124]
The copy of the order is as under:
