2012 (10) TMI 1260 - HC - Income Tax

Summary

Issues involved: Interpretation of interest granted to landowner u/s 28 of Land Acquisition Act, 1894 for tax computation.

Summary:
The High Court of Himachal Pradesh addressed the issue of calculating interest granted to a landowner u/s 28 of the Land Acquisition Act, 1894 for tax purposes. The main question was whether the interest should be calculated on a year-to-year basis or in the year when the amount is credited to the landowner. However, the Court referred to a judgment by the Supreme Court which clarified that the interest under Section 28 is considered a part of compensation and not separate interest. The Supreme Court emphasized the distinction between interest under Section 28, which is part of the enhanced compensation, and interest under Section 34, which is for delay in payment after the compensation amount is determined. The Court highlighted that the receipt of enhanced compensation, including interest under Section 28, is taxable in the year of receipt. Therefore, the interest under Section 28 is to be treated as part of compensation itself and not as separate interest, as per the Supreme Court's ruling. Consequently, the Court disposed of the appeal in line with the Supreme Court's judgment, directing the Assessing Officer to proceed accordingly without any costs being awarded.