2020 (8) TMI 61 - AT - Income Tax

Interest received u/s 28 of Land Acquisition Act 1984 - Capital gain or income from other sources - Whether it does not fall under the category of capital asset?- AO granted deduction u/s 57 of the Act at the rate of 50% instead of exemptive the entire amount - HELD THAT - As decided in Dnyanoba Shajirao Jadhav 2018 (2) TMI 105 - ITAT PUNE said receipts are not taxable as the same is covered by the provisions of section 28 of the Land Acquisition Act, 1984. The interest received u/s 28 of the said Act is not taxable. In our considered opinion, the Assessing Officer and the CIT(A) made an error in not complying with the judgement of the Hon ble Supreme Court in the case of CIT vs. Ghanshyam (HUF) 2009 (7) TMI 12 - SUPREME COURT . AO shall decide the issue after granting reasonable opportunity of being heard to the assessee during the remand proceedings and allow the claim after due verification of the calculation, figures and the applicability of the said decisions cited above (supra). Thus, the grounds raised by the assessee are allowed for statistical purposes.

Summary

Issues:
Taxation of amount received under the Land Acquisition Act 1984.

Analysis:
The appeal was filed against the order of CIT(A)-2, Aurangabad for the Assessment Year 2012-13, regarding the taxation of a sum of ?3,10,33,961 received by the assessee under section 28 of the Land Acquisition Act 1984. The core issue revolved around whether this amount should be treated as interest or part of the consideration. The Assessing Officer taxed this amount as a receipt under section 28, granting a deduction of 50% under section 57 of the Act. The CIT(A) upheld this decision without considering relevant legal precedents.

The Tribunal, after considering the facts and legal precedents, concluded that the interest received under section 28 of the Land Acquisition Act is not taxable. Referring to a previous judgment, the Tribunal emphasized that interest under section 34 of the Act on delayed payment of compensation is taxable, but interest under section 28 is not. The Tribunal directed the Assessing Officer to follow this decision and the Supreme Court's judgment in a related case, allowing the assessee's appeal for statistical purposes.

In summary, the Tribunal ruled in favor of the assessee, holding that the amount received under section 28 of the Land Acquisition Act should not be taxed. The decision was based on established legal principles and precedents, directing the Assessing Officer to reevaluate the issue in light of the Tribunal's decision and the Supreme Court's judgment.