2024 (5) TMI 1298 - AT - Income Tax

Interest income received on account of land acquisition - Income from other sources - Addition of interest received u/s 28 of the Land Acquisition Act 1894 on enhanced compensation - Revenue referring to statutory amendments in section 56(2)(viii) r.w.s. 57(iv) r.w.s. 145B(i) inserted by the Finance Act 2009 contended that such interest income is taxable - HELD THAT - We notice that the honourable jurisdictional high court s decision in Rupesh Rashmikant Shah vs. Union of India 2019 (8) TMI 518 - BOMBAY HIGH COURT has already settled the issue in assessee s favour and against the department so far as the assessment of such an interest income u/s 28 of the Land Acquisition law is concerned. Also recently decided in SHRI KUSUM JAYRAM THAKUR DHUTUM 2024 (5) TMI 343 - ITAT PUNE has already settled the issue in assessee s favour and against the department wherein as held that taxability of the assessee s interest income received under section 28 of the Act is covered in assessee s favour as per the hon ble high court s Bombay bench 2019 (8) TMI 518 - BOMBAY HIGH COURT holding that the same is not taxable under section 56(2)(viii) of the Act as against the Revenue s contentions that the Aurangabad bench of the very hon ble jurisdictional high court has taken a divergent view against the taxpayer in Shivajirao and Others 2013 (8) TMI 1160 - BOMBAY HIGH COURT - Decided in favour of assessee. Addition of interest income derived from fixed deposits towards joint bank guarantee - this taxpayer claims that the same also has accrued in the hands of his sister Smt. Kunda Thakur - HELD THAT - A perusal of the Assessing Officer s detailed discussion reveals that his sister had nowhere offered the said interest income in her return filed for the impugned assessment year. AO has rather been fair enough in even taking note of her computation to this effect - Faced with this situation we hardly see any merit in the assessee s instant latter substantive ground so far as assessment of the impugned interest income is concerned. Decided against assessee.

Summary

Issues Involved:
1. Addition of Rs. 1,80,94,690/- as interest income received on account of land acquisition.
2. Addition of Rs. 14,84,463/- as interest income pertaining to the assessee's sister.
3. Taxation of interest income in view of Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

Summary of Judgment:

Issue 1: Addition of Rs. 1,80,94,690/- as Interest Income
The assessee contested the addition of Rs. 1,80,94,690/- as interest income received u/s 28 of the Land Acquisition Act, 1894, arguing that the additional compensation and interest were disputed by the State Government and had not attained finality. The Revenue, supported by statutory amendments in section 56(2)(viii) r.w.s. 57(iv) r.w.s. 145B(i) inserted by the Finance Act, 2009, contended that such interest income is taxable. The Tribunal referred to the jurisdictional high court's decision in Rupesh Rashmikant Shah vs. Union of India (2019) 417 ITR 169 (Bom), which settled the issue in favor of the assessee, holding that interest received u/s 28 of the Land Acquisition Act is not taxable under section 56(2)(viii). The Tribunal also cited its recent order in Kusum Jayram Thakur Dhutum vs. ITO (2024) 162 taxmann.com 388 (Pune-Tribunal) supporting the same view. Consequently, the Tribunal decided this issue in favor of the assessee.

Issue 2: Addition of Rs. 14,84,463/- as Interest Income Pertaining to Assessee's Sister
The assessee argued that the interest income of Rs. 14,84,463/- from fixed deposits towards a joint bank guarantee should be attributed to his sister. However, the Assessing Officer noted that the sister had not offered this interest income in her return for the relevant assessment year. Given this, the Tribunal found no merit in the assessee's claim and upheld the addition of Rs. 14,84,463/- as interest income in the hands of the assessee.

Issue 3: Taxation of Interest Income in View of Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013
The Tribunal did not specifically address this issue separately in the judgment, implying that the primary focus was on the taxability of interest income under the Income Tax Act, 1961, rather than the provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

Conclusion:
The appeal was partly allowed. The addition of Rs. 1,80,94,690/- as interest income was deleted, while the addition of Rs. 14,84,463/- was upheld. The order was pronounced in the Open Court on 27th May, 2024.