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2022 (6) TMI 22 - AT - Income TaxNature of income - Income from other sources - interest income received u/s. 28 of Land Acquisition Act, 1984 as taxable u/s 56(2)(viii) r.w.s. 145A(b) - Scope of amended principles - HELD THAT - As decided recently in Shri Madhav Pandharinath Kande 2022 (5) TMI 1026 - ITAT PUNE no merit inn assessee s instant argument once the legislature has inserted Section 56(2)(viii) vide Finance Act 2009 w.e.f. 01.04.2010 holding interest received on compensation or on enhanced compensation referred to in clause (b) of Section 145A as treating the corresponding income as income from other sources. The assessee could hardly rebut the fact that the foregoing statutory provision in fact makes both interest on compensation as well as on enhanced compensation deemed as income of the year in which it is received whereas the assessment year before their lordships was 1999-2000 only. We thus hold that the CIT(A) has rightly affirmed the assessment findings assessing the impugned interest income in assessee s hands. Thus the impugned interest income is very much taxable as per the amended provision i.e. Section 56(2)(viii) r.w.s. 57(iv) r.w.s. 145A(b) applicable w.e.f. 01.04.2010. - Decided against assessee.
Issues Involved:
1. Taxability of interest income received under Section 28 of the Land Acquisition Act, 1984. 2. Applicability of Section 56(2)(viii) and Section 145A(b) of the Income Tax Act, 1961. 3. Interpretation of judicial precedents regarding the nature of interest income on enhanced compensation. Detailed Analysis: 1. Taxability of Interest Income Received Under Section 28 of the Land Acquisition Act, 1984: The primary issue involves whether the interest income of Rs. 1,90,51,664/- received under Section 28 of the Land Acquisition Act, 1984, is taxable. The assessee argued that this interest is part of the enhanced compensation and should be exempt under Section 10(37) of the Income Tax Act, 1961, citing several judicial precedents. However, the lower authorities treated this interest as taxable under Section 56(2)(viii) read with Section 145A(b) of the Act. The CIT(A) upheld the Assessing Officer's decision, emphasizing that the legislative intent behind the amendments was to tax interest received on compensation or enhanced compensation in the year of receipt. The Tribunal affirmed this view, referencing the Supreme Court's decision in Bikram Singh vs. Land Acquisition Collector, which classified such interest as a revenue receipt exigible to income tax. 2. Applicability of Section 56(2)(viii) and Section 145A(b) of the Income Tax Act, 1961: The Tribunal examined the applicability of Section 56(2)(viii) and Section 145A(b), which were introduced by the Finance Act 2009, effective from 01.04.2010. These provisions categorize interest received on compensation or enhanced compensation as income from other sources and deem it taxable in the year of receipt. The assessee's argument, based on the Supreme Court's decision in CIT vs. Ghanshyamdas (HUF), was rejected as the legislative amendments post-dated the assessment year in question. The Tribunal noted that the statutory provisions clearly make such interest income taxable, thereby upholding the CIT(A)'s findings. 3. Interpretation of Judicial Precedents: The Tribunal also addressed the interpretation of various judicial precedents cited by the assessee. The assessee relied on the Supreme Court's decisions in CIT vs. Ghanshyamdas (HUF) and other cases to argue that interest under Section 28 is part of the compensation and thus exempt. However, the Tribunal referred to the larger bench decision in Bikram Singh vs. Land Acquisition Collector, which held that interest on delayed payment of compensation is a revenue receipt and taxable. The Tribunal emphasized that the larger bench's decision takes precedence over the smaller bench's decision in Ghanshyamdas (HUF). Additionally, the Tribunal noted the Bombay High Court's decision in Shivajirao Dnyanoba Ghanwat vs. State of Maharashtra, which followed the larger bench's ruling, reinforcing the taxability of such interest income. Conclusion: The Tribunal dismissed the assessee's appeal, affirming the CIT(A)'s decision that the interest income received under Section 28 of the Land Acquisition Act, 1984, is taxable under Section 56(2)(viii) read with Section 145A(b) of the Income Tax Act, 1961. The Tribunal relied on the larger bench decision of the Supreme Court in Bikram Singh and subsequent judicial interpretations to uphold the taxability of the interest income as a revenue receipt. The order was pronounced in the open court on 12th May 2022.
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