2023 (12) TMI 705 - AT - Income Tax

Addition u/s 56 - taxing the Interest amount granted by the Land Acquisition Officer u/s 28 of the Land Acquisition Act as Income from other sources - case was selected for scrutiny for the reason that gross receipt shown in schedule 0S of ITR is less than the receipts reported in 26AS u/s 193 and large agricultural income - HELD THAT - In the present case, the applicability of the Hon ble Apex Court in case of Ghanshyam HUF 2009 (7) TMI 12 - SUPREME COURT will not be applicable as the interest u/s . 28 is not on delayed payment but was enhanced compensation. But in present assessee s case, the interest has been granted by the Hon ble Principal Senior Civil Judge while awarding additional compensation to the assessee. Therefore, the decision of Hon ble Apex Court which is a three judge bench decision in case of Bikram Singh 1996 (9) TMI 6 - SUPREME COURT will be applicable wherein it is clearly held that the interest was not intended to exclude the revenue receipt on interest on delayed payment of compensation from taxability. Hence, the appeal of the assessee is dismissed.

Summary

Issues involved:
The judgment deals with the taxation of interest amount granted by the Land Acquisition Officer under section 28 of the Land Acquisition Act, and the interpretation of judgments of the Honourable Supreme Court.

Details of the Judgment:

Issue 1: Taxation of Interest Amount
- The assessee filed a return of income declaring nil income, which was selected for scrutiny due to discrepancies in receipts reported.
- The Assessing Officer held that the interest component of enhanced compensation must be taxed under "income from other sources."
- The assessee's appeal before the CIT(A) was dismissed.
- Despite notices, the assessee did not appear at the hearing, and no new address was provided.
- The Department argued that interest on enhanced compensation should be taxable under specific sections of the Income Tax Act.
- Various judicial decisions were cited, including a recent Supreme Court judgment dismissing a special leave petition related to interest on enhanced compensation.
- The Department emphasized the plain language of relevant sections of the Income Tax Act and cited precedent regarding statutory construction.
- A Pune Tribunal decision was referenced to support the precedence of larger bench judgments over smaller bench decisions.
- The Department relied on past Supreme Court rulings to argue that interest on delayed compensation is a revenue receipt subject to income tax.

Issue 2: Applicability of Judicial Precedents
- The Tribunal noted that the interest granted to the assessee was part of enhanced compensation, not delayed payment.
- Citing a three-judge bench decision of the Supreme Court, the Tribunal held that the interest on enhanced compensation was not intended to be excluded from taxability.
- Based on the above reasoning, the Tribunal dismissed the appeal of the assessee.

Conclusion:
The appeal of the assessee was dismissed based on the interpretation of relevant legal provisions and judicial precedents. The Tribunal upheld the taxation of interest on enhanced compensation as income from other sources.