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TMI Blog2020 (5) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... In the facts and circumstances of the case, the Learned CIT(Appeals) erred in not appreciating the facts of the case and denying exemption under section 10(37) of the I.T. Act, 1961, in the light of the Hon'ble Supreme Court decision in the case of CIT v. Ghanshyam (HUE) 315 ITR 1 (SC) (2) In the facts and circumstances of the case, the Learned CIT(Appeals) erred in upholding the action of the AO in taxing the interest under section 28 of the Land Acquisition Act, 1894, under section 56(2)(viii) of the I.T. Act, 1961 though it is not a interest covered by the said provisions of the I.T. Act, 1961 (3) In the facts and circumstances of the case, the Learned CIT(Appea1s) erred in ignoring the decision Of I TAT, Panaji Bench, Panaji in the case of The Chief Accounts Officer, LA, Upper Krishna Project, Bagalkot in ITA No.64/PNJ/2011 for A.Y. 2009-10 dated 13.4.2011 wherein, it was held that interest under section 28 of the LAA, 1894, is an accretion to the value and hence it is part of enhanced compensation and as such, provisions of section 194L are not applicable in respect of interest u/ s 28 of the LAA, 1894 is concerned. (4) The appellant prays for his reliance on the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsation is part of enhanced value of land whereas the Assessing Officer has not disputed the fact that the lands are agriculture in nature. Hence considering the enhanced compensation on acquisition of agriculture land to the extent of Rs. 75,85,659 is allowed as exempted under Section 10(37) of the Act. But in respect of remaining compensation which includes interest component of Rs. 1,27,09,612, the Assessing Officer is of the opinion that it should be taxed under ' income from other sources ' and allow deduction to the entire 50% under Section 57(iv) of the Act. The Assessing Officer also observed that TDS Credit to the extent of ¼ th share as per Section 199 of the Act r.w. Rule 37(BA), has to be allowed Rs. 12,70,961 and assessed the total income of Rs. 69,68576 and passed the order under Section 143(3) dt.27.03.2014. Aggrieved by the order, the assessee filed an appeal with the CIT(Appeals) and whereas the CIT(Appeals) confirmed the action of the Assessing Officer and dismiss the assessee's appeal. Aggrieved by the order of CIT(Appeals), the assessee has filed an appeal before the Tribunal. 4. At the time of hearing, the learned Authorised Representative submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute that the interest in question was interest awarded u/s. 28 of the Land Acquisition Act, 1894. In the given circumstances, we are of the view that the decision of the Hon'ble Gujarat High Court in the case of Movaliya Bhikhubhai Balabhai (supra) will be applicable to the facts of the present case. 12. In Movaliya Bhikhubhai Balabhai v. Income-tax Officer-TDS-1-Surat [2016] 70 taxmann.com 45 (Gujarat), the Hon'ble Gujarat High Court had to deal with the nature of the interest awarded u/s.28 of the Land Acquisition Act, 1894. The facts of the case before the Hon'ble Gujarat High Court was that the petitioner's agricultural lands came to be acquired under the provisions of the Act of 1894 for the public purpose of the Ozat-2 Irrigation Scheme. The award passed by the Collector came to be challenged by the petitioner before the learned Principal Senior Civil Judge, Junagadh (hereinafter referred to as the "Reference Court"), who by an order dated 20th March, 2011 awarded additional compensation of Rs. 5,01,846/- in favour of the petitioner together with other statutory benefits. Pursuant to such award, the second respondent calculated the amount payable to the petitioner and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay of interest received on compensation or on enhanced compensation referred to in clause (b) of section 145A which is chargeable as income from other sources. The first respondent Income Tax Officer seeks to tax the interest received by the petitioner under section 28 of the Act of 1894 as income from other sources under section 56(2)(viii) read with section 145A(b) of the I.T. Act. In the opinion of this court, in the light of the law laid down by the Supreme Court in the case of Ghanshyam (HUF) (supra), the interest received under section 28 of the Act of 1894 would not fall within the ambit of the expression "interest" as envisaged under section 145A(b) of the I.T. Act, inasmuch as, the Supreme Court in the above decision has held that interest under section 28 of the Act of 1894 is not in the nature of interest but is an accretion to the compensation and, therefore, forms part of the compensation." It was argued on behalf of the Revenue before the Hon'ble Gujarat High Court that the decision of Hon'ble Supreme Court in the case of Ghanshyam (HUF) was rendered prior to the substitution of section 145A of the I.T. Act by Finance (No. 2) Act, 2009 with effect from 1st April, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UF)'s case (supra) but was brought in to mitigate the hardship caused to the assessee on account of the decision of the Supreme Court in Rama Bai v. CIT [1990] 181 ITR 400/[1991] 54 Taxman 496 whereby it was held that arrears of interest computed on delayed or enhanced compensation shall be taxable on accrual basis. Therefore, when one reads the words "interest received on compensation or enhanced compensation" in section 145A of the I.T. Act, the same have to be construed in the manner interpreted by the Supreme Court in Ghanshyam (HUF)'s case (supra)." 13. The Hon'ble Gujarat High Court finally concluded, as follows: "13. The upshot of the above discussion is that since interest under section 28 of the Act of 1894, partakes the character of compensation, it does not fall within the ambit of the expression "interest" as contemplated in section 145A of the I.T. Act. The first respondent - Income Tax Officer was, therefore, not justified in refusing to grant a certificate under section 197 of the I.T. Act to the petitioner for nondeduction of tax at source, inasmuch as, the petitioner is not liable to pay any tax under the head "income from other sources" on the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X
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