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TMI Blog2022 (5) TMI 1026X X X X Extracts X X X X X X X X Extracts X X X X ..... le jurisdictional high court raising the very issue. We find no substance in assessee s instant latter request as well once it is clear that 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. The assessee fails in its sole substantive ground as well as in the main appeal therefore. - ITA No. 2584/PUN/2016 - - - Dated:- 28-4-2022 - SHRI S. S. GODARA , JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE , ACCOUNTANT MEMBER Appellant by : Shri Bharat Shah Respondent by : Shri S. P. Walimbe ORDER Per S.S. Godara , JM This assessee s appeal for AY 2013-14 is against the order of the CIT(A) 2, Aurangabad dated 04.07.2017 passed in case No. PN/CIT (A)-2/Set aside/PN/66/2011-12.755 involving proceedings under Section 143(3) r.w.s. 260A of the Income Tax Act, 1961 in short the Act. Heard both the parties. Case file perused. 2. The assessee s sole substantive grievance pleaded in the instant appeal challenges both the lower authorities action treating its interest income on enhanced land acquisition compensation of Rs.1,64,96,146/- as taxable under Section 56( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal or other authority is made; to state that since the interest which was received by the assessee was in pursuance of an interim order of the Honourable High Court, the said interest amount cannot be taxable till the Honourable High Court delivers its final judgement. 6. I have given a careful consideration to the submissions made by the assessee and I find that this case is squarely covered by the decision in the case of Bikram Singh Vs. Land Acquisition Collector [1997] 224 ITR 551 (SC). The Hon'ble Supreme Court held: 7. Relying upon these three provisions, it is contended that the definition of 'interest' is confined only to money-lending business between debtor and the creditor and if the creditor receives any amount by way of interest from the debtor, it is in the nature of a receipt of income on a charge paid in respect of money borrowed or in respect of the credit facility given which have been utilised and, therefore, the definition would be applicable only when the money is lent by a creditor and received by the debtor. Then only interest is chargeable to income-tax. When interest is paid either under section 34 or section 28 of the Lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er in respect of any moneys borrowed or a debt incurred or enumerated analogous transaction would be deemed interest. That was explained by the board in the circular referred to hereinbefore. 10. But the question is: whether the interest on delayed payment on the acquisition of the immovable property under the Acquisition Act would not be exigible to income-tax? It is seen that this Court has consistently taken the view that it is a revenue receipt. The amended definition of 'interest' was not intended to exclude the revenue receipt of interest on delayed payment of compensation from taxability. Once it is construed to be a revenue receipt, necessarily, unless there is an exemption under the appropriate provisions of the Act, the revenue receipt is exigible to tax. The amendment is only to bring within its tax net, income received from the transaction covered under the definition of interest. It would mean that the interest received as income on the delayed payment of the compensation determined under section 28 or 31 of the Land Acquisition Act is a taxable event. Therefore, we hold that it is a revenue receipt exigible to tax under section 4 of the Act. Section 194A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Honourable Apex Court. 8. In a recent decision in the case of Manjeet Singh (HUF) Karta Manjeet Singh Vs. Union of India [2016] 65 taxmann.com 160 (Punjab Haryana), similar decision has been taken. The decision is as under: 7. The primary question for consideration that arises in these petitions relates to the nature of interest received by the landowner-assessee under Section 28 of the 1894 Act. In other words, whether the interest which is received by the assessee-landowner partakes the character of income or not and, in such a situation is it taxable under the provisions of the Act. 8. It would be apposite to quote herein below Sections 28 and 34 of 1894 Act which read thus:- 28. Collector may be directed to pay interest on excess compensation. - If the sum which, in the opinion of the court, the Collector ought to have awarded as compensation is in excess of the sum which the Collector did award as compensation, the award of the Court may direct that the Collector shall pay interest on such excess at the rate of [nine per centum] per annum from the date on which he took possession of the land to the date of payment of such excess into C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 23(2) of the Act forms an integral and statutory part of the compensation awarded to a landowner, then from the plain terms of Section 28 of the Act, it would be evident that the interest is payable on the compensation awarded and not merely on the market value of the land. Indeed the language of Section 28 does not even remotely refer to market value alone and in terms talks of compensation or the sum equivalent thereto. The interest awardable under Section 28 therefore would include within its ambit both the market value and the statutory solatium. It would be thus evident that the provisions of Section 28 in terms warrant and authorize the grant of interest on solatium as well. 12. Adverting to the case law on the subject, inevitably, reference is made to the judgment by the three Judges bench of the Supreme Court in the case of Dr.ShamlalNarula v. CIT [1964] 53 ITR 151, which had considered the issue regarding award of interest under the 1894 Act. Interest under Section 28 of the 1894 Act was considered akin to interest under Section 34 thereof as both were held to be on account of keeping back the amount payable to the owner and did not form part of compensation or da ..... X X X X Extracts X X X X X X X X Extracts X X X X
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