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TMI Blog2023 (1) TMI 824X X X X Extracts X X X X X X X X Extracts X X X X ..... d CIT V. Ghanshyam Dass & Ors.: [315 ITR 1(SC)] with regard to interest received u/s 28 of the Land Acquisition Act, 1894. The assessee had submitted a letter from District Revenue Officer where it was stated that in total an amount of Rs. 8,25,64,962/- was paid to the assessee which included interest of Rs. 5,42,98,691/- after deducting TDS of Rs. 54,29,869/- and the total sum was paid u/s 28 of the Land Acquisition Act. It made clear that TDS was deducted on interest part only. Ld. AO observed that the assessee was actually in receipt of interest of amount of Rs. 5,97,28,560/- while in the return filed the assessee had claimed interest u/s 28 of the Land Acquisition Act to be Rs. 5,12,65,313/-. The ld AO taking into consideration the provision of sub-section (1) of Section 145B of the Act read with section 56(2)(viii) of the Act was of the view that interest part of the enhanced compensation amounting to Rs. 5,97,28,560/- was taxable and further extending the benefit of Section 54(4) of the Act of deduction of 50% proposed additions. However, addition of Rs. 2,71,49,345/- was made accepting the submission of assessee that interest of enhanced compensation was Rs. 5,42,98,690/- an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ismissed on 04.03.2021 without appreciating that since the same was dismissed in limine, there was no merger of the High Court order with that of the Hon'ble Supreme Court, and thus the decision in the case of CIT vs. Ghanshyam (supra) would still hold the field. 7. That CIT(A) erred on facts and in law in upholding the addition of Rs. 2,71,49,345/- made by the AO without considering that substitution of section 145A of the Act was brought in by Finance (No.2) Act, 2009 to mitigate hardship caused to the assessee on account of the decision on the Hon'ble Apex Court in Rama Bai vs. CIT: [181 ITR 400], and was not in connection with its decision in CIT vs Ghanshyam (supra). 8. That the CIT(A) erred on facts and in law in not appreciating that the interest on enhanced compensation partakes nature of compensation received by the Appellant, falling under the head "Capital Gains" and not "Income from Other Sources" and is exempt by virtue of Section 10(37) of the Act." 4. Heard and perused the record. 5. On behalf of the assessee it was submitted that the Ld. Tax Authorities below have fallen an error in not taking into consideration the judgment of Hon'ble Hon'ble Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e when particular section was inserted in the Act. 9. Coming to the claim of assessee based on the basis of judgment of Hon'ble Supreme Court of India in CIT Vs. Ghanshyam (HUF) (supra) it is pertinent to mention that the same was of 16.07.2009 however, subsequent amendments in the Act have been taken note by Hon'ble Punjab and Haryana High Court in the judgment of Mehendra Pal Narang V. CBDT (2020) 120 Taxman.com 400 (P&H) and which has been thoroughly relied by the Ld. Tax authorities below. The contention raised before this bench have been considered by the Hon'ble Punjab and Haryana High Court and relevant paras are reproduced below:- 6. Learned counsel for the petitioner argued that there is no amendment in section 10(37) of the 1961 Act and by insertion of sections 56(2)(viii) and 57(iv), the nature of interest under section 28 of the 1894 Act will remain that of compensation. To fortify the submission, he relies upon the decision of the Supreme Court in CIT v. Ghanshyam (HUF) [2009] 182 Taxman 368/315The contention is that as per the decision of the Apex Court, the interest under section 28 of the 1894 Act is not compensatory for delay but would be treated akin to com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, it was held that enhanced compensation received under the 1894 Act may be received in multiple stages but the same is to be treated as "deemed income" at the time when it is received and is to be taxed on receipt basis. It was further held, the fact that enhanced compensation is in dispute and the withdrawal is conditional will not make a difference. While dealing with the said issue, it was held that interest on enhanced value of land forms part of compensation and is exigible to tax in the year of receipt whereas interest on delayed payment of enhanced compensation is income in a different nature. 9. The scheme with regard to chargeability of interest received on compensation and enhanced compensation has undergone a sea change with the insertion of sections 56(2) (viii) and 57(iv)of the 1961 Act. Section 56 deals with income from other sources and a specific provision has been inserted by way of sub-section whereby the interest received on compensation or enhanced compensation, as referred to in clause (b) to section 145A has been included under the head 'Income from other sources'. In clause (iv) to section 57, deduction of fifty per cent is provided on interest r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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