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TMI Blog2024 (8) TMI 487X X X X Extracts X X X X X X X X Extracts X X X X ..... e year in which it is received read with section 56(2)(viii) of the Act which provides income by way of interest on compensation or on enhanced compensation referred to in sub-section (1) of section 145B of the Act shall be chargeable to income tax under the head Income from other sources . Therefore, we hold that the interest granted by the reference Court u/s. 28 of the Land Acquisition Act from the date of possession of land till the date of judgment of High Court is an accretion of the value of the land acquired. Respectfully following the decision of Rupesh Rashmikant Shah [ 2019 (8) TMI 518 - BOMBAY HIGH COURT] we hold the interest received u/s. 28 of the Land Acquisition Act would not fall within the ambit of the expression interest as envisaged u/s. 145A(b) of the Act, further, hold that the amendment by way of substitution of section 145A by Finance (No. 2) Act, 2009 w.e.f. 01-04-2010 and amendment by way of insertion of clause (iii) in section 56(2) by Finance Act, 2009 would have no applicability to the facts of the present case and in view of the same the order of CIT(A) in confirming the order of AO is not justified. Thus, ground Nos. 1 and 2 raised by the assessee are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndustrial Development Corp. in support of his contention. The AO did not accept the submissions of assessee and was of the opinion, the 50% of the interest received on enhanced compensation is taxable under amended provisions u/s. 56 w.e.f. 01-04-2010. The AO held the facts and circumstances in the case of Haryana State Industrial Development Corp. (supra) are different and the said decision is not applicable to the facts on hand. Further, he relied on the decision of Hon ble Supreme Court in the case of Bikram Singh reported in 224 ITR 551 (SC) and held interest of Rs.69,30,640/- which is 50% of interest received on enhanced compensation as taxable u/s. 56(2)(viii) of the Act. The CIT(A) by placing reliance in the cases of Bikram Singh (supra), Manjeet Singh (HUF) reported in 65 taxmann.com 160 (Punjab Haryana) and Balasaheb Raosaheb Bidwe and Others in Writ Petition No. 5401 of 2013, held the interest received u/s. 28 of Land Acquisition Act is taxable u/s. 56(2)(viii) of the Act. Aggreived by the order of CIT-A, the assessee is before us. 6. The ld. AR placed reliance in the case of Hari Singh reported in 302 CTR 458 (SC) for the proposition that the AO shall keep in mind the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held the law laid down by the Ghanshyam (HUF) (supra) is not applicable and interest received on enhanced compensation referred to in clause (b) of section 145A is income from other sources, chargeable to tax. He vehemently argued that the case laws as relied on by the ld. AAR are not applicable in view of the orders of this Tribunal on similar issue and also in view of the amendments brought in by substitution of section 145A of the Act and insertion of clause (iii) to section 56(2) of the Act. He submits that the law laid down by the Hon ble High Court of Bombay in the case of Rupesh Rashmikant Shah reported in 417 ITR 169 (Bom) is not applicable to the facts on hand as the Hon ble High Court held the charging of interest on compensation/enhanced compensation of motor accident case is not taxable which is a pure question of law. He prayed to dismiss the grounds of appeal raised by the assessee. 8. Heard both the parties and perused the material available on record. In the present case there is no dispute with regard to taxability of interest u/s. 34 of the Land Acquisition Act as the assessee himself offered the same for taxation. The only issue emanates for our consideration is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the interest on excess compensation from the date of possession to date of payment into the Court is part and parcel of compensation? 9. Vide order dated 29-01-2018, the Co-ordinate Bench of this Tribunal in the case of Dnyanoba Shajirao Jadhav in ITA No. 168/PUN/2016 for A.Y. 2011-12 in para 10, observed that the decision in the case of Bikram Singh Ors. (supra) by three Judges Bench of Hon ble Supreme Court was not considered by the two Judges Bench of Hon ble Supreme Court in the case of Ghanshyam (HUF) (supra). The Tribunal further observed that there was no conflict of law laid down in the said decisions of Hon ble Supreme Court as both the judgments held the payment of interest on delayed payment of compensation u/s. 34 of the Land Acquisition Act is hargeable to tax. Further, also observed that two Judges Bench in the case of Ghanshyam (HUF) (supra) is clearly marked the distinction between the interest received u/s. 23(1A) and 23(2) r.w.s. 28 of the L.A. Act vis- -vis interest on delayed payment of compensation u/s. 34 of the L.A. Act, by holding so remanded the issue to the file of AO for examination of facts of the case and determine the nature of interest received by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28 is not by way of any charge on compensation determined u/s. 23(1) of the Land Acquisition Act. 15. Vide order dated 31-03-2016, the Division Bench i.e. two Judges Bench of Hon ble High Court of Gujarat in the case of Movaliya Bhikhubhai Balabhai reported in 388 ITR 343 (Guj.) by following the decision of Hon ble Supreme Court in the case of Ghanshyam (HUF) (supra) held the amount paid u/s. 28 of the Land Acquisition Act forms part of the compensation which partakes the character of compensation. 16. Vide order dated 08-08-2019, the Division Bench i.e. two Judges Bench of Hon ble High Court of Bombay in the case of Rupesh Rashmikant Shah reported in 417 ITR 169 (Bom), while dealing with a question under Motor Vehicles Act, held interest awarded in the motor accident claim cases from the date of the claim petition till the passing of the award or in case of appeal, till the judgment of the High Court in such appeal, could not be exigible to tax, not being an income vide para 57. The Hon ble High Court, since the question involved complex issues, requested a senior counsel as amicus curie. The said amicus curie opined the taxability of the interest would depend on the nature and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a part of enhanced compensation or consideration. Interest u/s. 34 is only for delay in making payment after the compensation amount is determined. Having said that opined while dealing the interest u/s. 28 and 34 of the Land Acquisition Act, the vital difference between these two sections needs to be kept in mind while dealing the issues relating to interest u/s. 28 and 34 of the Land Acquisition Act. 18. Vide order dated 15-09-2017, two Judges Bench of Hon ble Supreme Court in the case of Hari Singh (supra) held, while determining as to whether the compensation paid was for agricultural land or not, the Assessing Officer(s) will keep in mind the provisions of section 28 of the Land Acquisition Act and the law laid down in the case of Ghanshyam (HUF) (supra) to ascertain whether interest given under the said provisions amounts to compensation or not. 19. Vide order dated 12-09-1996, three Judges Bench of Hon ble Supreme Court in the case of Bikram Singh Ors. (supra) observed that the interest received as income on delayed payment of compensation determined u/s. 28 and 34 of the Land Acquisition Act is a revenue receipt and is exigible to tax. 20. Having referred to the various c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e observing so, held the AO had committed an error in levying tax on the interest components of the compensation awarded to the claimant till the date of judgment of the High Court, further held, any interest paid to the claimant post the judgment tax had to be collected as income from other sources. Therefore, it is clear from the judgment of Hon ble Jurisdictional High Court that no interest could be brought to tax from the date of claim petition till the judgment of High Court. Applying the same principle to the present facts of the case that the interest granted u/s. 28 of Land Acquisition Act on enhanced compensation/compensation by the reference court u/s. 18 of Land Acquisition Act, from the date of possession of land and till the judgment of High Court, is part of compensation, could not be taxed in view of amendments by substitution of section 145A read with clause (iii) of section 56(2) of the Act. 21. In the present case, the AO simply proceeded on the premise that the amendments to provisions u/s. 145A which bears the heading method of accounting in certain cases, section 145A(b) provides that notwithstanding anything to the contrary contained in section 145, interest r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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