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TMI Blog2024 (10) TMI 361X X X X Extracts X X X X X X X X Extracts X X X X ..... d 18-03-2013 directed to pay additional compensation to the assessee and other co-owners along with interest. Accordingly, the assessee during the year under consideration received additional compensation of Rs. 1,64,36,212/- and interest on the same for Rs. 79,11,298/- only. The amount of additional compensation as well as the amount of interest was claimed as exempted income under section 10(37) of the Act. The assessee contended that interest received was in accordance with section 28 of Land Acquisition Act of 1894 which is part and parcel of amount of additional compensation eligible for exemption under section 10(37) of the Act. The assessee in this regard placed reliance on the judgment of Hon'ble Supreme Court in the case of CIT vs. Ghanshayam (HUF) reported in 315 ITR 31. 4. However, the AO held that only the part of additional compensation shall be subject to exemption under section 10(37) of the Act, and the amount of interest is required to be taxed as income under the head other sources as per the provision section 145A(b) r.w.s. 56(2)(viii) of the Act. Accordingly, the AO treated interest amount of Rs. 79,11,298/- as income from other sources and after providing dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax at source has been rejected on the ground that the interest amount received under section 28 of the Act of 1894 is taxable as per the provisions of section 57(iv) read with section 56(2)(viii) and section 145A(b) of the I.T. Act. Section 145A of the I.T. bears the heading "Method of accounting in certain cases". Section 145A(b) provides that notwithstanding anything to the contrary contained in section 145, interest received by an assessee on compensation or on enhanced compensation, as the case may be, shall be deemed to be the income of the year in which it is received. Clause (viii) of subsection (2) of section 56 of the I.T. Act provides for income by way 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 receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt after considering the scheme of section 45(5) of the I.T. Act has categorically held that payment made under section 28 of the Act of 1894 is enhanced compensation, as a necessary corollary, therefore, the contention that payment made under section 28 of the Act of 1894 is interest as envisaged under section 145A of the I.T. Act and has to be treated as income from other sources, deserves to be rejected. 11. It has been vehemently contended on behalf of the first respondent that the above decision has been rendered prior to the substitution of section 145A of the I.T. Act by Finance (No. 2) Act, 2009 with effect from 1st April, 2010, and hence, would have no applicability to the facts of the present case. The scope and effect of the substitution (with effect from 1st April, 2010) of section 145A, as also amendment made in section 56(2) by Act 33 of 2009 have been elaborated in the following portion of the departmental circular No. 5/2010, dated 3.6.2010, as follows: "Rationalizing the provisions for taxation of interest received on delayed compensation or on enhanced compensation.- 46.1 The existing provisions of Income Tax Act, 1961, provide that income chargeable under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court has chosen to place reliance upon various decisions of the Supreme Court rendered during the period 1964 to 1997 and has chosen to brush aside the subsequent decision of the Supreme Court in Ghanshyam (HUF)'s case (supra) which is directly on the issue by observing that the assessee cannot derive any benefit from the observations made by the Supreme Court as quoted therein. In Hari Kishan's case (supra), the Punjab and Haryana High Court has placed reliance upon its earlier decision in the case of Manjet Singh (HUF) Karta Manjeet Singh (supra). In Bir Singh (HUF)'s case (supra), the Punjab and Haryana High Court has held that under the scheme of the 1894 Act, interest under section 34 is part of compensation while interest under section 28 is not the interest which partakes the character of compensation and is treated differently. In the opinion of this court, the above view of the Punjab and Haryana High Court is contrary to what has been held in the decision of the Supreme Court in Ghanshyam (HUF)'s case (supra) wherein it has been held that interest under section 28 unlike interest under section 34 is an accretion to the value, hence it is a part of enhanc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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