9911796707
TMI Blog2025 (2) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... , unjustified and unreasonable. Whereas I had also presented before him the several orders passed by the ITAT, in which clearly written that compensation & enhanced compensation on compulsory acquisition of agriculture land u/s 28 of Land Acquisition Act, 1894 is exempt from tax. The addition of Rs. 17,20,330/- (50% of Rs. 34,40,660/) made on this account deserves to be deleted. 2. On the basis of Facts & circumstances of the case there is no legal warrant or valid justification on the part of learned the PCIT to treat the said interest of Rs. 34,40,660/- granted U/s 28 of Land Acquisition Act, 1894 as income from other source U/s 56 of the Act and allow deduction U/s 57 of the Act i.e. 50% of the said amount and not allowing the said amount as exempt u/s 10(37) of the Act as claimed in the return. The claim of the assesse deserve to be allowed." 4. The ld DR assisted the Bench with the facts of the case. It is submitted that the assessee had not filed any return of income for AY 2015-16. On the basis of AIMS information that the assessee had received interest of Rs 46,27,628/-, the AO issued notice u/s 148 in response to which the assessee filed a return declaring income of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest on enhanced compensation awarded by the Court. The sections 28 and 34 of the Land Acquisition Act read as under: - "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 Court." "34. Payment of interest.− When the amount of such compensation is not paid or deposited on or before taking possession of the land, the Collector shall pay the amount awarded with interest thereon at the rate of nine per centum per annum from the time of so taking possession until it shall have been so paid or deposited. Provided that if such compensation or any part thereof is not paid or deposited within a period of one year from the date on which possession is taken, interest at the rate of fifteen per centum per annum shall be payable from the date of expiry of the said period o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest under section 34 of the 1894 Act, could be treated as part of the compensation under section 45(5) of the 1961 Act?" The Hon'ble Court answered in affirmative that the "interest under Section 28 unlike interest under Section 34 is an accretion to the value, hence it is a part of enhanced compensation or consideration which is not the case with interest under Section 34 of the 1894 Act. So also additional amount under Section 23(1A) and solatium under Section 23(2) of the 1961 Act forms part of enhanced compensation under Section 45(5)(b) of the 1961 Act". 12. We are of the considered opinion that the decision of Ghanshyam HUF was dealing with the taxability of interest on enhanced compensation under section 28 of the Land Acquisition Act under capital gains under section 45(5)(b) of the Act only, before the amendment in the provisions of section 56(2)(viii) and 145B(1) of the I T Act with effect from 01.04.2010. In this case, the hon'ble Supreme Court had no occasion to deal with the issue of taxability of interest received under section 28 of LAA as 'income from other sources' especially after the amended provision of section 56(2)(viii) and 145B(1) of the I T Act with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Inderjit Singh Sodhi (HUF) reported in [2024] 423 ITR 13 (Delhi), and the Punjab and Haryana High Court in the case of Mahender Pal Narang [2021] 415 ITR 215 (P & H) have deliberated on the issue at hand. It was held by both the Delhi High Court and the Punjab and Haryana High Court that the decision of the hon'ble Supreme Court in the case of CIT Vs. Ghanshyam Dass HUF (supra) pertained to the law which existed prior to the amendment in section 56(2)(viii) and 145B(1) of the Income Tax Act. 15. The hon'ble Delhi High Court in the case of Principal Commissioner of Income-tax 10 v. Inderjit Singh Sodhi (HUF) reported in [2024] 423 ITR 13 (Delhi), deliberated at length on the issue at hand as follows: "22. However, vide Finance (No.2) Act, 2009 (with effect from 01.10.2010), Clause (viii) of sub-Section 2 to Section 56 of the Act was inserted and the same is extracted hereunder as:- "56. Income from other sources.- *** (2) In particular and without prejudice to the generality of the provisions of sub-section (1), the following incomes shall be chargeable to income tax under the head "Income from other sources", namely:- *** [(viii) income by way of interest received o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm part of compensation. The relevant extract of the said decision is culled out as under:- "9. --- As we have pointed out, earlier, as soon as the Collector has taken possession of the land either before or after the award the title absolutely vests in the Government and thereafter the owner of the land so acquired ceases to have any title or right of possession to the land acquired. Under the award he gets compensation for both the rights. Therefore, the interest awarded under Section 28 of the Act, just like under Section 34 thereof, cannot be a compensation or damages for the loss of the right to retain possession but only compensation payable by the State for keeping back the amount payable to the owner. ---" [Emphasis supplied] 27. The decision in Sham Lal Narula (supra) was subsequently followed by the Hon'ble Supreme Court in the case of Bikram Singh v. Land Acquisition Collector [(1997) 10 SCC 243], wherein, it was held that interest under Section 28 of the Act of 1894 was in the nature of a revenue receipt and hence, the same was considered to be taxable. The relevant paragraphs of the said decision read as under:- "8. The controversy is no longer res integ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a), the High Court of Punjab and Haryana, while enunciating the effect of Section 145A(b) and Section 56(2)(viii) of the Act, has held as under:- "19. The cumulative effect of section 145A(b) and section 56(2)(viii) would be that any interest received on compensation or on enhanced compensation shall be taxable under the head "Income from other sources" in the year of receipt. 20. However, by section 27 of the 2009 Act, a new clause (iv) in section 57 has been inserted with effect from April 1, 2010 which lays down that in the case of income of the nature referred to in section 56(2)(viii), a deduction of a sum equal to 50 per cent. of such income would be allowable thereunder and no deduction would be allowed under any other clause of section 57. The said provision reads thus: "57. Deductions.-The income chargeable under the head 'Income from other sources' shall be computed after making the following deductions, namely : . . . (iv) in the case of income of the nature referred to in clause (viii) of sub-section (2) of section 56, a deduction of a sum equal to fifty per cent. of such income and no deduction shall be allowed under any other clause of this section." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra) has been quoted with approval by the Delhi High Court in the case of Inderjit Sodhi(supra). We also note that the decision in the case of Mahender Pal Narang and Puneet Singh is binding in the case of the assessee as he is assessed in the territorial and subjective jurisdiction of the Hon'ble Punjab & Haryana High Court. 17. In identical facts, the ITAT Delhi Bench in the case of Veena Shah for A.Y. 2018-19 reported in (2024) 165 taxmann.com 51(Delhi- Trib.), and ITAT Delhi Bench in the case of Jagjit Singh Kataria for A.Y. 2019-20 in ITA 1245/Del/2024 upheld the jurisdiction of the PCIT u/s 263 for directing the AO to tax the interest on enhanced compensation u/s 56(2)(viii) and 57(iv) of the Act. 18. From the perusal of the facts and circumstances of the case and the position of law as on date, we are of the considered view that the language in section 56(2)(viii) and 145B(1) are plain, simple and unambiguous and that the correct legal position is that the interest of Rs. 1,05,75,310/- received during the year on enhanced compensation under section 28 of the Land Acquisition Act, 1894 is exigible to tax u/s 56(2)(viii) r.w.s 145B(1). The assessee's claim of the same as exem ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
