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2019 (11) TMI 1101 - ITAT BANGALOREExemption u/s. 10(37) - Capital Gain on compulsory acquisition of urban Agricultural Land - Assessee contended that interest awarded u/s. 28 of the Land Acquisition Act, 1894 partook the character of compensation for land acquired and fell within the ambit of section 10(37) of the Act and to that exempt was exempt - assessee provisions of section 57(iv) r.w.s. 56(2)(viii) r.w.s. 145A(b) of the Act were not applicable for interest on enhanced compensation as interest was in the nature of enhanced compensation and not interest - HELD THAT:- As decided in MOVALIYA BHIKHUBHAI BALABHAI VERSUS INCOME TAX OFFICER - TDS - 1 - SURAT & 1 [2016 (5) TMI 488 - GUJARAT HIGH COURT] interest under section 28 of the Act of 1894 is an accretion to compensation and forms part of the compensation and, therefore, exigible to tax under section 45(5) of the Act. In coming to the aforesaid conclusion, the Hon’ble Gujarat High Court followed the decision of Hon’ble Supreme Court in the case of CIT v. Ghanshyam (HUF) [2009 (7) TMI 12 - SUPREME COURT] wherein it was held that interest under section 28 of the Act of 1894 is part of the amount of compensation whereas interest under section 34 thereof is only for delay in making payment after the compensation amount is determined. Interest under section 28 is a part of the enhanced value of the land which is not the case in the matter of payment of interest under section Assessee is entitled to exemption u/s. 10(37) of the Act on the interest received u/s. 28 of the Land Acquisition Act, 1894. We therefore direct the AO to allow the claim of the Assessee in this regard. Appeal of the Assessee is allowed.
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