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2023 (1) TMI 1218 - AT - Income TaxCharacterisation of income - interest on the compensation received by the assessee -compensation exempt from tax u/s 10(37) or taxable u/s 56(2)(viii) - interest received on enhanced compensation treated as Income of the appellant - assessee was owner of agricultural land and the same was taken under compulsory acquisition by Government of Haryana - assessee claimed the entire enhanced compensation inclusive of interest as residual part of compulsory acquisition of agricultural land and claimed it as exempted u/s 10(37) - AO did not accept the contention of the assessee and held that the interest income as taxable income under the head “income from other sources u/s 56(2)(viii) - HELD THAT:- As decided in SHRI SATBIR, SHRI VED PAL, SHRI SHEO CHAND, SHRI KARAMBIR, SHRI DHARAM PAL AND SHRI CHANDGI RAM [2018 (7) TMI 1163 - ITAT CHANDIGARH] as per proposition laid down in Ghanshyam, HUF [2009 (7) TMI 12 - SUPREME COURT] remains and which having been laid down by the Hon'ble Apex Court is the law of the land and has to be followed by all lower authorities. The interest received by the assessee during the impugned year on the compulsory acquisition of its land u/s 28 of the Land Acquisition Act, is in the nature of compensation and not interest which is taxable under the head income from other sources u/s 56 of the Act as held by the authorities below. The compensation being exempt u/s 10(37) of the Act is not disputed. In view of the same the order passed by the CIT(Appeals) upholding the addition made by the AO on account of interest on enhanced compensation is, not sustainable. Appeals of the assessees are allowed.
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