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2023 (8) TMI 140 - AT - Income TaxAddition made for interest received on enhanced compensation on account of compulsorily acquisition of Agriculture land - As argued it is only an accretion to the value of land and not in the nature of interest and the same is liable to be treated as per the provision of section 45(5) r.w.s. 10(37) and if the Original compensation is Taxable then the same will also be taxable and if original compensation is exempt u/s 10(37) on account of compulsorily acquisition of agriculture Land then the same will also be exempt because this interest has been awarded by the Apex court under the provision of section 28 of the Compulsorily Land acquisition act - AO allowed 50% of deduction on total interest received, u/s 28 of enhanced compensation by following the provisions of section 57(iv) of the Act and treated the remaining 50% as ‘Income from other sources.’ as confirmed by CIT(A) HELD THAT:- As the land of the assessee was acquired under the old Land Acquisition Act, but, the intention of the legislature is also clear as per the said Circular wherein the compensation received by the assessee u/s 96 of the RFCTLAAR Act has to be held as exempt from levy of income-tax. CIT(A) was not correct in upholding the assessment order wherein the AO has granted part relief to the assessee u/s 57(iv) of the Act and not applying the provisions of section 10(37) of the Act on the interest received by the assessee on enhanced compensation. Therefore, the orders of the authorities below are set aside being not sustainable and not in accordance with the provisions of the Act. Therefore, the grounds of appeal of the assessee are allowed and the AO is directed to allow deduction u/s 10(37) of the Act to the assessee on the entire amount of interest received on enhanced compensation u/s 28 of the Act. Decided in favour of assessee.
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