TMI Blog2018 (10) TMI 865X X X X Extracts X X X X X X X X Extracts X X X X ..... ind no grounds to interfere with the impugned orders of the CIT(Appeals). Appeal of the revenue is dismissed. - ITA Nos. 05/Bang/2017 - - - Dated:- 12-10-2018 - Shri N.V. Vasudevan, Judicial Member And Shri A.K. Garodia, Accountant Member For the Appellant : Smt. Sree Nandini Das, Addl.CIT(DR)(ITAT), Bengaluru. For the Respondent : None ORDER Per N.V. Vasudevan, Judicial Member This is an appeal filed by the revenue against the order dated 10.10.2016 of the CIT(Appeals), Hubli relating to assessment year 2013-14. 2. The facts and circumstances under which this appeal arise for consideration are that the Assessee owned Agricultural lands at Anagawadi Village, Bilagi Taluk, Bagalkot District, which was compulsorily acquired by the Special Land Acquisition Officer [hereinafter referred to as the SLAO ], Bagalkot under the provisions of the Land Acquisition Act, 1894 vide Notification dated 13.9.1996. Aggrieved by the award as originally passed awarding compensation for the land acquired by the Govt., the Assessee had filed a reference for enhanced compensation before the Senior Civil Judge, Bilagi, who vide order dated 3.10.2012 awarded enhanced comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compensation. The AO, however, was of the view that interest on enhanced compensation was chargeable to tax under the provisions of section 57(iv) r.w.s. 56(2)(viii) r.w.s. 145A(b) of the Act. These provisions read as follows:- Deductions. 57. The income chargeable under the head Income from other sources shall be computed after making the following deductions, namely :- ( i ) .. (ii) ( iii ) . ( 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 . Income from other sources. 56. (1) Income of every kind which is not to be excluded from the total income under this Act shall be chargeable to income-tax under the head Income from other sources , if it is not chargeable to income-tax under any of the heads specified in section 14, items A to E. (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able for interest on enhanced compensation as such interest was in the nature of enhanced compensation and not interest. 8. Aggrieved by the aforesaid orders of the CIT(Appeals), the revenue has preferred the present appeals before the Tribunal. 9. We have heard the rival submissions of the ld. DR, who relied upon the order of the AO and reiterated the stand of the revenue as contained in the grounds of appeal filed before the Tribunal which is a reiteration of the stand taken by the AO in the order of Assessment. None appeared on behalf of the Assessee. We have however taken note of the decision of the Hon ble Gujarat High Court in the case of in Movaliya Bhikhubhai Balabhai v. Income-tax Officer-TDS-1-Surat [2016] 70 taxmann.com 45 (Guj) dealing with identical issue on exemption u/s.10(37) of the Act on interest on enhanced compensation awarded u/s.28 of the Land Acquisition Act, 1894. 10. We have considered the submissions of the learned DR. It is not disputed by the AO that the land acquired was agricultural land and the conditions laid down u/s. 10(37)(i) to (iv) are applicable to the land which is in question which was compulsorily acquired. It is also not in dispu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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] 182 Taxman 368, 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 34. On the applicability of the provisions of Sec.57(iv) read with 56(2)(viii) and Sec.145A(b) of the Act, the Hon ble Gujarat High Court held, :- 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 sub-section (2) of section 56 of the I.T. Act pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther the Hon'ble Supreme Court in the case of Smt. Rama Bai v. CIT (1990) 84 CTR (SC) 164 : (1990) 181 ITR 400 (SC) has held that arrears of interest computed on delayed or enhanced compensation shall be taxable on accrual basis. This has caused undue hardship to the taxpayers. 46.2 With a view to mitigate the hardship, section 145A is amended to provide that the interest received by an assessee on compensation or enhanced compensation shall be deemed to be his income for the year in which it was received, irrespective of the method of accounting followed by the assessee. 46.3 Further, clause (viii) is inserted in sub-section (2) of the section 56 so as to provide that income by way of interest received on compensation or enhanced compensation referred to in clause (b) of section 145A shall be assessed as income from other sources in the year in which it is received. 46.4 Applicability. - This amendment has been made applicable with effect from 1st April, 2010, and it will accordingly apply in relation to assessment year 2010-11 and subsequent assessment years. Thus, the substitution of section 145A by Finance (No. 2) Act, 2009 was not in connection ..... X X X X Extracts X X X X X X X X Extracts X X X X
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