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2011 (1) TMI 558 - HC - Income TaxAppeal to High Court - whether the interest on enhanced compensation is taxable in the hands of the assessee in the year of receipt - the similar issue came up for consideration before this Court (The Commissioner of Income Tax, Faridabad v. Bir Singh (HUF) Ballabgarh) (2010 -TMI - 205309 - PUNJAB & HARYANA HIGH COURT) wherein it was held that: (a) that 'income from Business or profession' and 'income from other sources' are ascertained on the basis of system of accountancy followed by the assessee; (b) where assessee is not maintaining books of accounts by adopting any specific method, it shall be treated to be cash system of accountancy; (c) the interest under Section 34 to be awarded by the Collector partakes the characters of compensation and is taxable in the year of receipt in view of Section 45(5)(b) of the Act; and (d) under cash system of accountancy, the element of interest awarded by the Court received on enhanced amount of compensation under Section 28 of the1894 Act falls for taxation under Section 56 as 'income from other sources' in the year of receipt - answered in favour of the revenue
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