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2015 (12) TMI 111 - HC - Income TaxTDS on enhanced compensation - whether the action of the respondents in charging TDS is not legal and valid as per the law laid down in Ghanshyam's case (2009 (7) TMI 12 - SUPREME COURT ) and the circular dated 13.4.2011 issued by the respondents - Held that:- we find merit in the stand taken by the respondent authorities. Admittedly, interest had been awarded to the petitioners on the enhanced compensation on account of acquisition of their land on which TDS was deducted by the respondent authorities. It needs to be noticed that the judgment in Ghanshyam's case (supra) was delivered on 16.7.2009 by the Apex Court. Thereafter, amendments were made to Sections 56 and 145A of the 1961 Act w.e.f 1.4.2010 thereby including income by way of interest received on compensation or on enhanced compensation to be income of the year in which it was received. In view of the said amendments, the interest component on the amount of compensation or enhanced compensation being revenue receipt was exigible to tax in the year of receipt irrespective of the method of accounting employed. Similarly, in Bir Singh's case (2010 (10) TMI 581 - PUNJAB & HARYANA HIGH COURT ), it was held that the interest awarded by court on enhanced compensation was interest under section 28 of the Act and chargeable to tax in the year of receipt. Also decided in Prem Singh's case [2010 (12) TMI 460 - PUNJAB AND HARYANA HIGH COURT ] the interest component on enhanced compensation under section 28 is liable to be taxed under Section 56 of the Act even when compensation is treated as agricultural income and is not covered by Section 45(c) of the Act. We thus answer the questions in favour of the revenue and modify our order dated 5.7.2010 accordingly. The amount of interest on enhanced compensation is held to be taxable in the year of receipt irrespective of pendency of proceedings against award of enhanced compensation - Decided against assessee.
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