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2018 (10) TMI 1754 - AT - Income TaxTaxability of the interest received on enhanced compensation u/s 28 of the Land Acquisition Act, 1894 - income from other sources - year of taxability of the interest income - assessee treated the interest on the enhanced compensation as part of the compensation liable to be taxed under section 45(5) of the income Tax Act and the transferred land being rural agricultural land exempt from capital Gains tax u/s 10(37) - enhanced compensation alongwith interest thereupon u/s 28 of the Land Acquisition Act, 1894 was received by the assessee - assessee treated the interest on the enhanced compensation as part of the compensation liable to be taxed under section 45(5) of the income and the transferred land being rural agricultural land exempt from capital Gains tax u/s 10(37) - HELD THAT:- As decided in Manjeet Singh(HUF) [2015 (12) TMI 1123 - PUNJAB & HARYANA HIGH COURT] which had dealt with the decisions of the Hon'ble Apex Court in Ghanshyam, HUF [2009 (7) TMI 12 - SUPREME COURT] holding the same to be in the nature of compensation taxable as such. The law of the land and has to be followed by all lower authorities. In view of the above, we hold that 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 - Decided in favour of assessee Revision u/s 263 - Since the adjudication relied on the judgments of the highest Court of the Country and also the judgments of jurisdictional High Courts the the action proposed by the CIT(Panchkula) under Section 263 is hereby quashed as at this juncture the order of the Assessing Officer cannot be termed as erroneous in so far as it is prejudicial to the interest of the Revenue. Regarding the taxes already paid no directions are being passed with reference to the issue of refund to the assessee. The Revenue may consider for appropriate relief in accordance with the provisions of Income Tax Act,1961 on receipt of application from the assessee in this regard.
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