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2019 (7) TMI 1928 - AT - Income TaxExemption u/s 10(37) - compensation and interest u/s. 28 of Land Acquisition Act on account of compulsory acquisition of land - AR submitted that the interest received u/s. 28 of the L.A. Act is capital in nature and hence is not taxable - HELD THAT:- The Co-ordinate Bench of Tribunal in the case of Dnyanoba Shajirao Jadhav [2018 (2) TMI 105 - ITAT PUNE] after considering the judgment of Commissioner of Income Tax Vs. Ghanshyam (HUF) [2009 (7) TMI 12 - SUPREME COURT] and Bikram Singh & Ors. Vs. Land Acquisition Collector & Ors. [1996 (9) TMI 6 - SUPREME COURT] held that the interest awarded u/s. 28 of the L.A. Act is in the nature of solatium and is integral part of compensation. The said interest is in the nature of capital receipt and hence not exigible to tax under the provisions of Income Tax Act. Whereas, interest received u/s. 34 of the L.A. Act is on account delayed payment of compensation and is a revenue receipt. Though the amount received u/s. 28 and u/s. 34 of the L.A. Act are termed as ‘interest’ however they stand on different pedestal in so far as the provisions of Income Tax Act are concerned. In the instant case, it is not disputed by the Revenue that the amount received by the assessee as interest is u/s. 28 of the L.A. Act. Therefore, entire amount is exempt from tax being capital receipt. We find merit in the contention of the assessee. Hence, the impugned order is set aside and the appeal of assessee is allowed.
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