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2021 (4) TMI 862 - AT - Income TaxAccrual of income - interest received on enhanced Compensation - assessee is agriculturist his land was acquired by the Government and he received total compensation from land acquisition officer Panchkula which includes interest on enhanced compensation - assessee claimed exemption under Section 10(37) - HELD THAT:- From the perusal of the order of the CIT(A), it can be seen that the CIT(A) has not given a separate finding as to why the Assessing Officer is justified in making an addition. The capital receipt unless specifically taxable u/s. 45 under the head capital gain, in principle, is outside the scope of income chargeable to tax and cannot be taxed as income unless it is in the nature of Revenue receipt or specifically brought within the ambit of income by way of specific provision of the Income Tax Act. Thus, the interest received on compensation/enhanced compensation to the assessee is nothing but a capital receipt and the addition is against the law. This issue has been decided by the Hon'ble Apex Court in case of Union of India Vs. Hari Singh[2017 (11) TMI 923 - SUPREME COURT] wherein it is held that on agricultural Land no tax is payable when the compensation/enhanced compensation is received by the assessee as the land was agricultural land. The compensation was received in respect of agricultural land belonging to the assessee which had been acquired by the government. - Decided in favour of assessee.
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