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2024 (4) TMI 408 - HC - Income TaxCharacterization of receipt - interest received by the assessee under Section 28 and 34 of the Land Acquisition Act, 1894 - as per AO receipt of interest must be treated as income chargeable to tax u/s 56(2)(viii) of the Act and therefore, it allowed the statutory deduction of 50% of the interest income u/s 57(iv) - whether the interest on enhanced compensation received by the respondent-assessee partakes the character of income from other sources under Section 56(2)(viii) of the Act, to be considered as separable from the enhanced compensation? HELD THAT:- A conjoint reading of the provisions i.e., Sections 56(2)(viii) and 145-B of the Act vividly stipulate that the income received by way of interest on compensation or on enhanced compensation shall be chargeable to tax under the head "income from other sources". Therefore, since the position with respect to the imposition of tax on interest on compensation or enhanced compensation, as it exists today, came into being only in the year 2010, the conclusions drawn from the decision in Ghanshyam [2009 (7) TMI 12 - SUPREME COURT] which was passed in the year 2009, are unsustainable in the facts of the present case. Much reliance has been placed by the ITAT upon the decision of the Hon’ble Supreme Court in the case of CIT v. Govindbhai Mamaiya [2014 (9) TMI 587 - SUPREME COURT] which relies upon the case of Ghanshyam (supra) to hold that the interest on enhanced compensation received under Section 28 of the Act of 1894 is exigible to tax on receipt basis. However, a deeper analysis of the decision in Govindbhai Mamaiya (supra) would show that it does not deal with any issue pertaining to the change in the taxability, put in place through the concerned amendment of 2010. Therefore, the said decision lacks any applicability in the facts and circumstances of the present case. Notably, a three-Judges Bench of the Hon’ble Supreme Court in the case of Sham Lal Narula (Dr.) [1964 (4) TMI 10 - SUPREME COURT] while considering the interest under Section 28 of the Act of 1894 to be analogous to the interest under Section 34 of the Act, took the view that the same did not form part of compensation We affirm the concurrent findings of the AO and CIT(A) and find that the view taken by the ITAT is unsustainable, as the same is based on an incorrect appreciation of law. The 2010 amendment was a conscious departure by the Legislature from the earlier position and the said departure holds good law, as on date. There is no question with respect to the vires of the amendment before us or regarding any ambiguity in the language of the amendment. The only concern is regarding the enunciation of the applicable law and we hold the same to unequivocally mean that interest, whether on compensation or on enhanced compensation, shall be considered as income from other sources and shall be exigible to income tax. We, accordingly, answer the substantial question of law which has arisen in the instant appeal in affirmative and in favour of the Revenue.
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