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2023 (11) TMI 583 - ITAT SURATCharacterization of income - compensation, enhanced compensation, solatium and interest on such enhanced compensation on account of compulsory acquisition of assessee’s rural agricultural land by Government of Gujarat - Income from other sources or exempt income - HELD THAT:- Assessee was granted additional compensation and the statutory interest as per Section 28 of Land Acquisition Act, 1894. Hon’ble Apex Court in the case of Ghanshyam (HUF) [2009 (7) TMI 12 - SUPREME COURT] while considering the taxability of compensation on acquisition of asset held that interest paid on excess amount under section 28 of Land Acquisition Act, 1894 is a part of amount of compensation, however, interest under section 34 is only for delay in making payment after compensation is determined interest under section 28 of Land Acquisition Act, 1894 a part of enhanced value of land. Thus, this statutory interest awarded by Ld. Principal Senior Civil Judge, Gondal is the component of compensation. No interest under section 34 is awarded to assessee as per the judgment of Ld. Principal Senior Civil Judge, Gondal, therefore, the interest component is not taxable income. NFAC/Ld. CIT(A) restricted the allowed only 50% relief to assessee without any basis or reasoning. Coordinate bench of Delhi Tribunal in DCIT Vs Dinesh Sharma [2017 (4) TMI 1503 - ITAT DELHI] by following the decision of Hon’ble Apex Court in the case of Ghanshyam (supra) also held that where compensation received under compulsory acquisition of land was enhanced by Court on appeal of assessee land owner, interest received on enhanced compensation would be calculated under section 28 of land acquisition act and such interest would be exempted from tax. In view of factual and legal position, the ground raised by assessee is allowed.
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