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TMI Blog2010 (12) TMI 548X X X X Extracts X X X X X X X X Extracts X X X X ..... quantum of additional compensation is pending before a Court and had not attained finality, interest on enhanced compensation would not accrue and could be subjected to tax only when the issue of enhanced compensation is finally settled? 2. Whether in law it is still an open question that the compensation and/or enhanced compensation and interest thereon would be taxable only when it attained finality irrespective of the remedial provisions introduced in the Act from 1st April, 2004 by insertion of sub-cl. (c) of sub-s. (5) of s. 45 r/w sub-s. (16) of s. 155 and there is no more doubt that If the compensation and/or enhanced compensation is subsequently reduced, it would be assessed accordingly under these provisions?" 3. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . yr. 2002-03 the enhanced compensation along with interest was received by the assessee and the substantive assessment was made by the AO in this asst. yr. 2002-03 with a protective assessment of the same amount proportionately allocated in the asst. yrs. 1999-2000, 2000-01 and 2001-02 respectively. We, therefore, proceed to take up the appeal pertaining to the asst. yr. 2002-03 first. 5. In the assessment order dt. 27th Nov., 2006 passed by the AO under s. 144/147 of the Act, the AO has stated that the assessee has received the following amount of enhanced compensation along with interest thereupon during the year under consideration:- "Date Compensation Interest Total 8-8-2001 76,49,585 18,02,905 94,52,490 28-3-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fered 50 per cent thereof amounting to Rs. 9,01,453 to tax. Similarly, the compensation amount of Rs. 1,87,06,790 received in LAC No. 183 of 2000 was not offered to tax and only 50 per cent of interest of Rs. 94,40,522, which comes to Rs. 47,20,261 was only offered to tax. Thus, the total income shown by the assessee was of Rs. 56,21,714. The assessee also contended that out of the total compensation of Rs. 1,87,06,790 under LAC No. 183 of 2000, 50 per cent of the amount represented agricultural income being compensation received on account of trees standing upon the land. In the return filed by the assessee in response to notice under s. 148 of the Act, the assessee had declared the same income as shown in the original return. However, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring trees yielded agricultural income, which is not taxable and as such, there cannot be any presumption there being given compensation as capital asset by the HUDA. This fact was confronted to the AO on 13th March, 2008 by the CIT(A). The CIT(A) was then satisfied with the nature of trees being agricultural source in view of the LAC No. 183 of 2000. He, therefore, held that the cultivation of fruit-bearing trees amounted to agricultural operation and income therefrom is agricultural income, this should not be taken as compensation for the purpose of s. 45(5) of the Act and it should be accordingly taken for rate purposes only. The assessee had taken the sum of Rs. 93,53,395 for rate purposes. This issue regarding assessee's claim of agri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the year of receipt and this is reinforced by insertion of cl. (c). Compensation, including enhanced compensation/consideration under the Land Acquisition Act, 1894, is based on the full value of the property on the date of the notification under s. 4 of that Act. When the Court/Tribunal directs payment of enhanced compensation under s. 23(1A) or s. 23(2) or under s. 28, it is on the basis that the award of the Collector or the Court, under reference, has not compensated the owner for the full value of the property as on the date of the notification. Interest is different from compensation. Interest paid on the excess amount under s. 28 of the Land Acquisition Act, 1894, depends upon a claim made by the person whose land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest on such delay being on accrual basis. In the present case the assessee has received interest on enhanced value of land and it is covered by s. 28 of the Act, and therefore, interest amount is also to be assessed in the asst. yr. 2002-03 in which the amount has been received. The decision of Hon'ble Punjab and Haryana High Court in the case of Prem Singh (supra) relied upon by the CIT(A) would, therefore, be no longer good in the light of the decision of the Hon'ble Supreme Court in the case of Ghanshyam (HUF) (supra). We, therefore, hold that the AO was justified in assessing the amount of enhanced compensation along with interest thereupon in the year in which it is received. With this finding, we restore the matter back to the file o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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