TMI Blog2017 (1) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... from other sources . 2. Briefly stated facts are that assessee is an individual and her agricultural land admeasuring 37.23 acres situated at Patancheru Village, Medak District was compulsorily acquired by the APIIC Limited for the purpose of Industrial Park in 1976-77. The said land was acquired by the Land Acquisition Officer under the Land Acquisition Act, 1894. The Land Acquisition Officer initially ordered compensation and an amount of ₹ 12,96,950/- was paid. Assessee approached the Additional District Judge, Sangareddy, who granted a decree fixing the rate at 19 per sq. yd., vide decree dt. 31-12-1979. Not satisfied with the award, assessee approached the Hon ble High Court for enhancement of compensation. The Hon ble High Court of A.P. vide Appeal No. 1054/80 dt. 18-04-2003 granted following enhancement of compensation allowed by the Additional District Judge, Sangareddy: i. Market value of the land was determined at 19 per sq. yd; ii. Assessee was allowed statutory benefits like solatium etc., and granted interest at 4% from the date of notification till 30-04-1982 and thereafter @ 9%; iii. Assessee was eligible for additional market value u/s. 23(1A) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also made an alternate contention that an amount of ₹ 99,11,460/- was the amount receivable as per the order of the Hon ble High Court as on that date, hence that amount has already accrued prior to the amendment that was brought. Therefore, following the principles laid down by the Hon ble Supreme Court in the case Ramabai Vs. CIT [181 ITR 400], the accrued amount was taxable in earlier years. The same cannot be brought to tax in the year under consideration. This contention was also negatived by the AO stating that the Act was amended to avoid the hardship to assessees and accordingly, entire amount was taxable in the year of receipt. 3. Aggrieved by the order of AO, the matter was carried to the Ld. CIT(A), who after considering the submissions of assessee and the facts, however, rejected the contentions stating as under: 4.4. However, the assessee s contentions are not acceptable as it is seen from record that the compensation awarded to the assessee includes interest component of ₹ 1,45,03,226/-. I have also perused the High Court order dt. 18.04.2003 in appeal no. 1054 of 1980 where in it is clearly held that the claimants apart from other statuary benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The Hon'ble CIT(A) ought to have observed that the interest received is in respect of compensation for acquiring agriculture land and therefore the same is exempt u/s. 10(37) of the IT Act. 3. The Hon'ble CIT(A) ought to have observed that the interest on compensation was paid u/s. 28 of the Land Acquisition Act and therefore the same would form part of the compensation and cannot be assessed as income from other sources u/s. 56 of the IT Act. 4. The Hon'ble CIT(A) ought to have observed that the payment made by the authorities for the delay in payment of compensation also form part of compensation and can never be termed as interest and hence the same is beyond the definition of section 2(28A) of the IT Act. 5. The Hon'ble CIT(A) ought to have observed that in the given facts and circumstances of the case section 145A or 56 would not have any application. 6. The Hon'ble CIT(A) ought to have observed that even for argument it is agreed that the interest on compensation was liable for tax the same should be brought to tax on accrual basis in the light of preamendment provisions i.e. provisions standing earlier to 01.04.2010 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposited. Interest under section 28 would include within its ambit both the market valuation and the solatium and is part of the amount of compensation whereas interest under section 34 is only for delay in making payment after the compensation amount is determined. Interest under section 28 is a part of the enhanced value of the land, which is not the case in the matter of payment of interest under section 34 . 7.1. Accordingly, the interest received u/s. 28 of The Land Acquisition Act would be included within its ambit of both the market value and solatium as part of amount of compensation. 8. The argument of the Revenue is that consequent to the amendment brought to the Act w.e.f. 01-04-2010, the interest received is taxable in the year of receipt. There is no dispute that the interest received was made taxable in the year of receipt u/s. 145A rws 56(2)(vii). But that can only apply to interest u/s. 34 of the Land Acquisition Act but not to the interest u/s. 28 under the Land Acquisition Act which becomes part of Compensation. The principles laid down by the Hon ble Supreme Court in the case of CIT Vs. Ghanshyam HUF [315 ITR 1] (supra) have not been amended. The same con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 145A which is chargeable as income from other sources. The first respondent Income Tax Officer seeks to tax the interest received by the petitioner under section 28 of the Act of 1894 as income from other sources u/s 56(2)(viii) read with section 145A(b). In the opinion of this court, in the light of the law laid down by the SC in the case of Ghanshyam (HUF), the interest received under section 28 of the Act of 1894 would not fall within the ambit of the expression interest as envisaged under section 145A(b) inasmuch as, the SC in the above decision has held that interest u/s 28 of the Act of 1894 is not in the nature of interest but is an accretion to the compensation and, therefore, forms part of the compensation. Thus, it is clear that the SC after considering the scheme of section 45(5) has categorically held that payment made under section 28 of the Act of 1894 is enhanced compensation, as a necessary corollary, therefore, the contention that payment made under section 28 of the Act of 1894 is interest as envisaged under section 145A of the I.T. Act and has to be treated as income from other sources, deserves to be rejected; it has been vehemently contended on behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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