TMI Blog2018 (9) TMI 1468X X X X Extracts X X X X X X X X Extracts X X X X ..... RA KAMBLE, JM This appeal is filed by the assessee against the order dated 4/9/2017 passed by CIT (A)-2, Gurgaon, for Assessment Year 2013-14. 2. The grounds of appeal are as under:- 1. The Ld. CIT(A) 2 Gurugram has erred in law and on facts in rejecting the appeal of the assessee against order passed by the Ld. A.O. 2. The Ld.CIT(A) has erred in deciding the issue whether interest received u/s 28 of the L.A Act in case of compulsory acquisition of agricultural land is in the nature of interest income or it is a part of enhanced compensation. 3. The Ld.CIT(A) has erred in treating the receipt u/s 28 of the L.A Act as interest income taxable under I.T Act in contravention of the judgment of Hon'ble Supreme Court in case of Union of India ors Vs. Hari Singh Ors in Civil Appeal No. 15041 of 2017. 4. The Ld.CIT(A) has erred in confirming the addition of ₹ 47,84,031/- which may kindly be deleted. 5. The Ld.CIT(A) has erred in deciding the appeal on the basis of service of hearing notices issued in the name of dead person. 3. Return of income declaring income of ₹ 1,99,500/- along with refund of ₹ 9,56,810/- was filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al submissions of the ld. DR, who relied upon the order of the AO. We have considered the submissions of the ld. DR. It is not disputed by the AO that the land acquired was agricultural land and the conditions laid down u/s. 10(37)(i) to (iv) are applicable to the land which is in question which was compulsorily acquired. It is also not in dispute that the interest in question was interest awarded u/s. 28 of the Land Acquisition Act, 1894. In the given circumstances, we are of the view that the decision of the Hon'ble Gujarat High Court in the case of Movaliya Bhikhubhai Balabhai (supra) will be applicable to the facts of the present case. 12. In Movaliya Bhikhubhai Balabhai v. Income-tax Officer-TDS-1-Surat [2016] 70 taxmann.com 45 (Gujarat), the Hon'ble Gujarat High Court had to deal with the nature of the interest awarded u/s.28 of the Land Acquisition Act, 1894. The facts of the case before the Hon'ble Gujarat High Court was that the petitioner's agricultural lands came to be acquired under the provisions of the Act of 1894 for the public purpose of the Ozat-2 Irrigation Scheme. The award passed by the Collector came to be challenged by the petitioner befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 145A of the I.T. bears the heading Method of accounting in certain cases . Section 145A(b) provides that notwithstanding anything to the contrary contained in section 145, interest received by an assessee on compensation or on enhanced compensation, as the case may be, shall be deemed to be the income of the year in which it is received. Clause (viii) of sub-section (2) of section 56 of the I.T. Act provides for income by way of interest received on compensation or on enhanced compensation referred to in clause (b) of section 145A which is chargeable as income from other sources. The first respondent Income Tax Officer seeks to tax the interest received by the ITA Nos. 1747 1750/Bang/2017 petitioner under section 28 of the Act of 1894 as income from other sources under section 56(2)(viii) read with section 145A(b) of the I.T. Act. In the opinion of this court, in the light of the law laid down by the Supreme Court in the case of Ghanshyam (HUF) (supra), 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) of the I.T. Act, inasmuch as, the Supreme Court in the above deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of interest received on compensation or enhanced compensation referred to in clause (b) of section 145A shall be assessed as income from other sources in the year in which it is received. 46.4 Applicability. - This amendment has been made applicable with effect from 1st April, 2010, and it will accordingly apply in relation to assessment year 2010-11 and subsequent assessment years. Thus, the substitution of section 145A by Finance (No. 2) Act, 2009 was not in connection with the decision of the Supreme Court in Ghanshyam (HUF)'s case (supra) but was brought in to mitigate the hardship caused to the assessee on account of the decision of the Supreme Court in Rama Bai v. CIT[1990] 181 ITR 400/[1991] 54 Taxman 496 whereby it was held that arrears of interest computed on delayed or enhanced compensation shall be taxable on accrual basis. Therefore, when one reads the words interest received on compensation or enhanced compensation in section 145A of the I.T. Act, the same have to be construed in the manner interpreted by the Supreme Court in Ghanshyam (HUF)'s case (supra). ITA Nos. 1747 1750/Bang/2017 13. The Hon'ble Gujarat High Court finally c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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