TMI Blog2023 (11) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 benc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has received solatium u/s 28 of the Land Acquisition Act along with increased compensation the same is not an interest received as envisaged in Section 56 of the Income Tax Act 1961, and is not chargeable to tax, since, the same is received on compulsory acquisition of the Agricultural Land Situated in the remote area having a population of less than 10000. Section 56 Addition of Rs. 42,07,939 on account of solatium on increased compensation. Since the solatium/interest received along with increased compensation is in the nature of capital receipt is not covered by Section 56(2)(viii) hence is not taxable to Income Tax. Interest received on increased compensation partake the ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest on such enhanced compensation is not taxable as per the decision of Hon ble Apex Court in the case of CIT vs. Ghanshyam (HUF) 315 ITR 1, 182 Taxman 368 (SC). The Ld. AR for the assessee further submits that Ld.CIT(A) allowed 50% relief to assessee, which is without basis. 3. On the other hand, Ld. Sr-DR for the Revenue supported the order of NFAC/Ld. CIT(A) and submits that assessee has already got 50% relief. Though, ld CIT(A) allowed partial relief and the revenue has not filed due to low tax effect. The additional compensation, the interest received on additional compensation is liable to be taxed under section 56 of the Act under income from other sources . 4. I have considered the rival submissions of both the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest received from Central Bank of India is added to his income. Though, the assessee objected for making addition on part of compensation received against acquisition of such land. The Assessing Officer not accepted the contention of assessee and entire compensation included the interest thereon treated as income from other sources . 5. Aggrieved by the addition made by Assessing Officer the assessee filed appeal before Ld. CIT(A). Before Ld. CIT(A) assessee submitted that his agricultural land was acquired by State Government of Gujarat under the Land Acquisition Scheme notified during 1998 to 2000 for a Government project named Servo Irrigation Scheme. The assessee and other co-owners were not satisfied with the compensation and soug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther interested persons, with interest @ 9% for first year and @ 15% for remaining years, together with solatium @ 30% on additional amount from the date of notification issued till the date of award. I find that Ld. Principal Senior Civil Judge, Gondal while granting such interest in excess of sum which was awarded by Land Acquisition Collector, as per the Section 28 of Land Acquisition Act, 1894. For appreciation of facts, the provisions of Section 28 and under Section 34 of the Land Acquisition Act, 1894 is extracted below: Section 28 If the sum which, in the opinion of the court, the Collector ought to have awarded as compensation is in excess of the sum which the Collector did award as compensation, the award of the Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est as per Section 28 of Land Acquisition Act, 1894. I find that Hon ble Apex Court in the case of Ghanshyam (HUF) (supra) 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, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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