TMI Blog2024 (4) TMI 880X X X X Extracts X X X X X X X X Extracts X X X X ..... itutional Court declares the same as ultra vires the Act (i.e., on a view that interest u/s. 28 of LAA is capital in nature), that would entitle the assessing authority to disregard the same. The Hon'ble Apex Court per it s Constitutional Bench decision in Punjab Distilling Industries Ltd. [ 1965 (2) TMI 6 - SUPREME COURT] explained that there is no conflict between a receipt being capital in nature and, by fiction of law, an income chargeable to tax under the Act. That is, the nature of the receipt as capital, which is the purport of the decision in Ghanshyam (HUF) (supra), would not per se preclude interest from being, at the same time, subject to tax. Further, per it s larger bench decision in Sham Lal Narula (Dr.)[ 1964 (4) TMI 10 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 10(37) of the Act and allowed in assessment for that year. While accepting the assessee s claim, like-wise, for the current year, the Assessing Officer (AO) brought to tax 50% of the interest, i.e., Rs. 56,79,625, u/s. 56(2)(viii) r/w s. 57(iv) of the Act vide assessment u/s. 143(3) dated 22.12.2017. The assessee moved the AO on 15.12.2018, seeking rectification of his assessment inasmuch as the interest allowed was allowed u/s. 28 of the Land Acquisition Act, 1894 (LAA), which stands held as part of the compensation by the Hon'ble Apex Court in CIT vs. Ghanshyam (HUF) [2009] 315 ITR 1 (SC), i.e., as part of the transfer consideration and, thus, exempt u/s. 10(37) of the Act. The same did not find favour with the AO, in whose opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be allowed under any other clause of this section. 3.2 The facts as narrated above are not in dispute. Further, even as there is nothing on record to exhibit that the interest received by the assessee falls u/s. 28 of LAA; the assessee on the last occasion the case came up for hearing relying on a certificate dated 13.12.2018 by the Office of the Special Tahsildar, Koyilandy for the purpose, which was found invalid as the same was after the date of assessment, so that it could not form part of the record. We refer thereto as this aspect is integral to the assessee s claim inasmuch as the Apex Court has held only interest u/s. 28, as opposed to interest u/s. 34, as part of compensation and, thus, capital in nature. This, however, would not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipt being capital in nature and, by fiction of law, an income chargeable to tax under the Act. That is, the nature of the receipt as capital, which is the purport of the decision in Ghanshyam (HUF) (supra), would not per se preclude interest from being, at the same time, subject to tax. Further, per it s larger bench decision in Sham Lal Narula (Dr.) v. CIT [1964] 53 ITR 151 (SC), not referred to in it s later decision in Ghanshyam (HUF)(supra), the Apex Court held the provisions of s. 28 and 34 of LAA as analogous, i.e., compensatory, and, thus, not part of compensation (pg. 156). The decision in P.V. Kurien v. CIT [1962] 46 ITR 288 (Ker), holding interest on enhanced compensation as capital in nature, was negated by the Hon ble Court ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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