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TMI Blog2025 (3) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue of 'Refund Claim and Winnings from Lottery/ Crossword Puzzle/Horse Races'. The assessment was completed on 12.12.2020 by the Assessing Officer u/s 143(3) r.w.s. 143(3A) & 143(3B) of the Income Tax Act, 1961 (Act for short) accepting the returned income filed by the Assessee. 3.1. Later on perusal of the assessment record by the PCIT, it is noticed that the Assessee received interest on enhanced compensation to the tune of Rs. 51,18,600/- u/s 28 of the Land Acquisition Act, 1894. The assessment records revealed that the Assessing Officer did not conduct inquiry on the issues on the basis of which case was selected for scrutiny on the specific issues. The Ld. PCIT in exercise of the power conferred in the Section 263 of the Act vide order 16/12/2022, set aside the assessment order dated 12.12.2020 and directed the Assessing Officer to pass a fresh assessment order and directed to re-compute the Assessee's income after making further enquiries. Aggrieved by the Order of the PCIT dated 16/12/2022, the Assessee preferred the present Appeal on the grounds mentioned above. 4. None appeared for the Assessee, at the time of hearing. On verifying the order sheet, it is found that on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduced as under:- "18. The solitary question which arises for our consideration in the present appeal is whether the interest on enhanced compensation received by the respondent-assessee partakes the character of income from other sources under Section 56(2)(viii) of the Act, to be considered as separable from the enhanced compensation. 19. At the outset, it is significant to refer to Sections 28 and 34 of the Act of 1894, which deal with the payment of interest on compensation, and read as under:- "28. Collector may be directed to pay interest on excess compensation:- 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 may direct that the Collector shall pay interest on such excess at the rate of [nine per centum] per annum from the date on which he took possession of the land to the date of payment of such excess into Court."- *** "34. Payment of interest. When the amount of such compensation is not paid or deposited on or before taking possession of the land, the Collector shall pay the amount awarded with interest thereon at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 56 of the Act was inserted and the same is extracted hereunder as:- "56. Income from other sources.-- *** (2) In particular and without prejudice to the generality of the provisions of sub-section (1), the following incomes shall be chargeable to income tax under the head "Income from other sources", namely:-- *** [(viii) income by way of interest received on compensation or on enhanced compensation referred to in [sub-section (1) of Section 145- B].]" 23. For the sake of clarity, Section 145-B of the Act is reproduced as under:- "[145-B. Taxability of certain income.--(1) Notwithstanding anything to the contrary contained in Section 145, the interest received by an assessee on any compensation or on enhanced compensation, as the case may be, shall be deemed to be the income of the previous year in which it is received. (2) Any claim for escalation of price in a contract or export incentives shall be deemed to be the income of the previous year in which reasonable certainty of its realisation is achieved. (3) The income referred to in sub-clause (xviii) of clause (24) of Section 2 shall be deemed to be the income of the previous year in which it is received, if not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upplied] 27. The decision in Sham Lal Narula (supra) was subsequently followed by the Hon'ble Supreme Court in the case of Bikram Singh v. Land Acquisition Collector [(1997) 10 SCC 243], wherein, it was held that interest under Section 28 of the Act of 1894 was in the nature of a revenue receipt and hence, the same was considered to be taxable. The relevant paragraphs of the said decision read as under:- "8. The controversy is no longer res integra. This question was considered elaborately by this Court in Sham Lal Narula (Dr) v. CIT [(1964) 53 ITR 151 : AIR 1964 SC 1878]. Therein, K. Subba Rao, J., as he then was, considered the earlier case-law on the concept of "interest" laid down by the Privy Council and all other cases and had held at p. 158 as under: "In a case where title passes to the State, the statutory interest provided thereafter can only be regarded either as representing the profit which the owner of the land might have made if he had the use of the money or the loss he suffered because he had not that use. In no sense of the term can it be described as damages or compensation for the owner's right to retain possession, for he has no right to retain possess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion reads thus: "57. Deductions.--The income chargeable under the head 'Income from other sources' shall be computed after making the following deductions, namely : . .. (iv) in the case of income of the nature referred to in clause (viii) of sub-section (2) of section 56, a deduction of a sum equal to fifty per cent. of such income and no deduction shall be allowed under any other clause of this section." 21. The Assessing Officer in I. T. A. No. 132 of 2018 where the assessee had received Rs. 11,30,561 as interest income, held that the interest payment received on compensation/enhanced compensation to the tune of Rs. 5,65,280 (50 per cent. of Rs. 11,30,561) is taxable as income from other sources as per provisions of sections 56(2)(viii) read with 57(iv) and section 145A(b) of the Act for the assessment year 2010-11. The Commissioner of Income-tax (Appeals) and the Tribunal had upheld the order of the Assessing Officer in that regard. 22. No illegality or perversity could be pointed out by learned counsel for the assessee in the concurrent findings of fact recorded by the authorities below which may warrant interference by this court. No question of law, much le ..... X X X X Extracts X X X X X X X X Extracts X X X X
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