Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram
Income Tax - Highlights / Catch Notes

Home Highlights July 2024 Year 2024 This

Interest received on enhanced compensation u/s 56(2)(viii) is ...


Interest on enhanced compensation is taxable as income from other sources, not capital gains.

Case Laws     Income Tax

July 10, 2024

Interest received on enhanced compensation u/s 56(2)(viii) is taxable as income from other sources and not under capital gains. The Punjab & Haryana High Court's decision in Mahender Pal Narang case that interest on compensation is taxable as income from other sources is binding on tax authorities in that jurisdiction. The PCIT rightly relied on this subsequent case law. The 2010 amendment to Sections 56(2)(viii) and 57(iv) was a conscious legislative departure from the earlier position. Interest, whether on compensation or enhanced compensation, is exigible to income tax under income from other sources as per the plain language of these provisions. The Supreme Court's decision in Sham Lal Narula that interest u/s 28 of Land Acquisition Act is not compensation still holds good. The Ghanshyam HUF case is not applicable after the 2010 amendment. The assessment order not following the jurisdictional High Court's binding precedent was erroneous and prejudicial to revenue.

View Source

 


 

You may also like:

  1. Correct head of income - interest received under Section 28 of the Land Acquisition Act, 1894 - part take the character of the compensation and would fall under the head...

  2. Interest received on compensation or enhanced compensation amount u/s 28 of the Land Acquisition Act - Such interest are part of compensation and either taxable as...

  3. Correct head of income - compensation received for vacating the flat - While the assessee argued for capital gain treatment, the Revenue contended it should be...

  4. Nature of income - Income from other sources - interest income received u/s. 28 of Land Acquisition Act, 1984 as taxable u/s 56(2)(viii) r.w.s. 145A(b) - Scope of...

  5. Characterization of receipt - interest received by the assessee u/s 28 and 34 of the Land Acquisition Act, 1894 - The Delhi High Court, in a case concerning the...

  6. Capital gain computation or Income from other sources - compensation received by the assessee on extinguishment of his right in property - transfer of asset u/s 2(47) -...

  7. Relinquishment of right before development - Right to sue surrendered in lieu of getting compensation money - capital gain or business income - the impugned compensation...

  8. Receipt of interest on enhanced compensation - Income from other sources - the interest received by the assessee u/s 28 of the Land Acquisition Act, 1984 on enhanced...

  9. Correct head of income - interest on FD and gain of sale of mutual funds invested out of unutilized borrowed fund - interest/gains earned by the assessee company during...

  10. Correct head of income - profit on sale of land /immovable property - business income or capital gain income - Correct head of income - profit on sale of land /immovable...

  11. Disallowance of the interest claimed by way of set of - income from other sources - establishment of nexus - interest income with interest expenses - to claim of set off...

  12. Character of income - accrual of income - The cumulative effect of Section 145A(b) and Section 56(2) (viii) would be that any interest received on compensation or on...

  13. Enhanced Compensation Interest on enhanced compensation - Waiver of Interest - assessee was entitled for waiver of interest till the date of receipt of enhanced...

  14. Income from other source OR Capital gain - Correct head of income - relinquishing the right acquired under the Agreement by the Assessee - income from relinquishing...

  15. Compensation received from the German publisher - Honorarium receipt - receipt represents compensation for the loss of a source of income - capital in nature - not taxable - HC

 

Quick Updates:Latest Updates