DCIT Vs Ashok Sharma (ITAT Jaipur)
ITAT Jaipur held that interest received on enhanced compensation is nothing but compensation and hence for the interest received was eligible for exemption u/s. 10(37) of the Income Tax Act. Accordingly, appeal of department dismissed.
Facts- AO noted that the assessee has shown the exempt income of Rs. 8,86,73,959/- as interest on compensation fully exempt. It includes interest and claims exemption u/s. 10(37) of the Act. Record reveals that the assessee has received enhanced compensation of Rs. 5,60,56,954/- and interest u/s 28 of the Land Acquisition Act of Rs. 8,86,73,959/-. On this interest amount so received the assessee tax was deducted at source. While filling the ITR the assessee claimed that interest received by him on enhanced compensation is nothing but compensation and therefore, even for the interest received was eligible for exemption u/s. 10(37) of the Act.
However, AO considered that contention but was not found acceptable because there was change in the provision of section 145B(1) r.w.s. 56(2)(viii) of the Act interest received by the assessee on Compensation or Enhanced Compensation Amount is taken as an income in which year it has been received irrespective of the method of accounting followed by the assessee subject to deduction 50 % u/s. 57(iv) of the Act of such interest income referred to in clause (viii) of sub-section (2) of section 56 of the Act. Accordingly, a sum of Rs. 4,43,36,980/- which was the net interest income, after allowing deduction of 4,43,36,980/- u/s. 57(iv) of the Act was added to the total income of the assessee.
