Mange Ram Vs PCIT (ITAT Delhi)
This appeal for Assessment Year 2017–18 arose against the order dated 04.12.2023 passed by the Principal Commissioner of Income Tax (PCIT), Faridabad under Section 147 read with Section 144 of the Income-tax Act, 1961. The sole substantive issue was the correctness of the action of the lower authorities in assessing the interest component received on land acquisition compensation under Section 28 of the Land Acquisition Act, 1894 as income from “other sources” by invoking Sections 57(iv), 56(1)(a) and 145A(b) of the Act.
The Revenue relied upon the decision of the Punjab & Haryana High Court in Mahender Pal Narang v. CBDT (2020) and PCIT v. Inderjit Singh Sodhi HUF (2024), contending that interest on enhanced compensation is taxable as income from other sources.
The Tribunal considered its earlier detailed decision in Pawan Kumar v. PCIT (2024), where similar revisionary proceedings under Section 263 had been initiated. In that case, the assessee had received enhanced compensation including interest under Section 28 of the Land Acquisition Act on compulsory acquisition of agricultural land and claimed exemption under Section 10(37), relying on the Supreme Court’s decision in CIT v. Ghanshyam (HUF) (2009). The Assessing Officer (AO), after issuing notice under Section 142(1) and examining documentary evidence, accepted the explanation and completed assessment without addition.
