Interest on Compulsory Acquisition of Agricultural Land Still Exempt – ITAT Pune Deletes Tax & Penalty Together

Sushila Maruti Mhatre Vs ITO (ITAT Pune) The Pune ITAT has held that interest received u/s 28 of the Land Acquisition Act on compulsory acquisition of agricultural land is nothing but part of the enhanced compensation itself and therefore cannot be taxed as “interest income” u/s 56(2)(viii) of the Income-tax Act. The assessee, a housewife, had received compensation relating to agricultural land situated at Village Bokadvira, Taluka Uran, Raigad, which had been compulsorily acquired by the Government way back in 1986 for the New Bombay Project. Pursuant to enhancement ordered by the Civil C...