Vachaspati Sharma Vs ITO (ITAT Delhi)
ITAT Delhi held that the interest on compensation or on enhanced compensation cannot be considered as compensation and shall be chargeable to tax under the head income from other sources. Accordingly, appeal dismissed.
Facts- The assessee had ancestral rural agricultural land situated at Badha in the district of Gurgaon which was acquired by the Government of Haryana for public interest. The assessee has received enhanced compensation including interest u/s. 28 of the Land Acquisition Act 1894 of Rs.4,78,95,44/- during the year as per the decision of the Court. The assessee has claimed the total enhanced compensation including interest u/s 28 of the Act as exempted u/s 10(37) of the Act.
According to AO the interest u/s 28 of the Land Acquisition Act received by assessee is “Income from other Sources” and after allowing 50% deduction u/s 57(iv) of the Act on gross interest received, the AO has completed the assessment order u/s 143(3) of the Act. The assessing officer has determined the total income at Rs 2,56,82,162/- by making the addition of Rs 2,39,47,720/-.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Hon’ble Punjab &Haryana High Court in Mahender Pal Narang vs. DBDT New Delhi [2020]120 taxmann.com 400 (P&H) held that interest issued on the compensation for enhanced compensation is to be treated as income from other sources.
