Kanta Rani Yadav Vs PCIT (ITAT Delhi)
ITAT Delhi held that interest on enhanced compensation under section 28 of Land Acquisition Act, 1894 is not exempt u/s. 10(37). Such interest is exigible to tax u/s. 56(2)(viii) r.w.s. 145B(1). Accordingly, appeal of the assessee dismissed.
Facts- On the basis of AIMS information that the assessee had received interest of Rs 46,27,628/-, the AO issued notice u/s 148 in response to which the assessee filed a return declaring income of Rs 12,06,370/- being income from other sources. AO also held that a further amount of Rs 51,41,244/- received by the assessee as enhanced compensation for land acquired under LAA, was exempt from tax u/s 10(37).
It is against this decision of the AO regarding non-taxability of interest on enhanced compensation, the PCIT invoked his power u/s 263 of the Income Tax Act and held that the order of the AO was erroneous insofar as prejudicial to the interest of the Revenue and set aside the order of the AO directing him to pass a fresh assessment order. Aggrieved by the order of PCIT u/s 263 dated 21.03.2024, the assessee is before us.
Conclusion- Held that the language in section 56(2)(viii) and 145B(1) are plain, simple and unambiguous and that the correct legal position is that the interest of Rs. 1,05,75,310/- received during the year on enhanced compensation under section 28 of the Land Acquisition Act, 1894 is exigible to tax u/s 56(2)(viii) r.w.s 145B(1). The assessee’s claim of the same as exempt u/s 10(37) of the Act is unsustainable as the provisions of section 10(37) deals with ‘compensation’ only and not “interest on compensation or enhanced compensation”. Respectfully following the High Court’s decisions of Delhi and Punjab & Haryana as cited above, we hold that the ld. PCIT order to recompute the interest on enhanced compensation in accordance with section 56(2)(viii) r.w.s. 145B(1) and allowing deduction u/s 57(iv) needs no interference.
