Case Law Details
PCIT Vs Inderjit Singh Sodhi (HUF) (Delhi High Court)
The case of PCIT vs Inderjit Singh Sodhi (HUF) delves into the taxability of interest earned on compensation or enhanced compensation under the Land Acquisition Act, 1894. This article provides a comprehensive analysis of the Delhi High Court’s judgment on whether such interest constitutes income from other sources.
The crux of the matter lies in interpreting Sections 28 and 34 of the Land Acquisition Act, which govern the payment of interest on compensation. The Revenue argued that interest on enhanced compensation falls under Section 56(2)(viii) of the Income Tax Act, making it taxable as income from other sources. The court examined precedents and legislative amendments to arrive at its decision.
The court scrutinized the applicability of the Ghanshyam case and the impact of the Finance (No.2) Act, 2009 amendment on Section 56. It emphasized that interest on compensation or enhanced compensation became explicitly taxable under the head “Income from other sources” post the amendment.
Furthermore, the court considered earlier rulings, including Sham Lal Narula and Bikram Singh cases, which established that such interest is a revenue receipt liable to taxation. It highlighted the distinction between interest under Sections 28 and 34 of the Act of 1894 and emphasized that the 2010 amendment solidified the taxability of such interest.
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