Kuljeet Singh Vs ITO (ITAT Delhi)
Income Tax Appellate Tribunal (ITAT), Delhi Bench, has upheld the taxability of interest received as enhanced compensation from the compulsory acquisition of agricultural land, ruling it as “Income from other sources.” The decision, pronounced on May 1, 2025, in the case of Kuljeet Singh versus the Income Tax Officer (ITO), dismisses the assessee’s claim for exemption under Section 10(37) of the Income Tax Act, 1961.
The appeal was filed by Kuljeet Singh against an order dated August 31, 2023, from the Commissioner of Income-tax (Appeals), NFAC, Delhi, which arose from an assessment order passed on March 17, 2021. Despite repeated notices via post and email, the assessee did not appear for arguments before the ITAT. The Tribunal, after hearing the Departmental Representative and reviewing the available records, proceeded with the matter.
The central issue in dispute was the assessee’s claim for exemption under Section 10(37) of the Act on interest earned from enhanced compensation related to agricultural land acquired by the government. The tax authorities had consistently treated this interest income as taxable under the head “Income from other sources.”
The ITAT’s decision was heavily influenced by several judicial precedents that have addressed this specific issue. A significant reference was made to the judgment of the Punjab & Haryana High Court in the case of Mahindra Pal Narang vs. CBDT (2020), which was delivered on February 19, 2020. This ruling considered various provisions of the Income Tax Act, including Sections 10(37), 56(2)(viii), 57(iv), and 145B, and concluded that interest received on enhanced compensation should indeed be assessed as income from other sources in the year of receipt. The Hon’ble Supreme Court further reinforced this position by dismissing a Special Leave Petition filed against the Mahindra Pal Narang decision on March 4, 2021, effectively affirming the Punjab & Haryana High Court’s stance. Given that the Assessing Officer in the present case falls under the jurisdiction of the Punjab & Haryana High Court, the ratio of this judgment serves as a binding precedent.
