Karnail Singh Vs ITO (ITAT Chandigarh)
The Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT) dismissed the assessee’s appeal for Assessment Year 2018-19 and upheld the addition of ₹80,15,899/- made by the Assessing Officer on account of interest received on enhanced compensation. The Tribunal held that such interest was taxable under the provisions of the Income Tax Act as amended by the Finance Act, 2009.
The assessee, an individual, had filed his return of income on 25.07.2018 declaring a total income of ₹78,64,420/-. The assessee stated that he was an agriculturist whose agricultural land had been compulsorily acquired by the Government. According to the assessee, the amount received under Section 28 of the Land Acquisition Act, 1894 formed part of the compensation and was exempt under Section 10(37) of the Income Tax Act, 1961. The assessee further submitted that he had disclosed income of ₹1,60,31,799/- and had claimed a deduction of 50%, asserting that he was not fully aware of the provisions of the Income Tax Act. He maintained that the amount received by way of interest was not liable to tax.
The Assessing Officer rejected the assessee’s contention and held that the amount received as interest on enhanced compensation was taxable under Section 56(2)(viii) of the Act under the head “Income from Other Sources”. Accordingly, the amount was brought to tax.
