Case Law Details
Braham Prakash Vs ITO (ITAT Delhi)
Introduction: The Income Tax Appellate Tribunal (ITAT) Delhi has upheld the taxability of interest received under Section 28 of the Land Acquisition Act. The appeal, filed by Braham Prakash against the order of the Commissioner of Income Tax (Appeals) for the Assessment Year 2013-14, challenged the inclusion of interest on enhanced compensation in the taxable income.
Detailed Analysis: Braham Prakash, an individual receiving income from bank interest and compensation, filed an appeal challenging the tax treatment of interest received under Section 28 of the Land Acquisition Act. The Income Tax Officer (ITO) had added 50% of the interest on enhanced compensation to the taxable income, treating it as income from other sources.
The ITO applied the provisions of Section 56(2)(viii), introduced by the Finance (No.2) Act, 2009, which treats interest on enhanced compensation as income from other sources. While allowing an ad hoc deduction of 50%, the ITO added Rs. 70,44,235 to the taxable income.
The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the decision, considering relevant provisions of the Land Acquisition Act and referring to the decisions of the Hon’ble Punjab & Haryana High Court. The CIT(A) also noted the dismissal of the Special Leave Petition filed by the appellant before the Hon’ble Supreme Court.
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