Interest u/s 28 of Land Acquisition Act from date of possession of land till date of judgement is not taxable

Sanjay Bhimrao Patil Vs ITO (ITAT Pune)

ITAT Pune held that interest granted by the reference Court u/s. 28 of the Land Acquisition Act from the date of possession of land till the date of judgment of High Court is an accretion of the value of the land acquired and accordingly not taxable.

Facts- According to the AO, the assessee received an amount of Rs.2,10,45,467/- from Special Land Acquisition Officer, Udgir on account of enhanced compensation on compulsory acquisition of agricultural land belonging to the assessee and interest on enhanced compensation vide order dated 22-04-2008 on the file of Civil Judge, S.D., Ahmedpur.

AO did not accept the submissions of assessee and was of the opinion, the 50% of the interest received on enhanced compensation is taxable under amended provisions u/s. 56 w.e.f. 01-04-2010. AO relied on the judgement of Hon’ble Supreme Court in the case of Bikram Singh reported in 224 ITR 551 (SC) and held interest of Rs.69,30,640/- which is 50% of interest received on enhanced compensation as taxable u/s. 56(2)(viii) of the Act.

CIT(A) also held the interest received u/s. 28 of Land Acquisition Act is taxable u/s. 56(2)(viii) of the Act. Aggrieved by the order of CIT-A, the assessee is before us.

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