Sandeep Vs ITO (ITAT Delhi)
Interest Under Section 28 On Enhanced Compensation Is Part Of Compensation—Delhi ITAT Allows Exemption Under Section 10(37)
Summary: The Delhi Bench of the ITAT has held that interest awarded under section 28 of the Land Acquisition Act, 1894 forms part of the enhanced compensation and cannot be assessed separately as “income from other sources” under section 56(2)(viii). Since the underlying agricultural land had been compulsorily acquired and the compensation was exempt under section 10(37), the interest forming part of such compensation was also held to be exempt.
However, the decision requires considerable caution because the assessee was assessed at Sonipat and the Tribunal did not consider the directly contrary jurisdictional decision of the Punjab & Haryana High Court in Mahender Pal Narang v. CBDT, wherein such interest was held taxable after the amendments made with effect from AY 2010-11.
Facts of the case
The assessee had not originally filed his return of income. Based on information appearing in the AIMS module, the assessment was reopened on the ground that the assessee had received interest from the Land Acquisition Officer on which tax had been deducted under section 194A.
In response to the notice under section 148, the assessee filed his return on 30 October 2021 declaring income of ₹1,03,687.
