Case Number: ITA 1539/DEL/2020
Appellant: ITO WARD – 2, Hisar
Respondent: Hari Singh Saini, Hisar
Assessment Year: 2012-13
Result: 2012-13
Case Filed On: 2020-09-02
Order Type: Final Tribunal Order
Date of Order: 2023-03-20
Pronounced On: 2023-03-20
The case of Hari Singh Saini vs ITO Ward-2, Hisar addresses the issue of taxability of interest on enhanced compensation received under the Land Acquisition Act for the assessment year (AY) 2012-13. The appeal was filed by the Revenue against the order of the Commissioner of Income Tax (Appeals), Hisar, which favored the assessee, Hari Singh Saini. The primary contention was whether the interest received under Section 28 of the Land Acquisition Act, 1894, is taxable as income from other sources.
Hari Singh Saini, an agriculturist owning approximately 80 acres of land, received interest on enhanced compensation for land acquisition amounting to Rs. 1,22,55,550/- on 14.06.2011 and Rs. 2,14,04,697/- on 22.03.2012. The Assessing Officer (AO) issued a show-cause notice as to why this interest should not be taxed as income from other sources, allowing a deduction of 50% of such income in the year of receipt. The AO rejected the assessee’s submissions and taxed the amount as income from other sources.
The Revenue raised the following grounds of appeal:
The ITAT Delhi Bench ‘B’, comprising Shri Shamim Yahya, Accountant Member, and Ms. Astha Chandra, Judicial Member, heard the case. The Tribunal examined the facts and arguments presented by both parties. The assessee’s counsel relied on the order of the CIT(A) and several case laws in favor of the assessee.
The Tribunal referred to the Supreme Court decision in Ghanshyam HUF [2009 (9) SCC 412], which held that interest received under Section 28 of the Land Acquisition Act is not in the nature of interest but an accretion to the compensation and, therefore, forms part of the compensation. The Tribunal also cited various other decisions supporting this view, including those by the ITAT and High Courts.
The CIT(A) had allowed the assessee’s appeal, emphasizing that interest received under Section 28 of the Land Acquisition Act is part of the compensation and not taxable as interest. The CIT(A) relied on the following points:
After considering the precedents and the CIT(A)’s detailed analysis, the Tribunal found no infirmity in the CIT(A)’s order. The Tribunal upheld the decision, affirming that the interest received under Section 28 of the Land Acquisition Act is part of the compensation and not taxable as income from other sources.
In conclusion, the Revenue’s appeal was dismissed, and the cross-objection by the assessee, which was supportive of the CIT(A)’s order, was also dismissed as infructuous.
Order pronounced in the open court on 17th March, 2023.
Sd/-
(ASTHA CHANDRA)
JUDICIAL MEMBER
Sd/-
(SHAMIM YAHYA)
ACCOUNTANT MEMBER
Dated the 17th day of March, 2023
Copy forwarded to:
ASSISTANT REGISTRAR
ITAT, NEW DELHI
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