Interest received on enhanced compensation u/s 28 of Land Acquisition Act is part of compensation, the Delhi Bench of the Income Tax Appellate Tribunal (ITAT) grants an exemption under section 10(37) of the Income Tax Act,1961.
Shri Suraj Bhan Nain, Advocate appeared for the assessee and Shri Mithalesh Kr. Pandey appeared for the revenue.
Kamla Devi, the assessee contended that the CIT(A) has erred in confirming the addition of Rs. 24,88,134/- made by the Assessing Officer as ‘Income from other sources’ on account of interest u/s 28 of Land Acquisition Act received by the appellant which was part of enhanced compensation received on compulsory acquisition of her agricultural land which is exempt u/s 10(37) of the Act.
The revenue in contra argued that the interest received on compensation or enhanced compensation is to be treated as ‘Income from other sources’ and not under the head ‘Capital gains’ and the same is not exempt u/s 10(37) of the Income Tax Act,1961.
It was evident that the authorities below have treated interest received by the assessee on enhanced compensation u/s 28 of the Land Acquisition Act, 1984 as ‘Income from other sources’ and denied exemption u/s 10(37) of the Act.
A Coram of single member Shri C M Garg, judicial member viewed that in the case of Ram Kishan (supra) the coordinate Bench of the Tribunal held that “the interest received by the assessee u/s 28 of the Land Acquisition Act, 1984 on enhanced compensation is part and parcel of the compensation, if the agricultural land of the assessee has been acquired under compulsory acquisition and, thus, the same is exempt income u/s 10(37) of the Act.”
In light of the above-said case, the Tribunal allowed the appeal of the assessee and directed the AO to delete the addition.
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