The Delhi Bench of Income Tax Appellate Tribunal held that the interest received by the assessee under Section 28 of the Land Acquisition Act, 1894 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 under Section 10(37) of the Income Tax Act, 1961.
The assessee in this present case is Nitin Kumar, the Authorised Representative (AR) of the assessee Dhurav Goel, submitted that when the counsel checked the status of first appeal it came to the notice that the Commissioner of Income Tax Appeals [CIT(A)]-NFAC(National Faceless Appellate Centre) has dismissed appeal of assessee this fact came to the knowledge of assessee who is uneducated having limited knowledge of computers.
A delay of 161 days was caused in filing of the appeal before the Tribunal and further submitted that other than this there was no willful or deliberate default or omission on the part in filing delayed appeal.
The sole ground raised by the assesee is that the CIT(A) has erred in law and facts in confirming the addition of Rs. 20,07,526 being 50% of interest on enhance compensation on compulsory acquisition of agricultural land received under Section 28 of land acquisition Act 1894, and holding the same to be taxable under Section 56 (2) (viii) of the Income Tax Act.
The Departmental Representative (DR) Sumesh Swani, submitted 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’. Therefore, the same is not an exemption under Section 10(37) of the Income Tax Act.
The Bench comprising of Chandra Mohan Garg, Judicial Member observed that the authorities below have treated interest received by the assessee on enhanced compensation under Section 28 of the Land Acquisition Act as ‘Income from other sources’ and denied exemption under Section 10(37) of the Income Tax Act.
The Tribunal categorically held that the interest received by the assessee under Section 28 of the Land Acquisition Act on enhanced compensation is part and parcel of the compensation if the agricultural land of the assessee has been acquired under compulsory acquisition. Thus, the same is an exempted income under Section 10(37) of the Income Tax Act. Hence, directed the AO to delete the addition.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
