In recent ruling, the Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) observed that interest under land acquisition Act is capital receipt being an integral part of enhanced compensation, it is exempted under Section 10 (37) of the Income Tax Act, 1961.
The assessee has also relied on the plethora of other Judgments and contended before the A.O. that interest under Section 28 of the Land Acquisition Act 1894 awarded by the Court forms part of compensation/enhanced compensation for acquisition of agriculture land. Therefore, the assessee prayed for a refund of the TDS.
The A.O. has also issued one more notice on 03/12/2020 under Section 142(1) of the Income Tax Act Act calling upon the assessee to furnish bank account statement highlighting the receipt of “enhanced compensation” received during the year in respect of land acquisition
The assessee has received of Land Acquisition Act of Rs.3.32,27,840/- enhanced compensation the cheque received in Bank of Baroda. In which interest amount of Rs. 1, 86,42,032/- on which TDS of Rs. 18,64,203/- was deducted. The assessee agricultural land situated in villages Om Nagar Budhera in the district of Gurgaon.
Further received interest under Section 28 of the Land Acquisition Act awarded by the Court is a capital receipt being an integral part of enhanced compensation and is exempt under Section 10(37) of the Income Tax Act.
A.O. satisfied that the amount so received under the Land Acquisition Act, 1894 has not been brought to the tax. By going through the above facts and circumstances, it is found that in the original assessment proceedings, the A.O. has already examined the issue of the refund claim which includes the issue of amount received by the assessee under the Land Acquisition Act.
In the present case, whether the receipt of interest related to the additional compensation granted under Land Acquisition Act, 1894 is a part of exempt under Section 10 (37) of the Act or not is a debatable issue, therefore the two member bench of the tribunal comprising N.K.Billaiya (Accountant member) and Yogesh Kumar U.S (Judicial member) considered the opinion that the impugned order of the PCIT was found to be erroneous, accordingly, order impugned of the PCIT was hereby quashed. An appeal filed by the assessee was allowed.
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