KARNAIL SINGH,CHANDIGARH vs. INCOME TAX OFFICER, WARD 2(1), CHANDIGARH, CHANDIGARH

PDF · subscribers
ITA 1521/CHANDI/2025Status: DisposedITAT Chandigarh02 June 2026AY 2018-196 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that interest received on enhanced compensation is taxable under the head 'Income from Other Sources' after amendments by the Finance Act, 2009. The decision followed a coordinate bench ruling on similar facts.

What were the facts?

The assessee received compensation for acquired agricultural land and claimed exemption for interest received under Section 10(37). The Assessing Officer and CIT(A) held this interest to be taxable under Section 56(2)(viii).

What were the issues?

Whether interest received on enhanced compensation for land acquisition is exempt under Section 10(37) or taxable under Section 56(2)(viii) after the Finance Act, 2009 amendments.

Which sections of the Income-tax Act were involved?

Section 10(37),Section 56(2)(viii),Section 145B,Section 57(iv)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DIVISION BENCH, ‘A’ CHANDIGARH

Before: SHRI LALIET KUMAR & SHRI MANOJ KUMAR AGGARWAL

For Respondent: Shri Vivek Vardhan, Addl. CIT, Sr.DR
Hearing: 01.06.2026Pronounced: 02.06.2026

PER LALIET KUMAR, JM

This is an appeal filed by the Assessee against the order of the Ld. CIT(A), Siliguri dt. 26.09.2025 for the Assessment Year 2018-19.

2.

In the present appeal Assessee has raised the following grounds:

ITA No.1521/CHD/2025 A.Y.2018-19 2 1. That the order dated 26.09 2 025, passed under section 250 by the Ld Commissioner of Income Tax (Appeals), Addl./JCIT(A)-1, Siliguri in Appeal No. ITBA/NFAC/S/250/2025-26/1081226213(1) is contrary to law and facts of the case. 2. That in the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) gravelly erred in upholding the addition of Rs. 80,15,899./- made by the ld. Assessing Officer whereas the amount of Rs. 80,15,899 is part of compensation which is exempt under Section 10(37) of the Income Tax Act, 1961. 3. That the appellant craves to add, amend OR alter any ground of appeal before OR at the lime of hearing of appeal, with the permission of the Honourable Income Tax Appellate Tribunal, Chandigarh.

3.

Briefly stated, the facts of the case are that the assessee is an individual. The assessee had filed his return of income on 25.07.2018 and declared a total income of Rs.78,64,420/-. The assessee had submitted that he is an agriculturist and agricultural land of the assessee was compulsorily acquired by the Government. The assessee received interest u/s 28 of Land Acquisition Act, 1882 which is exempt u/s 10(37) of the Income Tax Act, 1961. The assessee had claimed that he had shown income of Rs.1,60,31,799/- and deduction of 50% was claimed as he was not aware of the Income Tax Act, 1961. The assessee has further submitted that the interest received by him is not liable to tax.

4.

The Assessing Officer did not accept the contention of the assessee. The AO held that the interest received on enhanced

ITA No.1521/CHD/2025 A.Y.2018-19 3 compensation was taxable under section 56(2)(viii) of the Act under the head “Income from Other Sources”.

5.

Against the order of the AO the assessee went in appeal before the Ld. CIT(A).

5.1 Before the Ld. CIT(A), the assessee reiterated that the interest received under section 28 of the Land Acquisition Act was part of compensation and therefore exempt under section 10(37) of the Act. Reliance was placed upon the judgments of Hon’ble Supreme Court in Ghanshyam (HUF) and Union of India Vs. Hari Singh & Others. The assessee also relied upon various decisions of Chandigarh Bench of the Tribunal.

5.2 The Ld. CIT(A), after considering the submissions of the assessee, upheld the action of the Assessing Officer. The Ld. CIT(A) observed that after insertion of section 56(2)(viii) and section 145B(1) by the Finance Act, 2009, interest received on compensation or enhanced compensation is specifically taxable under the head “Income from Other Sources” in the year of receipt.

5.3 The Ld. CIT(A), therefore, confirmed the addition made by the Assessing Officer.

6.

Against the order of the Ld. CIT(A) the assessee preferred an appeal before the Tribunal.

ITA No.1521/CHD/2025 A.Y.2018-19 4 7. None appeared on behalf of the assessee. However, the case of the assessee is that the amount received under section 28 of the Land Acquisition Act is in the nature of compensation and not interest and therefore exempt under section 10(37) of the Act. Reliance was placed upon the judgments of Hon’ble Supreme Court in CIT Vs. Ghanshyam (HUF) and Union of India Vs. Hari Singh & Others. It was argued that the issue is squarely covered in favour of the assessee.

8.

Per contra, the Ld. DR relied upon the orders of the lower authorities. The Ld. DR submitted that the issue is now squarely covered against the assessee by the decision of Chandigarh Bench of the Tribunal in the case of Shri Ajay Kumar Vs. ITO & Others in ITA No.463/Chd/2023 and connected matters.

8.1 The Ld. DR submitted that the Tribunal in the aforesaid decision has considered the entire statutory scheme including sections 56(2)(viii), 57(iv) and 145B of the Act and has held that interest received on enhanced compensation is taxable under the head “Income from Other Sources” after allowing statutory deduction of 50% under section 57(iv) of the Act.

8.2 It was further submitted that the legal grounds raised by the assessee are devoid of merit as the assessee had duly participated in the reassessment proceedings and no prejudice has been demonstrated.

ITA No.1521/CHD/2025 A.Y.2018-19 5 9. We have heard the submission of the ld. DR and perused the material available on record.

9.1 The primary issue involved in the present appeal relates to taxability of interest received on enhanced compensation under section 28 of the Land Acquisition Act.

9.2 We find that an identical issue has been considered by the Coordinate Chandigarh Bench of the Tribunal in the case of Shri Ajay Kumar Vs. ITO & Others in ITA No.463/Chd/2023 and connected matters. In the said decision, the Bench, after considering the provisions of sections 56(2)(viii), 57(iv) and section 145B of the Act as amended by Finance Act, 2009, held that interest received on compensation or enhanced compensation is taxable under the head “Income from Other Sources” and only deduction permissible is the statutory deduction of 50% under section 57(iv) of the Act.

9.3 The Bench in the said decision also considered the judgments of Hon’ble Supreme Court in the cases of Ghanshyam (HUF) and Hari Singh and thereafter concluded that after the statutory amendments brought by the Finance Act, 2009, the issue stands covered in favour of the Revenue.

9.4 Respectfully following the aforesaid decision of the Coordinate Bench in the case of Shri Ajay Kumar Vs. ITO & Others (supra), we uphold the order of the Ld. CIT(A) confirming the

ITA No.1521/CHD/2025 A.Y.2018-19 6 addition of Rs.80,15,899/- made by the Assessing Officer under section 56(2)(viii) of the Act.

10.

In the result, appeal of the Assessee is dismissed.

Order pronounced on 02nd June,2026. Sd/- Sd/-

(MANOJ KUMAR AGGARWAL) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER “Poonam” आदेश क� �ितिलिप अ�ेिषत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�/ CIT 4. िवभागीय �ितिनिध, आयकर अपीलीय आिधकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड� फाईल/ Guard File

सहायक पंजीकार/ Assistant Registrar

More judgments on Section 10(37)

All 558 judgments and leading authorities on Section 10(37) →

Recent GST High Court judgments

Search GST case law →