SARVAN SINGH,AMBALA vs INCOME TAX OFFICER-WARD 4, AMBALA

Order \nThese appeals are filed by the different assessee against the separate\norders passed by the various CIT(A)'s/ NFAC Ld. Commissioner of Income-tax\n(Appeals), National Faceless Appeal Centre, Delhi against the common legal\nground mentioned in the respective appeals. Since all the appeals were\nheard together, they are being disposed of by this consolidated order for the\nsake of convenience and brevity.\n2. It has been brought to our notice that, in certain appeals, there is a\ndelay in filing the same before the Tribunal as pointed out by the Registry.\nConsidering that the issue involved is purely legal in nature, and respectfully\nfollowing the ratio laid down by the Hon'ble Supreme Court in Collector,\nLand Acquisition v. Mst. Katiji& Others [(1987) 167 ITR 471 (SC)]*, which\nemphasizes that substantial justice should prevail over technical\nconsiderations, we condone the delay in filing these appeals.\n3. We shall take appeal of the assessee in for A.Y\n2018-19 as a lead case for discussion wherein assessee has raised the\nfollowing effective grounds:\n1.\nThat having regard to the facts and circumstances of the case\nand in law, the Ld. Commissioner of Income Tax (Appeals) has erred both\nin law and on facts in confirming the addition of Rs.34,65,610/- made by\nthe Ld. Assessing Officer under the head \"Income from other sources\" u/s\n56(viii) of the Income-tax Act 1961 (the Act) on account of interest u/s 28\nof the Land Acquisition Act 1894 of Rs.34,65,610/-received by the\nappellant during the year, which was part of enhanced compensation\nfor compulsory acquisition of his agricultural land exempt u/s 10(37) of the\nIncome Tax Act 1961.\n2.\nWithout prejudice to the above, even if for arguments sake it is\nassumed that interest u/s 28 of the Land Acquisition Act received by the\nappellant is assessable as 'Income from other sources' u/s 56(2)(viii) of the\nAct, the Ld. Assessing Officer as well as Ld. Commissioner of Income Tax\n(Appeals) erred in not allowing statutory deduction u/s 57(iv) of a sum\nequal to fifty percent of the said amount of interest.\n3.\nThat having regard to the facts and circumstances of the case\nand in law, the Ld. Commissioner of Income Tax (Appeals) has erred both\nin law and on facts in confirming the addition of Rs.34,65,610/- made by\nthe Ld. Assessing Officer under the head \"Income from other sources\" u/s\n56(viii) of the Income-tax Act referring to the provisions of section 199 of\nthe Act, which is not relevant to determine nature of receipt of interest\nu/s 28 of the Land Acquisition Act 1894 as to whether it is a capital receipt\nforming part of enhanced compensation or a revenue receipt\nchargeable u/s 56(viii) of the Act.\n4.\nBriefly the facts of the case are that the assessee, Shri Ajay Kumar, filed\nhis original return of income for A.Y. 2018-19 on 29.09.2018 declaring total\nincome of Rs.3,51,090/-, which was processed u/s 143(1). The case was\nsubsequently selected for Complete Scrutiny under the e-Assessment\nScheme, 2019 on two issues, namely, (i) reduction of income in the revised\nreturn coupled with claim of refund, and (ii) mismatch between\ninterest/winnings reported in Form 26AS and the income shown under\n“Income from Other Sources” in the return. Statutory notices u/s 143(2) and\n142(1) were issued calling for details.\n5.\nIn response, the assessee submitted that he had received enhanced\ncompensation of Rs.56,34,922/- from the Land Acquisition Officer, Hisar\n(HUDA), Haryana, pursuant to compulsory acquisition of agricultural land. It\nwas explained that the original award was passed on 31.03.2008,\nsubsequently enhanced by the Additional District Judge on 24.12.2013 and\nfurther enhanced by the Hon'ble High Court on 22.07.2015. During the\nrelevant previous year, the assessee received enhanced compensation\nalong with interest of Rs.34,65,610/-, on which TDS of Rs.3,46,561/- was\ndeducted by the Land Acquisition Officer u/s 194A.\n6.\nIt was further stated that in the original return the assessee had\ninadvertently offered the said interest amount to tax, however, upon realising\nthat the interest received was interest u/s 28 of the Land Acquisition Act,\n1894, being part of compensation and exempt u/s 10(37) of the Income-tax\nAct, he revised the return and withdrew the interest income while claiming\nrefund of TDS. The assessee relied on the nature of interest u/s 28 being\nintegral to compensation. During the course of assessment proceedings, the\nAO examined the submissions and found that, although the assessee claimed\nexemption on the interest component in the revised return, he continued to\nclaim credit for TDS deducted thereon, which was duly reflected in Form\n26AS. A show-cause notice dated 10.12.2020 was issued, proposing to treat\nthe interest as taxable u/s 56(2)(viii) read with section 145B(1). In reply, the\nassessee reiterated that interest u/s 28 forms part of compensation and is\nexempt. The AO, however, held that section 10(37) applies only to capital\ngains arising from transfer of agricultural land, and not to interest on delayed\npayment; that interest received on enhanced compensation is deemed to\nbe taxable u/s 56(2)(viii) in the year of receipt; and that the assessee could\nnot reduce income in a revised return while simultaneously claiming full TDS\ncredit u/s 199. Accordingly, the AO held the interest of Rs.34,65,610/- to be\ntaxable, added the same to the returned income, determined assessed\nincome at Rs.38,16,700/-, and initiated penalty proceedings u/s 270A for\nunder-reporting of income.\n7.\nFeeling aggrieved by the order passed by the Ld. Assessing Officer the\nassessee preferred the appeal before the Ld. CIT(A) / NFAC. The Ld. CIT(A)\nconsidered the assessment order, the written submissions of the assessee, and\nthe material available on record. At the outset, the Ld. CIT(A) observed that\nthe Assessing Officer had made an addition of Rs.34,65,610/- on account of\ninterest on enhanced compensation received by the assessee in respect of\ncompulsory acquisition of agricultural land, and that the assessee had\nclaimed TDS credit on such interest while not offering the corresponding\nincome in the revised return. It was noted that the assessee had initially filed\nthe return, declaring interest income. Subsequently, it revised the return to\nwithdraw the same on the grounds that interest received under Section 28 of\nthe Land Acquisition Act forms part of compensation and is exempt under\nSection 10(37). The Ld. CIT(A) recorded that the Assessing Officer had\nexamined this claim and determined that the assessee's reliance on section\n10(37) was misplaced, as that provision applies to capital gains arising from\ncompulsory acquisition of agricultural land and does not extend to interest\nreceived on delayed payment of compensation.\n8. The appellate authority / CIT(A) further concurred with the AO's\nanalysis that section 145B(1) read with section 56(2)(viii) provides a specific\nstatutory mandate to treat interest received on compensation or enhanced\ncompensation as taxable in the year of receipt under the head income from\nother sources. The Ld. CIT(A) emphasized that interest under section 28 and\ninterest under section 34 were distinct in nature, and the AO had already\nreproduced judicial interpretation explaining that interest under section 28\nmay partake the character of compensation, while interest under section 34\ncompensates for delay; however, in view of the express provisions of section\n145B and section 56, such interest is an enhanced compensation under\nsection 28 of the LA Act is chargeable to tax upon receipt basis. It was\nobserved that the assessee's revised return disclosed a lower income while\nclaiming refund based on the TDS deducted, which was impermissible in light\nof section 199, which requires that for claiming TDS credit, the corresponding\nincome must be offered to tax.\n9. The Ld. CIT(A) also took note that although the assessee contended\nthat the land acquired was agricultural and the interest was part of\ncompensation exempt u/s 10(37), the assessee had not offered any capital\ngains computation in either the original or revised return to demonstrate the\napplicability of section 10(37). It was held that exemption under section\n10(37) cannot be presumed and must be reflected through proper\ncomputation, which was lacking in the present case. The Ld. CIT(A) also\nechoed the AO's view that filing a revised return to exclude the interest\nincome while retaining TDS.\n10. Feeling aggrieved by the order passed by the Ld. CIT(A) the assessee is\nin appeal before us on the grounds mentioned hereinabove.\n11. The Id. AR, Shri Suraj Bhan Nain, Advocatethereafter, placing reliance\non the scheme of the Land Acquisition Act and the judicial position, invited\nour attention to the judgment of the Hon'ble Supreme Court in CIT vs.\nGhanshyam (HUF) [2009] 315 ITR 1 (SC) = 182 Taxman 368 (SC). It was\nsubmitted that the Hon'ble Supreme Court, after dealing with the statutory\nframework of the Land Acquisition Act, particularly Sections 23(1A), 23(2), 28\nand 34, has categorically held that interest awarded under Section 28 forms\npart and parcel of compensation, whereas interest awarded under Section\n34 is in the nature of interest simplicitor, merely compensating for delay in\npayment.\n12. Our attention was specifically drawn to paragraphs 30 to 36 of the said\njudgment. The Id. AR emphasized that the Hon'ble Supreme Court, in\nunequivocal terms, held that the interest awarded u/s 28 has the same colour\nand character as compensation and, therefore, is liable to be treated as part\nof the enhanced compensation for income-tax purposes, whereas interest\nu/s 34 stands on a distinct footing being compensatory in nature on account\nof delay in making payment. It was stressed that the legislative intent behind\nSection 28 is to provide recompense/restitution for the deprivation of property\nand, therefore, it assumes the character of compensation in entirety.\n13. It was further argued that the Apex Court clarified that the entire\nenhanced compensation, including interest u/s 28, becomes taxable in the\nyear of receipt under the provisions of section 45(5) of the Income-tax Act. In\ncontrast, interest u/s 34 is to be taxed as income from other sources. Thus, the\nId. AR submitted that the interest component in the present case-being\ninterest awarded on enhanced compensation under Section 28 of the Land\nAcquisition Act—is to be treated as compensation and not as interest\nsimplicitor.\n14.\nThe Id. AR also pointed out that the Hon'ble Supreme Court\ndistinguished the statutory scheme wherein Section 28 of the LA Act relates to\ncompensation determination, while Section 34 of the LAAct falls within the\nrealm of payment mechanism. Therefore, interest awarded u/s 28 is\nintrinsically linked with the judicial determination of compensation, and is\ninseparable from the award, thereby qualifying as part of the compensation\nitself. In CIT vs. Ghanshyam (HUF) [2009] 315 ITR 1 (SC) = 182 Taxman 368\n(SC)it5 was held as under:-\n"30. For the said purpose, the cost of acquisition is to be taken as Nil [See:\nExplanation (i)]. Also, where the enhanced compensation is received by any\nperson, other than the transferor by reason of the death of the transferor or for\nany reason, the amount of such additional compensation or additional\nconsideration is to be deemed to be the income of the recipient of the\nprevious year in which such amount is received by him.\n31. Two aspects need to be highlighted. Firstly, section 45(5) of the 1961 Act,\ndeals with transfer(s) by way of compulsory acquisition and not by way of\ntransfers by way of sales etc., covered by section 45(1) of the 1961 Act.\nSecondly, section 45(5) of the 1961 Act talks about enhanced compensation\nor consideration which in terms of L.A. Act, 1894 results in payment of\nadditional compensation.\n32. The issue to be decided before us what is the meaning of the words\n"enhanced compensation/consideration" in section 45(5)(b) of the 1961 Act?\nWill it cover "interest"? These questions also bring in the concept of the year of\ntaxability.\n33. It is to answer the above questions that we have analysed the provisions of\nsections 23, 23(1A), 23(2), 28 and 34 of the 1894 Act. As discussed hereinabove,\nsection 23(1A) provides for additional amount. It takes care of increase in the\nvalue at the rate of 12 per cent per annum. Similarly, under section 23(2) of the\n1894 Act, there is a provision for solatium which also represents part of\nenhanced compensation. Similarly, section 28 empowers the Court in its\ndiscretion to award interest on the excess amount of compensation over and\nabove what is awarded by the Collector. It includes additional amount under\nsection 23(1 A) and solatium under section 23(2) of the said Act. Section 28 of\nthe 1894 Act applies only in respect of the excess amount determined by the\nCourt after reference under section 18 of the 1894 Act. It depends upon the\nclaim, unlike interest under section 34 which depends on undue delay in\nmaking the award. It is true that "interest" is not compensation. It is equally true\nthat section 45(5) of the 1961 Act, refers to compensation. But as discussed\nhereinabove, we have to go by the provisions of the 1894 Act, which awards\n"interest" both as an accretion in the value of the lands acquired and interest\nfor undue delay. Interest under section 28 unlike interest under section 34 is an\naccretion to the value, hence it is a part of enhanced compensation or\nconsideration which is not the case with interest under section 34 of the 1894\nAct. So also additional amount under section 23(1A) and solatium under\nsection 23(2) of the 1961 Act forms part of enhanced compensation under\nsection 45(5)(b) of the 1961 Act. In fact, what we have stated hereinabove is\nreinforced by the newly inserted clause (c) in section 45(5) by the Finance Act,\n2003 with effect from 1-4-2004. This newly added clause envisages a situation\nwhere in the assessment for any year,-\nthe capital gain arising from the transfer of a capital asset is\ncomputed by taking the -\ncompensation or consideration referred to in clause (a) of section\n45(5) or, as the case may be,\nenhanced compensation or consideration referred to in clause (b)\nof section 45(5), and subsequently such compensation or\nconsideration is reduced by any Court, Tribunal or other authority.\n34. In such a situation, such assessed capital gain of that year shall be\nrecomputed by taking the compensation or consideration as so reduced by\nsuch Court, Tribunal or other authority to be the full value of the\nconsideration. For giving effect to such recomputation, the provisions of the\nnewly inserted (with effect from 1-4-2004) section 155(16) by the Finance Act,\n2003 (32 of 2003), have been enacted.\n35. It was urged on behalf of the assessee that section 45(5)(b) of the 1961\nAct deals only with re-working, its object is not to convert the amount of\nenhanced compensation into deemed income on receipt. We find no merit\nin this argument. The scheme of section 45(5) of the 1961 Act was inserted\nwith effect from 1-4-1988 as an overriding provision. As stated above,\ncompensation under the L.A. Act, 1894, arises and is payable in multiple\nstages which does not happen in cases of transfers by sale etc. Hence, the\nlegislature had to step in and say that as and when the assessee-claimant is\nin receipt of enhanced compensation it shall be treated as "deemed\nincome" and taxed on receipt basis. Our above understanding is supported\nby insertion of clause (c) in section 45(5) with effect from 1-4-2004 and\nsection 155(16) which refers to a situation of a subsequent reduction by the\nCourt, Tribunal or other authority and recomputation/amendment of the\nassessment order. Section 45(5) read as a whole (including clause \"c\") not\nonly deals with reworking as urged on behalf of the assessee but also with the\nchange in the full value of the consideration (computation) and since the\nenhanced compensation/consideration (including interest under section 28\nof the 1894 Act) becomes payable/ paid under 1894 Act at different stages,\nthe receipt of such enhanced compensation/consideration is to be taxed in\nthe year of receipt subject to adjustment, if any, under section 155(16) of the\n1961 Act, later on. Hence, the year in which enhanced compensation is\nreceived is the year of taxability. Consequently, even in cases where\npending appeal, the Court/Tribunal/Authority before which appeal is\npending, permits the claimant to withdraw against security or otherwise the\nenhanced compensation (which is in dispute), the same is liable to be taxed\nunder section 45(5) of the 1961 Act. This is the scheme of section 45(5) and\nsection 155(16) of the 1961 Act. We may clarify that even before the insertion\nof section 45(5)(c) and section 155(16) with effect from 1-4-2004, the receipt\nof enhanced compensation under section 45(5)(b) was taxable in the year\nof receipt which is only reinforced by insertion of clause (c) because the right\nto receive payment under the 1894 Act is not in doubt. It is important to note\nthat compensation, including enhanced compensation/consideration under\nthe 1894 Act, is based on the full value of property as on date of notification\nunder section 4 of that Act. When the Court/Tribunal directs payment of\nenhanced compensation under section 23(1A), or section 23(2) or under\nsection 28 of the 1894 Act it is on the basis that award of Collector or the\nCourt, under reference, has not compensated the owner for the full value of\nthe property as on date of notification.\n36. Having settled the controversy going on for last two decades, we are of\nthe view that in this batch of cases which relate back to assessment years\n1991-92 and 1992-93, possibly the proceedings under the 1894\nAct have ended. In number of cases we find that proceedings under the 1894\nAct have been concluded and taxes have been paid. Therefore, by this\njudgment we have settled the law but we direct that since matters are\ndecade old and since we are not aware of what has happened in Land\nAcquisition Act proceedings in pending appeals, the recomputation on the\nbasis of our judgment herein, particularly in the context of type of interest\nunder section 28 vis-a-vis interest under section 34, additional compensation\nunder section 23(1A) and solatium under section 23(2) of the 1894 Act, would\nbe extremely difficult after all these years, will not be done.\n15.\nThe Id. AR submitted that the sum and substance of the judgment of\nthe Hon'ble Supreme Court in Ghanshyam (HUF) (supra) is that interest\nawarded on enhanced compensation—irrespective of whether it is\ndescribed as interest or solatium—forms an integral part of the compensation\nand is, therefore, liable to be taxed under section 45(5)(b) of the Income-tax\nAct, 1961 (“the Act”). It was further submitted that the said decision was\ndelivered by the Hon'ble Supreme Court on 16.07.2009.\nThe decision of the Hon'ble Supreme Court in the case of 'Ghanshyam' was\nlater on followed in the case of ‘CIT, Rajkot vs Govindbhai Mamalya' [2014]\n52 taxmann.com 270 (SC).\n"6. In the present case, the admitted facts are that the property in question\nwhich was acquired by the Government, came to the respondents on\ninheritance from their father i.e. by the operation of law. Furthermore, even\nthe income which is earned in the form of interest is not because of any\nbusiness venture of the three assesseesbut it is the result of the act of the\nGovernment in compulsorily acquiring the said land. In these circumstances,\nthe case is squarely covered by the ratio of the judgment laid down in Meera\n& Co. (supra) inasmuch as it is not a case where any \"Association of Persons\"\nwas formed by volition of the parties for the purpose of generation of\nincome. This basic test to determine the status of AoP is absent in the present\ncase.\n7. Insofar as the second question is concerned, that is also covered by\nanother judgment of this Court in CIT v. Ghanshyam (HUF) [2009] 8 SCC 412,\nalbeit, in favour of the Revenue. In that case, the court drew distinction\nbetween the \"interest\" earned under Section 28 of the Land Acquisition Act\nand the \"interest\" which is under Section 34 of the said Act. The Court clarified\nthat whereas compensation given to the assessee of the land acquired\nwould be 'income', the enhanced compensation/consideration becomes\nincome by virtue of Section 45(5)(b) of the Income Tax Act. The question was\nwhether it will cover \"interest\" and if so, what would be the year of taxability.\nThe position in this respect is explained in paras 49 and 50 of the judgment\nwhich make the following reading:\n"49. As discussed hereinabove, Section 23(1-A) provides for additional\namount. It takes care of the increase in the value at the rate of 12% per\nannum. Similarly, under Section 23(2) of the 1894 Act there is a provision for\nsolatium which also represents part of the enhanced compensation. Similarly,\nSection 28 empowers the court in its discretion to award interest on the\nexcess amount of compensation over and above what is awarded by the\nCollector. It includes additional amount under Section 23(1-A) and solatium\nunder Section 23(2) of the said Act. Section 28 of the 1894 Act applies only in\nrespect of the excess amount determined by the court after reference under\nSection 18 of the 1894 Act. It depends upon the claim, unlike interest under\nsection 34 which depends on undue delay in making the award.\n50. It is true that \"interest\" is not compensation. It is equally true that Section\n45(5) of the 1961 Act refers to compensation. But as discussed hereinabove,\nwe have to go by the provisions of the 1894 Act which awards \"interest\" both\nas an accretion in the value of the lands acquired and interest for undue\ndelay. Interest under Section 28 unlike interest under Section 34 is an\naccretion to the value, hence it is a part of enhanced compensation or\nconsideration which is not the case with interest under Section 34 of the 1894\nAct. So also additional amount under Section 23 (1-A) and solatium under\nSection 23(2) of the 1961 Act forms part of enhanced compensation under\nSection 45(5)(b) of the 1961 Act.\n8. It is clear from the above that whereas interest under Section 34 is not\ntreated as a part of income subject to tax, the interest earned under Section\n28, which is on enhanced compensation, is treated as a accretion to the\nvalue and therefore, part of the enhanced compensation or consideration\nmaking it exigible to tax. After holding that interest on enhanced\ncompensation under Section 28 of 1894 Act is taxable, the Court dealt with\nthe other aspect namely, the year of tax and answered this question by\nholding that it has to be tested on receipt basis, which means it would be\ntaxed in the year in which it is received. It would mean that converse position\ni.e. spread over of this interest on accrual basis is not permissible. Here again,\nwe would like to reproduce the discussion contained in paras 53 and 54\nwhich gives the rational in coming to the said conclusion. Paras 53 and 54\nread as under:\n"53. The scheme of Section 45(5) of the 1961 Act was inserted w.e.f. 1-4-1988\nas an overriding provision. As stated above, compensation under the L.A.Act,\n1894, arises and is payable in multiple stages which does not happen in\ncases of transfers by sale, etc. Hence, the legislature had to step in and say\nthat as and when the assessee claimant is in receipt of enhanced\ncompensation it shall be treated as \"deemed income\" and taxed on receipt\nbasis. Our above understanding is supported by insertion of clause (c) in\nSection 45(5) w.e.f. 1-4-2004 and Section 155(16) which refers to a situation of\na subsequent reduction by the court, tribunal or other authority and\nrecomputation/ amendment of the assessment order.\n54. Section 45 (5) read as a whole [including clause (c)] not only deals with\nreworking as urged on behalf of the assessee but also with the change in the\nfull value of the consideration (computation) and since the enhanced\ncompensation/consideration (including interest under Section 28 of the 1894\nAct) becomes payable/ paid under the 1894 Act at different stages, the\nreceipt of such enhanced compensation/ consideration is to be taxed in the\nyear of receipt subject to adjustment, if any, under Section 155(16) of the\n1961 Act, later on. Hence, the year in which enhanced compensation is\nreceived is the year of taxability. Consequently, even in cases where\npending appeal, the court/tribunal/authority before which appeal is\npending, permits the claimant to withdraw against security or otherwise the\nenhanced compensation (which is in dispute), the same is liable to be taxed\nunder Section 45(5) of the 1961 Act. This is the scheme of section 45(5) and\nsection 155(16) of the 1961 Act. We may clarify that even before the insertion\nof section 45(5)(c) and section 155(16) with effect from 1-4-2004, the receipt\nof enhanced compensation under section 45(5)(b) was taxable in the year\nof receipt which is only reinforced by insertion of clause (c) because the right\nto receive payment under the 1894 Act is not in doubt.\n16.\nThe Id. AR further submitted that the aforesaid legal position has\nsubsequently been reaffirmed by the Hon'ble Supreme Court in Chet Ram\n(supra). Our attention was also invited to page 265 of the paper book, which\ncontains the judgment of the Hon'ble Punjab & Haryana High Court in\nHaryana State Industrial Development Corporation Ltd. (CR No. 2509 of 2012-\nO&M) vs. Savitri Devi. Referring to page 275 of the paper book, it was pointed\nout that the Hon'ble High Court, vide judgment dated 29.11.2013, expressly\ndirected the authorities to follow the ratio laid down by the Hon'ble Supreme\nCourt in Ghanshyam (HUF) (supra), by observing as under:\n\"Admittedly, in the instant case the land was agricultural land and\nenhanced compensation and interest was awarded under Section 28. Thus,\nin view of specific finding of Hon'ble Supreme Court in Ghanshyam's case\n(supra) that amount awarded under Section 28 of the Land Acquisition Act is\naccretion in value of land and interest therein forms part of compensation;\nincome tax cannot be deducted at source since land acquired is\nagricultural land.\nIn view of above, I do not find any illegality or perversity in the impugned\norder.\"\n17.\nThe Id. AR further submitted that against the judgment of the Hon'ble\nPunjab & Haryana High Court in the case of Haryana State Industrial\nDevelopment Corporation Ltd. (supra), a Special Leave Petition was\npreferred before the Hon'ble Supreme Court. It was pointed out that the\nHon'ble Supreme Court, vide order dated 31.03.2016, has been pleased to\ndispose of the said SLP, thereby leaving the decision of the Hon'ble High\nCourt undisturbed.\n18. The Id. AR thereafter invited our attention to the legislative\ndevelopments post the judgment in Ghanshyam (HUF) (supra). It was\nsubmitted that w.e.f. 01.04.2010, the Legislature, through the Finance (No. 2)\nAct, 2009, inserted section 145A (subsequently renumbered as section 145B)\nand simultaneously amended section 56(2) by inserting clause (viii) to\nspecifically deal with taxability of interest on compensation or enhanced\ncompensation. The Id. AR submitted that the CBDT also issued a clarificatory\nCircular explaining the intent and scope of these amendments. In this\nconnection, our attention was drawn to paragraph 11 of the judgment of the\nHon'ble Gujarat High Court in MavaliyaBhikhubhaiBalabhai vs. ITO (TDS)\n[2016] 70 taxmann.com 45 (Guj.), SCA No. 17944 of 2015, dated 31.03.2016\n(placed at page 278 of the paper book), wherein the Hon'ble Court\nreproduced the relevant CBDT Circular and explained the legislative purpose\nin the following terms:\n11. It has been vehemently contended on behalf of the first respondent that\nthe above decision has been rendered prior to the substitution of section\n145A of the I.T. Act by Finance (No. 2) Act, 2009 with effect from 1st April,\n2010, and hence, would have no applicability to the facts of the present\ncase. The scope and effect of the substitution (with effect from 1st April,\n2010) of section 145A, as also amendment made in section 56(2) by Act 33 of\n2009 have been elaborated in the following portion of the departmental\ncircular No. 5/2010, dated 3.6.2010, as follows:\n\"Rationalizing the provisions for taxation of interest received on delayed\ncompensation or on enhanced compensation.-\n46.1 The existing provisions of Income Tax Act, 1961, provide that income chargeable\nunder the head \"Profits and gains of business or profession\" or \"Income from other\nsources\", shall be computed in accordance with either cash or mercantile system\nof accounting regularly employed by the assessee. Further the Hon'ble Supreme\nCourt in the case of Smt. Rama Bai v. CIT (1990) 84 CTR (SC) 164 : (1990) 181 ITR\n400 (SC) has held that arrears of interest computed on delayed or enhanced\ncompensation shall be taxable on accrual basis. This has caused undue hardship\nto the taxpayers.\n46.2 With a view to mitigate the hardship, section 145A is amended to provide that\nthe interest received by an assessee on compensation or enhanced\ncompensation shall be deemed to be his income for the year in which it was\nreceived, irrespective of the method of accounting followed by the assessee.\n46.3 Further, clause (viii) is inserted in sub-section (2) of the section 56 so as to\nprovide that income by way of interest received on compensation or enhanced\ncompensation referred to in clause (b) of section 145A shall be assessed as\n\"income from other sources\" in the year in which it is received.\n46.4 Applicability. - This amendment has been made applicable with effect from 1st\nApril, 2010, and it will accordingly apply in relation to assessment year 2010-11\nand subsequent assessment years.\"\nThus, the substitution of section 145A by Finance (No. 2) Act, 2009 was not in\nconnection with the decision of the Supreme Court in Ghanshyam\n(HUF)'s case (supra) but was brought in to mitigate the hardship caused to\nthe assessee on account of the decision of the Supreme Court in Rama\nBai v. CIT [1990] 181 ITR 400/[1991] 54 Taxman 496 whereby it was held that\narrears of interest computed on delayed or enhanced compensation shall\nbe taxable on accrual basis. Therefore, when one reads the words \"interest\nreceived on compensation or enhanced compensation\" in section 145A of\nthe I.T. Act, the same have to be construed in the manner interpreted by the\nSupreme Court in Ghanshyam (HUF)'s case (supra).\n12. On behalf of the first respondent, reliance has been placed upon\ndecisions of different High Courts taking a different view. This court is not in\nagreement with the view adopted by the other High Courts which are not\nconsistent with the law laid down in the case of Ghanshyam (HUF) (supra).\nIn Manjet Singh (HUF) Karta Manjeet Singh's case (supra), the Punjab and\nHaryana High Court has chosen to place reliance upon various decisions of\nthe Supreme Court rendered during the period 1964 to 1997 and has chosen\nto brush aside the subsequent decision of the Supreme Court in Ghanshyam\n(HUF)'s case (supra) which is directly on the issue by observing that the\nassessee cannot derive any benefit from the observations made by the\nSupreme Court as quoted therein. In Hari Kishan's case (supra), the Punjab\nand Haryana High Court has placed reliance upon its earlier decision in the\ncase of Manjet Singh (HUF) Karta Manjeet Singh (supra). In Bir Singh\n(HUF)'s case (supra), the Punjab and Haryana High Court has held that under\nthe scheme of the 1894 Act, interest under section 34 is part of compensation\nwhile interest under section 28 is not the interest which partakes the\ncharacter of compensation and is treated differently. In the opinion of this\ncourt, the above view of the Punjab and Haryana High Court is contrary to\nwhat has been held in the decision of the Supreme Court in Ghanshyam\n(HUF)'s case (supra) wherein it has been held that interest under section 28\nunlike interest under section 34 is an accretion to the value, hence it is a part\nof enhanced compensation or consideration which is not the case with\ninterest under section 34 of the 1894 Act. This court is in agreement with the\nview adopted by the Punjab and Haryana High Court in Jagmal Singh's case\n(supra), which has been extensively referred to in paragraph 4.1 above. The\ndecision of the Delhi High Court in Sharda Kochhar's case (supra), having\nbeen rendered in the context of a different controversy would have no\napplicability to the facts of the present case.\n13. The upshot of the above discussion is that since interest under section 28\nof the Act of 1894, partakes the character of compensation, it does not fall\nwithin the ambit of the expression \"interest\" as contemplated in section 145A\nof the I.T. Act. The first respondent - Income Tax Officer was, therefore, not\njustified in refusing to grant a certificate under section 197 of the I.T. Act to\nthe petitioner for non-deduction of tax at source, inasmuch as, the petitioner\nis not liable to pay any tax under the head \"income from other sources\" on\nthe interest paid to it under section 28 of the Act of 1894\".\nA copy of the judgment and order dated 31.03.2016 passed by the Hon'ble\nHigh Court of Gujarat in Special Civil Application No. 17944/2015 is produced\nas Annexure-P-18 (pg. 304 to 326).\n20. Subsequently, the Id. AR invited our attention to page 352 of the paper\nbook, pointing to the reliefs sought by the assessee in the writ petition.\nParticular emphasis was placed on Ground (b) at page 352, which reads as\nunder:\nb) issue writ of mandamus or in the nature of mandamus or any other writ or\ndirection directing that the interest component under Section 28 of the Land\nAcquisition Act is not exigible to tax under Section 56 (2) (viii) r/w Section 145A\n(b) of the Income Tax Act as \"income from other sources\"; and /or...\n21. The Id. AR thereafter invited our attention to page 364 of the paper\nbook, wherein a consolidated order passed by the Hon'ble Supreme Court is\nplaced on record. Further reference was made to page 366 of the paper\nbook, where the Hon'ble Supreme Court made the following observations:-\ni)\nCivil appeal No. 15094/2017 (arising out of SLP ( C) No. 19887/2014) -HSIDCL\nvs Savitri and another\nii)\nWP (C) No. 590/2016 (page 291) – Brahamaprakash& Ors.\niii)\nCivil Appeal No. 15145/2017 (arising out of SLP ( C) No. 18495/2017)\nMovaliyaBhikubhgaiBalabhai\n22. It was submitted that the operative part of the direction of the Hon'ble\nSupreme Court dated 15.9.2017 reads as under:-\n2) While determining as to whether the compensation paid was for\nagricultural land or not, the Assessing Officer(s) will keep in mind the\nprovisions of Section 28 of the Land Acquisition Act and the law laid down by\nthis Court in Commissioner of Income Tax, Faridabad v. Ghanshyam (HUF)\n[2009 (8) SCC 412] in order to ascertain whether the interest given under the\nsaid provision amounts to compensation or not.\"\n23. On the basis of the submissions made before us, as reproduced\nhereinabove, the Learned Authorised Representative (Ld. AR) has\nemphasized that the ratio laid down by the Hon'ble Supreme Court in the\ncase of Ghanshyamdas (HUF) (supra) continues to hold the field and has\nbeen consistently followed by the Hon'ble Supreme Court itself, without any\nreservations or qualifications, even after the subsequent amendments to the\nAct.\n24. It was submitted that the Hon'ble Gujarat High Court, relying upon the\ndecision in the case of MovaliyaBhikubhaiBalabhai vs ITO, has decided\nanother writ petition in favour of the Assessee, and our attention was drawn\nto page 375 in the case‘Mukta Nand Giri Mahesh Giri vs Direct District\nDevelopment officer'.\n25. The Ld. AR had further drawn our attention to the decision of the\nHon'ble Supreme Court in the case of Mukta Nand Giri Mahesh Giri vs Direct\nDistrict Development officer' where again the Hon'ble Supreme Court had\nreiterated the applicability and enforceability of the decision of the Hon'ble\nSupreme Court in the case of Ghanshyam HUF. It was submitted that a Misc.\npetition was filed by the Revenue in the decision of 'Brahamaparkash vs\nState of Haryana State Industrial and Infrastructure Development\nCorporation Ltd.' (supra) by the Revenue. However, the said Misc.\napplication was withdrawn by the Revenue.\n26. The Ld. AR, thereafter, had drawn our attention to page 389 of the\npaper book, where another writ petition is placed and in the title Jai\nBhagwan Singh vs HSIDC, wherein the following prayer has been sought at\npage 416.\n\"Prayer\nIn the facts and circumstance of the case, it is prayed that this Hon'ble\nCourt may be pleased to;\na) issue writ of mandamus or in the nature of mandamus or any other\nwrit or direction directing the respondents to apply the judgment and\norder dated 15.09.2017 in C.A. No. 15041/2017 (Union of India & Ors. Vs.\nHari Singh & Ors) to the case of all the land owners and rectify the\nmistake by refunding the tax amount along with interest to the\npetitioners as the tax is not payable on compensation including interest\nunder Section 28 of L.A. Act received against the acquisition of rural\nagricultural lands And/or\nb) pass such order or orders as this Hon'ble Court may deem fit in the\nfacts and circumstances of the case.\"\n27. The Hon'ble Supreme Court after considering the submissions of the\nparties have passed the following order at page 420 and 421 of paper book\n\"We are not inclined to entertain the writ petition under Article 32 of the\nConstitution.\nThe writ petition is accordingly dismissed. It shall, be without prejudice to any\nof the remedies available to the petitioners including praying for a fresh\ndecision on the return filed in pursuance of the judgment of this Court in Civil\nAppeal 15041 of 2017 titled Union of India & Ors. v. Hari Singh & Ors. decided\non 15.09.2017. Learned ASG submits that the review petition which was earlier\nfiled to review the judgment datedor passing the fresh assessment order on\nthe return filed by the 15.09.2017 has already been withdrawn hence, steps\nwill be taken petitioner\n28. Thereafter, a communication dated 22.5.2016 was brought to our\nnotice whereby the PCIT was asked to comply with the direction. The Ld. AR\nhad drawn our attention to various orders passed by the Tribunal whereby\nthe Tribunal followed the decision of the ‘Ghanhsyan' (supra). It as\nsubmission of the Ld. AR that the decision in the case of 'Ghanshyam'\n(supra) be followed.\n\"2) While determining as to whether the compensation paid was for\nagricultural land or not, the Assessing Officer(s) will keep in mind the\nprovisions of Section 28 of the Land Acquisition Act and the law laid down by\nthis Court in 'Commissioner of Income Tax, Faridabad v. Ghanshyam (HUF)\n[2009 (8) SCC 412) in order to ascertain whether the interest given under the\nsaid provision amounts to compensation or not.\n29.\nThe Ld. Authorised Representative (AR) submitted that there is no\nspecific provision in Section 2(24) of the Income-tax Act, 1961, incorporating\nwithin its ambit any “other income" referred to in Section 56(2)(viii) of the\nAct. It was contended that unless a particular receipt is expressly brought\nwithin the inclusive definition of “income" under Section 2(24), the same\ncannot be subjected to tax under Section 56(2)(viii). The Ld. AR pointed out\nthat Section 56(2)(viii) does not have any corresponding mention in Section\n2(24)(xvi) or elsewhere, and hence, any amount described under that\nclause would not automatically form part of taxable income.\n30. It was further contended that the decision of the Hon'ble Punjab &\nHaryana High Court in the case of Mahender Singh Narang was rendered\nper incurium, since the Hon'ble Court did not take into account the binding\nprecedents of the Hon'ble Supreme Court in the cases of Hari Singh v. UOI\n(2018) 91 taxmann.com 20 (SC), Savitri Devi v. CIT, and other connected\nmatters. Therefore, it was argued that this Tribunal is not bound to follow a\nper incurium decision. The Ld. AR emphasised that the interest received on\nenhanced compensation under Section 28 of the Land Acquisition Act,\n1894, cannot be taxed as “Income from other sources,” since there exists no\ncharging provision in the Income-tax Act which brings such receipts to tax\nunder Section 56(2) (viii).\n31. It was also submitted that the amendment to Section 145A(b) was\nintroduced by the Finance (No. 2) Act, 2009 with effect from 1 April 2010\n(notification dated 09/07/2009), subsequent to the Supreme Court judgment\nin CIT v. Ghanshyam (HUF) (2009) 315 ITR 1 (SC). Therefore, the legislature did\nnot have the benefit of considering the said decision while enacting the\namendment. According to the Ld. AR, this is not a case of legislative\noverruling of the judicial pronouncement, and consequently, the law as laid\ndown in Ghanshyam (HUF) continues to govern the field. The Ld. AR further\nreferred to the Explanatory Notes to the Finance (No. 2) Act, 2009, wherein\nthe amendment was stated to address the hardship arising from the\ndecision in Ramabai (supra) and similar cases, and notably, there was no\nreference to Ghanshyam (HUF) therein, which supports the assessee's\ninterpretation that the amendment had a limited curative scope.\n32. Lastly, on the basis of the orders passed by the Hon'ble Supreme\nCourt in the case of Brahm Prakash (supra), the subsequent orders in the\nmiscellaneous petitions filed therein, the withdrawal order in the case of Jai\nBhagwan, the decision rendered in the case of Hari Singh, as well as the\norder of the Hon'ble High Court and the communication issued by the\nLearned Additional Solicitor General, the Ld. Authorised Representative\nsubmitted that the ratio laid down by the Hon'ble Supreme Court has\nremained undisturbed. On the contrary, it has been reinforced and\nreiterated by the Hon'ble Supreme Court on multiple occasions.\nAccordingly, it was contended that the impugned order passed by the\nlower authorities, being contrary to the binding decision of the Hon'ble\nSupreme Court, deserves to be set aside and the additions made are liable\nto be deleted.\n33. The Id. Counsel, Shri Dharminder Singh, Advocate, appearing in Item\nNo. 56, submitted that the award of the LAC was passed on 20.02.2008;\nthereafter, the learned Additional District Judge enhanced the\ncompensation vide order dated 09.10.2014;at page 103 of PB it was held as\nunder:-\n30. In view of findings recorded on the issues above, the present petitions are\nhereby accepted partly with costs in favour of the petitioners and against\nthe respondents. The market value of the acquired land is assessed at\nRs.28,65,500/- per acre i.e. at the rate of Rs.592,045 per sq. yards as on the\nday of issuance of the notification under Section 4 of the Act. The petitioners\nare also held entitled to all the statutory benefits including solatium at the\nrate of 30% and additional amount at the rate of 12% per annum and\ninterest at the rate of 9% per annum for the first year and at the rate of 15%\nper annum for the subsequent period, in accordance with Sections 23(1-A),\n23(2) and 28 of the Land Acquisition Act. However the relief as sought by the\npetitioners for enhancement of compensation amount with regard to the\ntrees, buildings/structures and tubewells etc. stand declined.\nAnd subsequently, on further appeal, the Hon'ble High Court again\nenhanced the compensation vide order dated 20.03.2021, at page 107-108\nHon'ble High Court held as under:-\n\"The market value assessed in Tara Chand's case (supra) was Rs.904/- per square\nyard. Granting the benefit of 12% annual increase on the abovesaid market value of\nRs.904/- per square yard, to the land owners of instant set of appeals, for this time\ngap of one year, the market value comes to Rs.1012.50, which is rounded off to\nRs.1013/- per square yard. Accordingly, the land owners are held entitled to receive\nthe amount of compensation at the uniform rate of Rs.1013/- per square yard for\ntheir acquired land, from the date of notification under Section 4 of the Act.\nLet it be specifically recorded here that no better evidence or any judicial\nprecedent was pressed into service nor any other argument was raised on behalf of\neither of the parties.\nConsidering the peculiar facts and circumstances of the cases noted above,\ncoupled with the reasons aforementioned, this Court is of the considered view that\nso far as the appeals filed by the beneficiary department i.e. HSIIDC are concerned,\nthe same have been found wholly misconceived, bereft of merit and without any\nsubstance, thus, these must fail and are hereby dismissed. The appeals filed by the\nland owners deserve to be partly accepted and the same are allowed to the extent\nindicated above. The land ownersare held entitled to receive the compensation for\ntheir acquired land at the rate of Rs.1013/- per square yard, from the date of\nnotification under Section 4 of the Act. Besides this, the land owners shall also be\nentitled to all the statutory benefits available to them, under the relevant provisions\nof the Act.\nResultantly, with the observations made above, all these 134 appeals stand\ndisposed of, in the abovesaid terms, however, with no order as to costs\".\n34.\nIt was submitted that both the learned ADJ and the Hon'ble High\nCourt granted enhanced compensation under section 28 of the Land\nAcquisition Act and not under section 34. Accordingly, the amount\nawarded under Section 28 partakes the character of compensation, not\ninterest simpliciter.\n35. In ITA No. 486, the Id. AR also advanced an alternative submission\nadopting the arguments of Shri Suraj Bhan, submitting that there is no\ndispute regarding the tax character of the interest received by the assessee\nup to 01.04.2010, since the field stood governed by the law laid down by the\nHon'ble Supreme Court in Ghanshyam (HUF) (supra). It was contended that\nthe interest is required to be bifurcated on a pro-rata basis, i.e., the portion\nrelatable to the period up to 01.04.2010 is to be treated as part of the\ncompensation, while the portion accruing thereafter may, if applicable, be\nassessed in terms of section 56(2)(viii) of the Act.\n36.\nIn Item No. 32, in the case of Shri Avtar Singh, Shri Vineet Krishan, the\nlearned AR appearing for the assessee, submitted that the law declared by\nthe Hon'ble Supreme Court under Article 141 of the Constitution of India is\nbinding on all Courts and authorities. It was contended that once the\nHon'ble Supreme Court in Ghanshyam (HUF) (supra) has categorically held\nthat interest on enhanced compensation partakes the character of\ncompensation, the subsequent statutory amendment cannot retrospectively\nalter the settled legal position to the detriment of the assessee. The learned\nAR further submitted that several assessees similarly situated have not been\nsubjected to tax under the head “Income from Other Sources” in respect of\nsuch interest. Reliance was placed on the judgment of the Hon'ble Punjab\n& Haryana High Court in Jaswant Rai v. CIT [107 ITR 466], as well as a\ndecision of the Hon'ble Kerala High Court, in support of the contention that\nthe interest awarded on enhanced compensation has to be treated as part\nof compensation and not as independent interest income.\n37. Per contra, the learned DR, Shri Manav Bansal, appearing for the\nRevenue, submitted that sections 11, 23 and 24 of the Land Acquisition Act\nare required to be read strictly in the context of the enquiry relating to the\ndetermination of compensation. It was contended that, on a plain reading\nof section 28 of the LAC, the provision contemplates two distinct\ncomponents: first, the determination of the amount payable in excess of the\ncompensation awarded initially by the Collector; and second, the grant of\ninterest on such excess amount at the statutory rate of 9%. According to the\nlearned DR, the statute consciously employs separate terminology\n-one\nabout \"enhanced amount/award\" and the other to \"interest on such\nexcess amount\" — and therefore, both elements must be treated distinctly\nin law.\n38. The learned DR further placed reliance on section 2(24) of the\nIncome-tax Act, which defines “income”, and section 2(28A), which defines\n"interest”, to contend that the statutory definition squarely encompasses\nany interest received pursuant to a claim, and hence such receipt\nconstitutes income. Having referred to the definition clause, the learned DR\ndrew attention to section 56(2)(viii) of the Act, which expressly provides that\ninterest on compensation or enhanced compensation is taxable under the\nhead \"Income from Other Sources”. It was thus argued that the legislative\nscheme clearly mandates separate taxation of the interest component,\nindependent of the compensation..\n39. The learned DR further submitted that the ratio laid down by the\nHon'ble Supreme Court in Ghanshyam (HUF) (supra) has been subsequently\nconsidered and followed by the jurisdictional Punjab & Haryana High Court\nin the case of Mohinder Pal Narang as well as by the Hon'ble Delhi High\nCourt in the case of Interjesh Singh Sodhi. The relevant portions of the\naforesaid judgments are reproduced elsewhere.\n40. The learned DR submitted that the decision in the case of Hari Singh\n(supra) pertains to an entirely different issue and, therefore, has no\napplication to the present controversy. In this regard, he drew our attention\nto page 366 of the paper book filed by the learned AR, which records the\nfollowing observations:\n\"An admitted fact which is common in all these appeals that while disbursing\nthe compensation, the Land Acquisition Collector had deducted the tax at\nsource and deposited the same with the Income Tax Department. These\nappellants preferred the writ petition in the High Court stating that no such\ndeduction at source was permissible in view of the provisions of Section 194LA\nof the Income Tax land and this provision categorically mentions that in Act,\n1961, since the land which was acquired was agricultural respect of\nagricultural land, tax at source is not to be deducted.\nSimilarly, the learned DR submitted that the writ petition filed by Jai\nBhagwan Singh pertained to deduction of tax at source under section 194LA\nof the Act and the applicability of exemption under section 10(37) of the\nAct. It was contended that the scope and ambit of the decisions in Hari\nSingh as well as in Jai Bhagwan Singh were confined to the interpretation of\nsection 194LA and section 10(37) of the Income-tax Act, and did not deal\nwith section 56(2)(viii), section 145A/145B of the Act, or section 28 of the\nLand Acquisition Act. Therefore, according to the learned DR, those\ndecisions have no bearing on the present dispute.It was submitted that\nSection 194LA of the Income-tax Act, 1961 mandates deduction of tax at\nsource (TDS) by the payer at the time of making payment for compulsory\nacquisition of immovable property other than agricultural land. It was further\ncontended that in the case of Hari Singh v. Union of India [2018] 91\ntaxmann.com 20 (SC)the issue of chargeability of interest to tax was not the\nlis before the Hon'ble Supreme Court. The only question before the Hon'ble\nCourt was whether the disbursing authority was required to deduct tax at\nsource under Section 194LA while releasing the award amount pertaining to\nagricultural land, which is otherwise excluded from the ambit of the said\nprovision. He had drawn our attention to para 2&3 of the judgement of the\nHon'ble Supreme Court which is to the following effect:\n2. In all these appeals the short question of law which needs consideration is\nas to whether the tax at source is to be deducted on the amounts which are\npaid as compensation or enhanced compensation, etc., on account of\ncompulsory acquisition of land under the provisions of Land Acquisition Act,\n1894.\n3. An admitted fact which is common in all these appeals is that while\ndisbursing the compensation, the Land Acquisition Collector had deducted\nthe tax at source and deposited the same with the Income Tax Department.\nThese appellants preferred the writ petition in the High Court stating that no\nsuch deduction at source was permissible in view of the provisions of Section\n194LA of the Income Tax Act, 1961, since the land which was acquired was\nagricultural land and this provision categorically mentions that in respect of\nagricultural land, tax at source is not to be deducted.\n42. The learned DR further submitted that when the Hon'ble Supreme\nCourt rendered its decision in Ghanshyam (HUF) (supra), the Court did not\nhave the benefit of considering the subsequent statutory amendments\nbrought into effect from 01.04.2010 by insertion of section 56(2)(viii) and\nsection 145A/145B. It was also pointed out that the CBDT, vide Circular\ndated 03.06.2010, in paragraphs 46.1to 46.4, has clearly clarified the\nlegislative intent behind the said amendments, which reads as under:-\nCIRCULAR NO. 5/2010/[F. NO. 142/13/2010-SO(TPL)]\nFINANCE (NO. 2) ACT, 2009 - EXPLANATORY NOTES TO THE PROVISIONS OF THE\nFINANCE (NO. 2) ACT, 2009\nCIRCULAR NO. 5/2010/[F. NO. 142/13/2010-SO(TPL)], DATED 3-6-2010\n[AS CORRECTED BY CORRIGENDUM NO.5/2010 [F.NO.142/13/2010-SO(TPL)],\nDATED 30-9-2010]\n46. Rationalizing the provisions for taxation of interest received on delayed\ncompensation or on enhanced compensation\n46.1 The existing provisions of Income-tax Act provide that income\nchargeable under the head \"Profits and gains of business or profession\" or\n\"Income from other sources\", shall be computed in accordance with either\ncash or mercantile system of accounting regularly employed by the\nassessee. Further, the Hon'ble Supreme Court in the case of Rama\nBai v.CIT (181 ITR 400) has held that arrears of interest computed on delayed\nor enhanced compensation shall be taxable on accrual basis. This has\ncaused undue hardship to the taxpayers.\n46.2 With a view to mitigate the hardship, section 145A is amended to\nprovide that the interest received by an assessee on compensation or\nenhanced compensation shall be deemed to be his income for the year in\nwhich it was received, irrespective of the method of accounting followed by\nthe assessee.\n46.3 Further, clause (viii) is inserted in the sub-section (2) of the section 56 so\nas to provide that income by way of interest received on compensation or\non enhanced compensation referred to in clause (b) of section 145A shall be\nassessed as \"income from other sources\" in the year in which it is received.\n46.4 Applicability - This amendment has been made applicable with effect\nfrom 1st April, 2010, and will accordingly, apply in relation to assessment year\n2010-11 and subsequent assessment years.\n43. In sum and substance, the learned DR submitted that a plain reading\nof section 56(2)(viii) of the Act clearly provides that interest received on\ncompensation or on enhanced compensation is taxable under the head\n\"Income from Other Sources”, and therefore the assessees are liable to pay\ntax on such receipts.\n44. Rebutting the submissions advanced by the learned AR, it was\ncontended that the absence of any specific reference to section 56(2)(viii)\nin section 2(24) of the Act, which defines “income”, is of no consequence.\nThe definition in section 2(24) is inclusive in nature, and several categories of\nincome or deemed income chargeable to tax do not find express mention\ntherein. Further, the Ld. DR refer to Section 4 and 14 of the Income Tax Act,\n1961 to support the case of the Revenue. It was submitted that the deemed\nincome is chargeable under section 4 of the Act, and Section 14 provide\nthe heads of income and Clause F provide income from other sources and\nincome from other sources is provided under section 56 of the Act. Thus,\nonce the interest on enhanced compensation is included as income from\nother sources under section 56 then the same is chargeable to tax under\nsection 4 being the deemed income.\n45. It was further argued that where the statutory language is clear and\nunambiguous, literal interpretation must prevail. Lastly, the learned DR\nsubmitted that the taxability of the impugned receipts must be determined\nstrictly in accordance with the provisions of the Income-tax Act and not on\nthe basis ofthe definition of compensation under the Land Acquisition Act.\nThe Income-tax Act being a special statute governing taxation will prevail\nover the meaning assigned to compensation under section 28 of the Land\nAcquisition Act.\n46. The Ld. Departmental Representative (DR) drew attention to the\nExplanatory Notes to the Finance (No. 2) Act, 2009, emphasising that the\nlegislative intent was to bring uniformity in taxation of interest on\ncompensation or enhanced compensation and to mitigate practical\nhardship in such cases. The Ld. DR submitted that the omission of any\nreference to Ghanshyam (HUF) in the said Notes does not dilute the\nlegislative intent. According to the Ld. DR, the insertion of clause (viii) in\nSection 56(2) and corresponding amendments in Section 145A were\ndesigned to codify the law and provide a specific charging mechanism for\ninterest on compensation, whether under Section 28 or 34 of the Land\nAcquisition Act. Hence, the receipt of interest in question squarely falls within\nthe purview of taxable income.\n47. He had drawn our attention to the following two decision of the\nPunjab & Haryana High Court in the case of Mahnder Pal Naran Vs. CBDT,\nNew Delhi in C.W.P. No. 17971 of 2019 dt. 19/02/2020 [2020] 120 taxmann.co\nm 400 has held as under :\n7. Before dealing with the contentions, relevant portion of the circular is quoted\nbelow:\n'46. Rationalizing the provisions of taxation of interest received on delayed\ncompensation or on enhanced compensation.\n46.1 The existing provisions of Income-tax Act provide that income chargeable under\nthe head \"Profits and gains of business or profession\" or \"Income from other sources\",\nshall be computed in accordance with either cash or mercantile system of\naccounting regularly employed by the assessee. Further, the Hon'ble Supreme Court\nin the case of Rama Sai v. CIT (181 ITR 400) has held that arrears of interest computed\non delayed or enhanced compensation shall be taxable on accrual basis. This has\ncaused undue hardship to the taxpayers.\n46.2 With a view to mitigate the hardship, section 145A is amended to provide that\nthe interest received by an assessee on compensation or enhanced compensation\nshall be deemed to be his income for the year in which it was received, irrespective of\nthe method of accounting followed by the assessee.\n46.3 Further, clause (viii) is inserted in the sub-section (2) of the section 56 so as to\nprovide that income by way of interest received on compensation or on enhanced\ncompensation referred to in clause (b) of section 145A shall be assessed as \"income\nfrom other sources\" in the year in which it is received.\n46.4 Applicability- This amendment has been made applicable with effect from 1st\nApril, 2010, and will accordingly apply in relation to assessment year 2010-11 and\nsubsequent assessment years.'\n8. Section 45 of the 1961 Act deals with capital gains. By Finance Act, 1987, sub-\nsection (5) was inserted in Section 45 and as per its clause (b), the enhanced\ncompensation shall be chargeable under the head \"Capital gains" of the previous\nyear in which the amount is received by the assessee. This issue came up before Apex\nCourt in Ghanshyam's case (supra). Considering Sections 45(5) and 155(16) of the\n1961 Act, it was held that enhanced compensation received under the 1894 Act may\nbe received in multiple stages but the same is to be treated as \"deemed income\" at\nthe time when it is received and is to be taxed on receipt basis. It was further held, the\nfact that enhanced compensation is in dispute and the withdrawal is conditional will\nnot make a difference. While dealing with the said issue, it was held that interest on\nenhanced value of land forms part of compensation and is exigible to tax in the year\nof receipt whereas interest on delayed payment of enhanced compensation is\nincome in a different nature.\n9. The scheme with regard to chargeability of interest received on compensation and\nenhanced compensation has undergone a sea change with the insertion of sections\n56(2) (viii) and 57(iv) of the 1961 Act. Section 56 deals with income from other sources\nand a specific provision has been inserted by way of sub-section 2(viii), whereby the\ninterest received on compensation or enhanced compensation, as referred to in\nclause (b) to section 145A has been included under the head 'Income from other\nsources'. In clause (iv) to section 57, deduction of fifty per cent is provided on interest\nreceived on compensation or enhanced compensation.\n10. In view of the amendments, the decision of Apex Court in Ghanshyam's case\n(supra) does not come to the rescue of the petitioner to claim that interest received\nunder section 28 of the 1894 Act is to be treated as compensation and to be dealt\nwith under \"Capital gains\". The fact that there is no amendment carried out under\nsection 10(37) of the 1961 Act will not change the position. Section 10 deals with\ndeductions and sub-section (37) thereof deals with capital gains arising from transfer\nof agricultural land, it no where provides as to what is to be included under the head\n\"Capital gains\". The argument raised is not well founded.\n11. Learned counsel has relied on Circular No. 5 of 2010 by merely reading clause\n46.

The said clause talks about undue hardship being caused as arrears of interest\nbeing taxable on accrual basis. Clause 46.2 states that Section 145A is amended to\novercome the difficulty, by deeming the income for the year in which it is received.\nClause 46.3 has been ignored in which section 56(2) (viii) is dealt with that interest on\ncompensation or on enhanced compensation referred to in clause (b) of section\n145A shall be assessed as \"income from other sources\".\n12. Gujarat High Court in MovaliyaBhikhubhai Balabhai's case (supra) while dealing\nwith deduction of tax at source relying upon Circular No. 5 of 2010 held that\namendment to the provisions of the 1961 Act by Finance Act, 2010 Act was not in\nconnection with the decision of Supreme Court in Ghanshyam's case (supra) but to\nmitigate the hardship caused by the decision of Supreme Court in Rama Bai's case\n(supra). It was held that interest under section 28 of the 1894 Act continues to part\ntake the character of compensation and will not fall within the ambit of expression\n\"interest\". In view of discussion above, we with utmost respect are not in agreement\nwith the view taken by Gujarat High Court. There is another aspect, i.e. the language\nof sections 56(2) (viii) and 57(iv) of the 1961 Act is plain, simple and unambiguous.\nThere is no scope of taking outside aid for giving an interpretation to newly inserted\nsub-sections and clauses. Supreme Court in I.T.C. Ltd. v. CCE [2004] 7 SCC 591 held as\nunder:\n\"23. ........These decisions exemplify the general rule of statutory construction that\nwords have to be construed strictly according to their ordinary and natural meaning,\nparticularly when the statute is a fiscal one irrespective of the object with which the\nprovision was introduced. Of course if there is ambiguity in the statutory language,\nreference may be made to the legislative intent to resolve the ambiguity. But if the\nstatutory language is unambiguous then that must be given effect to. The legislature is\ndeemed to intend and mean what it says. The need for interpretation arises only\nwhen the words used in the statute are, on their own terms ambivalent and do not\nmanifest the intention of the legislature.\"\n13. In view of the above, it is held that the interest received on compensation or\nenhanced compensation is to be treated as \"income from other sources\" and not\nunder the head \"Capital gains\"\n48. Against the abovesaid decision the SLP filed by the assessee was\ndismissed by the Hon'ble Supreme Court and the order of the Hon'ble\nSupreme Court was reported in [2021] 126 taxmann.com 105 (SC)/[2021] 279\nTaxman 74 (SC)/[2..\n49. Similarly the Hon'ble Delhi High Court in the case of PCIT Vs. Inderjit\nSingh Sodhi (HUF)[2024] 161 taxmann.com 301 (Delhi has held as under;\n17. We have heard the learned counsels appearing on behalf of the parties\nand perused the record.\n18. The solitary question which arises for our consideration in the present\nappeal is whether the interest on enhanced compensation received by the\nrespondent-assessee partakes the character of income from other sources\nunder Section 56(2) (viii) of the Act, to be considered as separable from\nthe enhanced compensation.\n19. At the outset, it is significant to refer to Sections 28 and 34 of the Act of\n1894, which deal with the payment of interest on compensation, and read as\nunder:-\n\"28. Collector may be directed to pay interest on excess compensation. -\nIf the sum which, in the opinion of the court, the Collector ought to have\nawarded as compensation is in excess of the sum which the Collector did\naward as compensation, the award of the Court may direct that the\nCollector shall pay interest on such excess at the rate of [nine per centum]\nper annum from the date on which he took possession of the land to the\ndate of payment of such excess into Court.\n***\n\"34. Payment of interest. - When the amount of such compensation is not\npaid or deposited on or before taking possession of the land, the Collector\nshall pay the amount awarded with interest thereon at the rate of nine per\ncentum per annum from the time of so taking possession until it shall have\nbeen so paid or deposited.\nProvided that if such compensation or any part thereof is not paid or\ndeposited within a period of one year from the date on which possession is\ntaken, interest at the rate of fifteen per centum per annum shall be payable\nfrom the date of expiry of the said period of one year on the amount\nof compensation or part thereof which has not been paid or deposited\nbefore the date of such expiry.\"\n20. A reading of Section 28 of the Act of 1894 indicates that the said provision\ncomes into play in cases where the Court finds that some\nhigher compensation ought to have been provided by the Collector. In such\nsituations, the Court may direct for payment of an interest on the excess\nawarded amount. Whereas, Section 34 of the Act of 1894 stipulates that the\nCollector shall award interest onthe compensation at the rate of 9% per\nannum from the date of taking possession. It further lays down the condition\nthat in case of non-payment despite expiry of a period of one year, the\nsaid interest on the amount of compensation which remains unpaid, shall be\nawarded at the rate of 15% per annum, calculable from the date of such\nexpiry.\n21. It is the contention of the respondent-assessee that the interest awarded\nunder Section 28 of the Act of 1894, as discussed above, shall constitute a\npart of the compensation itself. The ITAT has also drawn strength from the\nobservation of the Hon'ble Supreme Court in the case of Ghanshyam (supra)\nand the relevant paragraph of the said decision reads as under:-\n\"35. To sum up, interest is different from compensation. However, interest paid\non the excess amount under Section 28 of the 1894 Act depends upon a\nclaim by the person whose land is acquired whereas interest under Section\n34 is for the delay in making payment. This vital difference needs to be kept\nin mind in deciding this matter. Interest under Section 28 is part of the amount\nof compensation whereas interest under Section 34 is only for delay in\nmaking\npayment\nafter\nthe compensation amount\nis\ndetermined. Interest under Section 28 is a part of enhanced value of the land\nwhich is not the case in the matter of payment of interest under Section 34.\"\n22. However, vide Finance (No.2) Act, 2009 (with effect from 01.10.2010),\nClause (viii) of sub-Section 2 to Section 56 of the Act was inserted and the\nsame is extracted hereunder as:-\n\"56. Income from other sources.-\n***\n(2) In particular and without prejudice to the generality of the provisions of\nsub-section (1), the following incomes shall be chargeable to income tax\nunder the head \"Income from other sources\", namely :—\n[(viii) income by way of interest received\non compensation or\non enhanced compensation referred to in [sub-section (1) of Section 145-B].]\"\n23. For the sake of clarity, Section 145-B of the Act is reproduced as under:-\n\"145-B. Taxability of certain income.-(1) Notwithstanding anything to the contained in section 145,\nthe interest received by an assessee on any compensation or on enhanced\ncompensation, as the case may be, shall be deemed to be the income of\nthe previous year in which it is received.\n(2) Any claim for escalation of price in a contract or export incentives shall\nbe deemed to be the income of the previous year in which reasonable\ncertainty of its realisation is achieved.\n(3) The income referred to in sub-clause (xviii) of clause (24) of section 2 shall\nbe deemed to be the income of the previous year in which it is received, if\nnot charged to income-tax in any earlier previous year.]\"\nto\n24. A conjoint reading of the aforementioned provisions i.e., Sections\n56(2)(viii) and 145-B of the Act vividly stipulate that the income received by\nway of interest on compensation or on enhanced compensation shall be\nchargeable to tax under the head „income from other sources'. Therefore,\nsince the position with respect\nthe imposition of tax\non interest on compensation or enhanced compensation, as it exists today,\ncame into being only in the year 2010, the conclusions drawn from the\ndecision in Ghanshyam (supra), which was passed in the year 2009, are\nunsustainable in the facts of the present case.\n25. Further, much reliance has been placed by the ITAT upon the decision of\nthe Hon'ble Supreme Court in the case of Ghanshyam (supra) to hold that\nthe interest on enhanced compensation received under Section 28 of the\nAct of 1894 is exigible to tax on receipt basis. However, a deeper analysis of\nthe decision in GovindbhaiMamaiya (supra) would show that it does not deal\nwith any issue pertaining to the change in the taxability, put in place through\nthe concerned amendment of 2010. Therefore, the said decision lacks any\napplicability in the facts and circumstances of the present case.\n26. Notably, a three-Judges Bench of the Hon'ble Supreme Court in the case\nof Sham Lal Narula (Dr.) v. CIT [(1964) 53 ITR 151], while considering\nthe interest under Section 28 of the Act of 1894 to be analogous to\nthe interest under Section 34 of the Act, took the view that the same did not\nform part of compensation. The relevant extract of the said decision is culled\nout as under:-\n\"9.\nAs we have pointed out, earlier, as soon as the Collector has taken\npossession of the land either before or after the award the title absolutely\nvests in the Government and thereafter the owner of the land so acquired\nceases to have any title or right of possession to the land acquired. Under the\naward he gets compensation for both the rights. Therefore,\nthe interest awarded under Section 28 of the Act, just like under Section 34\nthereof, cannot be a compensation or damages for the loss of the right to\nretain possession but only compensation payable by the State for keeping\nback the amount payable to the owner.\n[Emphasis supplied]\n27. The decision in Sham Lal Narula (supra) was subsequently followed by the\nHon'ble Supreme Court in the case of Bikram Singh v. Land Acquisition\nCollector [(1997) 10 SCC 243], wherein, it was held that interest under Section\n28 of the Act of 1894 was in the nature of a revenue receipt and hence, the\nsame was considered to be taxable. The relevant paragraphs of the said\ndecision read as under:-\n\"8. The controversy is no longer res integra. This question was considered\nelaborately by this Court in Sham Lal Narula (Dr) v. CIT [(1964) 53 ITR 151 : AIR\n1964 SC 1878]. Therein, K. Subba Rao, J., as he then was, considered the\nearlier case-law on the concept of \"interest\" laid down by the Privy Council\nand all other cases and had held at p. 158 as under:\n\"In a case where title passes to the State, the statutory interest provided\nthereafter can only be regarded either as representing the profit which the\nowner of the land might have made if he had the use of the money or the\nloss he suffered because he had not that use. In no sense of the term can it\nbe described as damages or compensation for the owner's right to retain\npossession, for he has no right to retain possession after possession was taken\nunder Section 16 or Section 17 of the Act. We, therefore, hold that the\nstatutory interest paid under Section 34 of the Act is interest paid for the\ndelayed payment of the compensation amount and, therefore, is a revenue\nreceipt liable to tax under the Income Tax Act.\"\n9. This position of law has been consistently reiterated by this Court in the\ncase of T.N.K. Govindaraju Chetty v. CIT [(1967) 66 ITR 465: AIR 1968 SC 129]\n, Rama Bai v. CIT [1990 Supp SCC 699 : (1990) 181 ITR 400] and K.S. Krishna\nRao v. CIT [[1990] 84 CTR 144/181 ITR 408/[1991] 54 Taxman 339 (SC)]. Thus by\na catena of judicial pronouncements, it is settled law that\nthe interest received on delayed payment of the compensation is a revenue\nreceipt exigible to income tax. It is true that in amending the definition of\n\"interest\" in Section 2(28-A), interest was defined to mean interest payable in\nany manner in respect of any moneys borrowed or debt incurred including a\ndeposit, claim or other similar right or obligation and includes any service, fee\nor other charges in respect of the moneys borrowed or debt incurred or in\nrespect of any credit facility which has not been utilised. It is seen that the\nword \"interest\" for the purpose of the Act was interpreted by the inclusive\ndefinition. A literal construction may lead to the conclusion that\nthe interest received or payable in any manner in respect of any moneys\nborrowed or a debt incurred or enumerated analogous transaction would\nbe deemed interest. That was explained by the Board in the circular referred\nto hereinbefore.\"\n28. In the case of Puneet Singh (supra), the High Court of Punjab and\nHaryana, while enunciating the effect of Section 145A(b) and Section\n56(2) (viii) of the Act, has held as under:-\n\"19. The cumulative effect of section 145A(b) and section 56(2)(viii) would be\nthat any interest received\non compensation or\non enhanced compensation shall be taxable under the head \"Income from\nother sources\" in the year of receipt.\n20. However, by section 27 of the 2009 Act, a new clause (iv) in section 57\nhas been inserted with effect from April 1, 2010 which lays down that in the\ncase of income of the nature referred to in section 56(2) (viii), a deduction of\na sum equal to 50 per cent. of such income would be allowable thereunder\nand no deduction would be allowed under any other clause of section 57.\nThe said provision reads thus:\n\"57. Deductions. The income chargeable under the head 'Income from other\nsources' shall be computed after making the following deductions, namely:.\n(iv) in the case of income of the nature referred to in clause (viii) of sub-\nsection (2) of section 56, a deduction of a sum equal to fifty per cent. of such\nincome and no deduction shall be allowed under any other clause of this\nsection.\"\n21. The Assessing Officer in I. T. A. No. 132 of 2018 where the assessee had\nreceived Rs.11,30,561 as interest income, held that the interest payment\nreceived on compensation/enhanced compensation to the tune of Rs.\n5,65,280 (50 per cent. of Rs.11,30,561) is taxable as income from other\nsources as per provisions of sections 56(2) (viii) read with 57 (iv) and section\n145A(b) of the Act for the assessment year 2010-11. The Commissioner of\nIncome-tax (Appeals) and the Tribunal had upheld the order of the Assessing\nOfficer in that regard.\n22. No illegality or perversity could be pointed out by learned counsel for the\nassessee in the concurrent findings of fact recorded by the authorities below\nwhich may warrant interference by this court. No question of law, much less,\nsubstantial question of law arise in these appeals.\n23. Accordingly, finding no merit in the appeals, the same are hereby\ndismissed.\"\n[Emphasis supplied]\n29. Considering the foregoing discussion, we affirm the concurrent findings of\nthe AO and CIT(A) and find that the view taken by the ITAT is unsustainable,\nas the same is based on an incorrect appreciation of law. The 2010\namendment was a conscious departure by the Legislature from the earlier\nposition and the said departure holds good law, as on date. There is no\nquestion with respect to the vires of the amendment before us or regarding\nany ambiguity in the language of the amendment. The only concern is\nregarding the enunciation of the applicable law and we hold the same to\nunequivocally mean that interest,\nwhether on compensation or\non enhanced compensation, shall be considered as income from other\nsources and shall be exigible to income tax.\n30. We, accordingly, answer the substantial question of law which has arisen\nin the instant appeal in affirmative and in favour of the Revenue. We, thus,\nhold that the ITAT has erred in relying upon the decision\nof Ghanshyam (supra), ignoring the changes brought about by Finance\n(No.2) Act, 2009, which came into effect in the year 2010.\nBesides thatDR has also relied upon the following case laws:\n•\nDr.Shamlal Narula Vs. CIT (SC) India 53 ITR 151 dt. 09/04/1964\n•\nT.N.K. Govindaraju Chetty Vs. CIT (SC) 66 ITR 465 dt. 17/04/1967\n•\nState of Haryana Vs Kailashwati and Ors. (P&H) dt. 11/09/1979\nRama Bai Vs CIT (SC) 54 Trueman 496 dt. 08/11/1989\n•\nK.S. Krishna RAO Vs CIT (SC) 54 Trueman 339 dt. 08/11/1989\n•\nBikram Singh Vs Land Acquisition Collector 89 Trueman 119 dt. 12/09/1996\n•\nSunder vs Union of India, Civil Appeal No. 6271 of 1998 (SC) dt. 19/09/2001\n•\nShivajirao S/o, DnyanobaGhanwat and others, Vs The State of Maharashtra\nand others W.P.N. 5402 of2013 (High Court of Bombay at Aurangabad) dated 27\n08.2013\n•\nManjet Singh (HUF) Karta Manjeet Singh v. Union of India in High Court of\nPunjab and Haryana (2016) 65 raxmann.com 160/(2016) 237 Taxman 116 (Punjab and\nHaryana) dated 14.01.2014\n•\nSLP of Manjet Singh (HUF) Karta Manjeet Singh v. Union of India dismissed by\nHon'ble Supreme Court dated 18.12.2014\n•\nPuneet Singh v. CIT. Kamal in High Court of Punjab and Haryana (2019) 110\ntax.mann.com 116 dated 19.1 1.2018\n•\nMahender Pal Narang v. CBDT. New Delhi in High Court of Punjab and\nHaryana (2020) 423 !TR 13 dated 19.02.2020\n•\nSLP of Mahender Pal Narang v. CBDT, New Delhi dismissed by Hon'ble\nSupreme Court dated 04.03.2021\n•\nBraham Prakash Vs.Income Tax Officer (ITA No. 5819/Del/20 17 ITAT Delhi\nBench) dated 20.10.2023\n•\nMadhav Pandharinath. Kande vs ITO in ITAT, Pune (2022) 140 taxmann.com\n105Dt. 28/04/2022\n•\nPCIT v. Inderjit Singh Sodhi (HUF) in High Court of Delhi (2024) 161 taxrnann.com\n301 (Delhi) dated 08.04.2024\n•\nJagit Singh Kataria vs PCIT. Rohtak in ITAT Delhi Appeal No ITA No.\n1245/Del/2024 dated 10.12.2024\n•\nLeelu Ram vs. ITO. in ITAT Delhi (2025) 170 ta,mann.com 426 dated 27.12.2024\n•\nOm Prakash vs. PCIT. in ITA T, Delhi (2015) 173 taxmann.com 625 dated\n25.03.2025\n•\nITO Gurdev vs. in Singh. 176 laxmann.com 91 ITAT, Delhi: (2025) dated\n16.05.2025\n•\nCBDT-circular-5/2010-No.142/13/2010-50 (TPL) Date of pronouncement 2010-\n50 (TPL) dated 30.09.2010\nIt was submitted that the appeals of the assessee are required to be\ndismissed\n51.\nWe have heard the rival contention of the parties and perused the\nmaterial available on the record. Before we discuss the dispute in the\npresent set of appeals, it is necessary to review various provisions of the\nIncome Tax Act, 1961, which are relevant for the decision of the present\ncontroversy.\nSection 2 (14)(iii) the Agriculture land, income under section 2(24)\n28A, as under:\n(iii) agricultural land55 in India, not being land situate-\n(a) in any area which is comprised within the jurisdiction of a\nmunicipality55 (whether known as a municipality, municipal\ncorporation, notified area committee, town area committee, town\ncommittee, or by any other name) or a cantonment board and\nwhich has a population56 of not less than ten thousand 57[***]; or\n58[(b) in any area within the distance, measured aerially,-\n(1) not being more than two kilometres, from the local limits of\nany municipality or cantonment board referred to in item\n(a) and which has a population of more than ten\nthousand but not exceeding one lakh; or\n(II) not being more than six kilometres, from the local limits of\nany municipality or cantonment board referred to in item\n(a) and which has a population of more than one lakh but\nnot exceeding ten lakh; or\n(III) not being more than eight kilometres, from the local limits\nof any municipality or cantonment board referred to in\nitem (a) and which has a population of more than ten\nlakh.\nExplanation. For the purposes of this sub-clause, \"population\"\nmeans the population according to the last preceding census of\nwhich the relevant figures have been published before the first day\nof the previous year;]]\n\"income\"43 includes43-\n(i) profits and gains43 ;\n(ii) dividend;\n44[(iia) voluntary contributions received by a trust created wholly or partly for\ncharitable or religious purposes or by an institution established wholly or\npartly for such purposes 45 [or by an association or institution referred to in\nclause (21) or clause (23)46, or by a fund or trust or institution referred to in\nsub-clause (iv) or sub-clause (v) 47[or by any university or other educational\ninstitution referred to in sub-clause (iiiad) or sub-clause (vi) or by any hospital\nor other institution referred to in sub-clause (iiiae) or sub-clause (via)] of\nclause (23C) of section 1048 [or by an electoral trust]].\nExplanation. For the purposes of this sub-clause, \"trust\" includes any other\nlegal obligation ;)\n(iii) the value of any perquisite or profit in lieu of salary taxable under clauses (2)\nand (3) of section 17;\n42[(iiia) any special allowance or benefit, other than perquisite included under sub-\nclause (iii), specifically granted to the assessee to meet expenses wholly,\nnecessarily and exclusively for the performance of the duties of an office or\nemployment of profit ;\n(iiib) any allowance granted to the assessee either to meet his personal\nexpenses at the place where the duties of his office or employment of profit\nare ordinarily performed by him or at a place where he ordinarily resides or\nto compensate him for the increased cost of living ;]\n(iv) the value of any benefit or perquisite50, whether convertible into money or\nnot, obtained from a company either by a director or by a person who has\na substantial interest in the company, or by a relative of the director or such\nperson, and any sum paid by any such company in respect of any\nobligation which, but for such payment, would have been payable by the\ndirector or other person aforesaid ;\n51[(iva) the value of any benefit or perquisite52, whether convertible into money or\nnot, obtained by any representative assessee mentioned in clause (iii) or\nclause (iv) of sub-section (1) of section 160 or by any person on whose\nbehalf or for whose benefit any income is receivable by the representative\nassessee (such person being hereafter in this sub-clause referred to as the\n\"beneficiary\") and any sum paid by the representative assessee in respect\nof any obligation which, but for such payment, would have been payable\nby the beneficiary ;)\n(v) any sum chargeable to income-tax under clauses (ii) and (iii) of section\n28 or section 41 or section 59;\n53[(va) any sum chargeable to income-tax under clause (iiia) of section 28 ;]\n54[(vb) any sum chargeable to income-tax under clause (iiib) of section 28 ;]\n55[(vc) any sum chargeable to income-tax under clause (iiic) of section 28 ;]\n56[(vd)] the value of any benefit or perquisite taxable under clause (iv) of section\n28;\n52[(ve) any sum chargeable to income-tax under clause (v) of section 28 ;]\n(vi) any capital gains chargeable under section 45;\n(vii) the profits and gains of any business of insurance carried on by a mutual\ninsurance company or by a co-operative society, computed in\naccordance with section 44 or any surplus taken to be such profits and\ngains by virtue of provisions contained in the First Schedule ;\n58[(viia) the profits and gains of any business of banking (including providing credit\nfacilities) carried on by a co-operative society with its members;]\n(viii) [Omitted by the Finance Act, 1988, w.e.f. 1-4-1988. Original sub-clause (viii)\nwas inserted by the Finance Act, 1964, w.e.f. 1-4-1964;]\n52[(ix) any winnings from lotteries60, crossword puzzles, races including horse races,\ncard games and other games of any sort or from gambling or betting of\nany form or nature whatsoever.]\n61[Explanation.—For the purposes of this sub-clause, —\n(i) \"lottery\" includes winnings from prizes awarded to any person by\ndraw of lots or by chance or in any other manner whatsoever,\nunder any scheme or arrangement by whatever name called;\n(ii) \"cardgame and other game of any sort\" includes any game show,\nan entertainment programme on television or electronic mode, in\nwhich people compete to win prizes or any other similar game ;]\n62[(x) any sum received by the assessee from his employees as contributions to\nany provident fund or superannuation fund or any fund set up under the\nprovisions of the Employees' State Insurance Act, 1948 (34 of 1948), or any\nother fund for the welfare of such employees ;]\n63[(xi) any sum received under a Keyman insurance policy including the sum\nallocated by way of bonus on such policy.\nExplanation. For the purposes of this clause*, the expression \"Keyman\ninsurance policy\" shall have the meaning assigned to it in\nthe Explanation to clause (10D) of section 10 ;]\n64[(xii) any sum referred to in 65[clause (va)] of section 28;]\n66[(xiia) the fair market value of inventory referred to in clause (via) of section 28;]\n67[(xiii) any sum referred to in clause (v) of sub-section (2) of section 56;]\n68[(xiv) any sum referred to in clause (vi) of sub-section (2) of section 56;]\n62[(xv) any sum of money or value of property referred to in clause (vii) 20[or\nclause (viia)] of sub-section (2) of section 56;]\n11[(xvi) any consideration received for issue of shares as exceeds the fair market\nvalue of the shares referred to in clause (viib) of sub-section (2) of section\n56;]\n72[(xvii) any sum of money referred to in clause (ix) of sub-section (2) of section 56;]\n23[(xviia) any sum of money or value of property referred to in clause (x) of sub-\nsection (2) of section 56;]\n74[(xviib) any compensation or other payment referred to in clause (xi) of sub-\nsection (2) of section 56;]\n75[(xviii) assistance in the form of a subsidy or grant or cash incentive or duty\ndrawback or waiver or concession or reimbursement (by whatever name\ncalled) by the Central Government or a State Government or any\nauthority or body or agency in cash or kind to the assessee 76[other than, —\n(a) the subsidy or grant or reimbursement which is taken into\naccount for determination of the actual cost of the asset in\naccordance with the provisions of Explanation 10 to clause\n(1) of section 43; or\n(b) the subsidy or grant by the Central Government for the\npurpose of the corpus of a trust or institution established by\nthe Central Government or a State Government, as the case\nmay be];]\n\"interest'83 means interest payable in any manner in respect of any moneys\n80[81(28A)82 borrowed or debt incurred (including a deposit, claim or other similar right or\nobligation) and includes any service fee or other charge in respect of the\nmoneys borrowed or debt incurred or in respect of any credit facility which has\nnot been utilised ;]\nSection 4\nCharge of income-tax.\n13. 4 14(1) Where any Central Act enacts that income-tax¹ shall be charged for any assessment\nyear at any rate or rates, income-tax at that rate or those rates shall be charged for that\nyear in accordance with, and [subject to the provisions (including provisions for the levy of\nadditional income-tax) of, this Act] in respect of the total income of the previous\nyear 18[***] of every person :\nProvided that where by virtue of any provision of this Act income-tax is to be charged in\nrespect of the income of a period other than the previous year, income-tax shall be charged\naccordingly.\n(2) In respect of income chargeable under sub-section (1), income-tax shall be deducted at\nthe source or paid in advance, where it is so deductible or payable under any provision of this\nAct.\nIncomes not included in total income.\n10. In computing the total income of a previous year of any person, any income\nfalling within any of the following clauses shall not be included-\n[(37) in the case of an assessee, being an individual or a Hindu undivided family, any\nincome chargeable under the head \"Capital gains\" arising from the transfer of\nagricultural land, where-\n(i) such land is situate in any area referred to in item (a) or item (b) of sub-\nclause (iii) of clause (14) of section 2;\n(ii) such land, during the period of two years immediately preceding the date\nof transfer, was being used for agricultural purposes by such Hindu\nundivided family or individual or a parent of his;\n(iii) such transfer is by way of compulsory acquisition under any law, or a\ntransfer the consideration for which is determined or approved by the\nCentral Government or the Reserve Bank of India;\n(iv) such income has arisen from the compensation or consideration for such\ntransfer received by such assessee on or after the 1st day of April, 2004.\nExplanation. For the purposes of this clause, the expression \"compensation or\nconsideration\" includes the compensation or con-sideration enhanced or further\nenhanced by any court, Tribunal or other authority;\nChapter IV\nCOMPUTATION OF TOTAL INCOME\nHeads of income.\n80 14. Save as otherwise provided by this Act, all income shall, for the\npurposes of charge of income-tax and computation of total income, be\nclassified under the following heads of income :—\nA. -Salaries.\nΒ. 81[***]\nC. -Income from house property.\nD. -Profits and gains of business or profession.\nΕ.\n-Capital gains.\nF. -Income from other sources.\nCapital gains.\n74 45.75[(1)] Any profits or gains arising from the transfer of a capital\nasset76 effected™ in_the_previous year shall, save as otherwise provided in\nsections ZZ[***] 78[ 54, 54B, 72[***] 80[81[ 54D, 82[ 54E, 83[ 54EA, 54EB,] 54F84[, 54G\nand 54H]]]]], be chargeable to income-tax under the head \"Capital gains\",\nand shall be deemed to be the income of the previous year in which the\ntransfer took place.\n[(5) Notwithstanding anything contained in sub-section (1), where the capital\ngain arises from the transfer of a capital asset, being a transfer by way of\ncompulsory acquisition under any law, or a transfer the consideration for\nwhich was determined or approved by the Central Government or the\nReserve Bank of India, and the compensation or the consideration for such\ntransfer is enhanced or further enhanced by any court, Tribunal or other\nauthority, the capital gain shall be dealt with in the following manner, namely\n:- (a) the capital gain computed with reference to the compensation awarded in the first\ninstance24 or, as the case may be, the consideration determined or approved in the\nfirst instance by the Central Government or the Reserve Bank of India shall be\nchargeable as 25 [income under the head \"Capital gains" of the previous year in\nwhich such compensation or part thereof, or such consideration or part thereof, was\nfirst received]; and\n(b) the amount by which the compensation or consideration is enhanced or further\nenhanced by the court, Tribunal or other authority shall be deemed to be income\nchargeable under the head \"Capital gains" of the previous year in which such\namount is received by the assessee :\n26[Provided that any amount of compensation received in pursuance of an interim\norder of a court, Tribunal or other authority shall be deemed to be income\nchargeable under the head \"Capital gains\" of the previous year in which the final\norder of such court, Tribunal or other authority is made;]\n22[(c) where in the assessment for any year, the capital gain arising from the transfer of a\ncapital asset is computed by taking the compensation or consideration referred to\nin clause (a) or, as the case may be, enhanced compensation or consideration\nreferred to in clause (b), and subsequently such compensation or consideration is\nreduced by any court, Tribunal or other authority, such assessed capital gain of that\nyear shall be recomputed by taking the compensation or consideration as so\nreduced by such court, Tribunal or other authority to be the full value of the\nconsideration.]\nExplanation.—For the purposes of this sub-section,—\n(i) in relation to the amount referred to in clause (b), the cost of acquisition and the\ncost of improvement shall be taken to be nil;\n(ii) the provisions of this sub-section shall apply also in a case where the transfer took\nplace prior to the 1st day of April, 1988;\n(iii) where by reason of the death of the person who made the transfer, or for any other\nreason, the enhanced compensation or consideration is received by any other\nperson, the amount referred to in clause (b) shall be deemed to be the income,\nchargeable to tax under the head \"Capital gains\", of such other person.]\nIncome from other sources.\n43 56. (1) Income of every kind which is not to be excluded from the total\nincome under this Act shall be chargeable to income-tax under the head\n\"Income from other sources\", if it is not chargeable to income-tax under any\nof the heads specified in section 14, items A to E.\n(2) In particular, and without prejudice to the generality of the provisions of\nsub-section (1), the following incomes, shall be chargeable to income-tax\nunder the head \"Income from other sources\", namely :—\n[(viii) income by way of interest received on compensation or on enhanced\ncompensation referred to in 700[sub-section (1) of section 145B];]\nTaxability of certain income.\n145B. (1) Notwithstanding anything to the contained in section 145,\nthe interest received by an assessee on any compensation or on enhanced\ncompensation, as the case may be, shall be deemed to be the income of\nthe previous year in which it is received.\n(2) Any claim for escalation of price in a contract or export incentives shall\nbe deemed to be the income of the previous year in which reasonable\ncertainty of its realisation is achieved.\n(3) The income referred to in sub-clause (xviii) of clause (24) of section 2 shall\nbe deemed to be the income of the previous year in which it is received, if\nnot charged to income-tax in any earlier previous year.]\"\n59. The following propositions emerge from a conjoint reading of the\nrelevant statutory provisions of the income tax after its amendment w.e.f\n1/4/2010 reproduced hereinabove :\n60.\n(i) By inserting Section 56(2)(viii) and Section 145B(1) with effect from 1st April\n2010, the Legislature introduced a specific charging mechanism mandating\nthat interest received on compensation or enhanced compensation shall be\ntaxable under the head \"Income from Other Sources\", and that such income\nshall be brought to tax on receipt basis.\n(ii) This amendment marks a substantive legislative departure from the earlier\nscheme of Section 45(5), wherein the entire compensation, including\nenhanced compensation, was treated as part of capital gains. The post-2010\nregime thus establishes a distinct head of income and a clear basis of\ncharge for interest on such compensation.\n(iii) It is pertinent to note that the opening words of Section 56(2)—“In\nparticular, and without prejudice to the generality of the provisions of sub-\nsection (1), the following incomes shall be chargeable to income-tax under\nthe head 'Income from Other Sources'”—constitute a deeming provision,\nbringing within its sweep certain categories of income which might not\notherwise fall under this head. The inclusion of clause (viii) therein deems\ninterest on compensation or enhanced compensation to be taxable as\nIncome from Other Sources, notwithstanding its earlier characterization under\ncapital gains.\n(iv) A conjoint reading of Section 2(24), Section 2(28A), Section 4, Section\n10(37), Section 14, Section 45(5), Section 56(2)(viii), Section 145B(1) and\nSection 194LA of the Act makes it abundantly clear that any income which\narises or is deemed to arise or accrue in India is chargeable to tax in the\nhands of a resident assessee.\n(v) The definition of “interest\" under Section 2(28A) specifically includes any\ninterest payable in any manner in respect of moneys borrowed or debt\nincurred, including a deposit, claim, or other similar right or obligation. The\nexpression “claim” is wide enough to encompass the amount of\ncompensation or consideration payable to an assessee, particularly in cases\nof compulsory acquisition.\n(vi) Further, under Section 14 read with Section 56(2) (viii), any income not\nfalling under other specific heads shall be chargeable to tax under the head\n\"Income from Other Sources." The timing of such taxation, as per Section\n145B(1), is on receipt basis.\n(vii) Consequently, the definition of “interest” under Section 2(28A) squarely\ncovers interest on enhanced compensation, which—being in the nature of a\nclaim-falls within the charging ambit of Section 4 of the Act.\n(viii) Hence, such interest is deemed to be taxable in the hands of the\nassessee under the specific deeming provision contained in Section\n56(2)(viii), read with Section 145B(1), in accordance with the legislative\nscheme introduced by the Finance Act, 2010.\nIt is trite law that once Parliament enacts a specific charging provision\ndealing with a particular species of income, characterisation under another\nstatute cannot override such specific provision. The Income-tax Act is a self-\ncontained code, and definitions or deeming fiction under another statute\n(including the Land Acquisition Act) cannot be imported unless expressly\nincorporated. Reference in this regard may be made to Scindia Steam\nNavigation (supra), and Vatika Township (supra). Further at the time of\npassing of the order by Hon'ble Supreme Court in the case of Ghanshyam\n(HUF) (supra), did not have the benefit of examining the various provisions of\nlaw, as mentioned herein above.\n61. Equally, the principle is well-settled that a judicial interpretation\ncontinues to apply only until the Legislature steps in and amends the law. In\nSedco Forex International Drilling Inc. v. CIT (2005) 279 ITR 310 (SC), the\nHon'ble Supreme Court held that judicial interpretation stands superseded\nwhen the statutory provision is subsequently amended prospectively. It was\nheld asunder:-\n12. In our view the 1999 Explanation could not apply to assessment years for\nthe simple reason that it had not come into effect then. Prior to introducing\nthe 1999 Explanation, the decision in S. G. Pgnatale's case (supra) was\nfollowed in 1989 by a Division Bench of the Gauhati High Court in CIT v.\nGoslino Mario [2000] 241 ITR 314. It found that the 1983 Explanation had been\ngiven effect from 1-4-1979 whereas the year in question in that case was\n1976-77 and said: \".. it is settled law that assessment has to be made with\nreference to the law which is in existence at the relevant time. The mere fact\nthat the assessments in question has somehow remained pending on April 1,\n1979, cannot be cogent reason to make the Explanation applicable to the\ncases of the present assessees. This fortuitous circumstance cannot take\naway the vested rights of the assessees at hand. . \" (p. 318)\n13. The reasoning of the Gauhati High Court was expressly affirmed by this\nCourt in CIT v. Goslino Mario [2000] 241 ITR 314. These decisions are thus\nauthorities for the proposition that the 1983 Explanation expressly introduced\nwith effect from a particular date would not effect earlier assessment years.\n20. As was affirmed by this Court in Goslino Mario's case (supra), a cardinal\nprinciple of the tax law is that the law to be applied is that which is in force in\nthe relevant assessment year unless otherwise provided expressly or by\nnecessary implication. See also Reliance Jute & Industries Ltd. v. CIT [1980] 1\nSCC 139. An Explanation to a statutory provision may fulfil the purpose of\nclearing up an ambiguity in the main provision or an Explanation can add to\nand widen the scope of the main section - Sonia Bhatia v. State of U. P. AIR\n1981 SC 1274, 1282. If it is in its nature clarificatory then the Explanation must\nbe read into the main provision with effect from the time that the main\nprovision came into force. Shyam Sunder v. Ram Kumar [2001] 8 SCC 24, Brij\nMohan Das Laxman Das v. CIT [1997] 1 SCC 352, 354, CIT v. Podar Cement (P.\n) Ltd. [1997] 5 SCC 482, 506. But if it changes the law it is not presumed to be\nretrospective irrespective of the fact that the phrase used are 'it is declared'\nor 'for the removal of doubts'.\n21. There was and is no ambiguity in the main provision of section 9(1) (ii) . It\nincludes salaries in the total income of an assessee if the assessee has earned\nit in India. The word \"earned\" had been judicially defined in S. G. Pgnatale's\ncase (supra) by the High Court of Gujarat, in our view, correctly, to mean as\nincome \"arising or accruing in India\". The amendment to the section by way\nof an Explanation in 1983 effected a change in the scope of that judicial\ndefinition so as to include with effect from 1979, \"income payable for service\nrendered in India. \"\n62. Applying these settled principles, it is clear that the ratio of Ghanshyam\n(HUF) (supra) represents the legal position under the unamended law,\nwhereas with the introduction of Section 56(2)(viii) read with Section 145B(1),\nthe Legislature has provided an explicit statutory mandate governing the tax\ntreatment of interest on enhanced compensation for assessment years from\n01.04.2010 onwards. Accordingly, for post-amendment years, interest on\nenhanced compensation is taxable under Section 56(2)(viii) irrespective of its\ncharacterisation under the Land Acquisition Act, and the deeming fiction\nunder Section 28 of the Land Acquisition Act cannot displace the statutory\nscheme enacted in the Income-tax Act.\n63. In view of the above legal position, we hold that the amended\nprovisions apply prospectively from 01.04.2010 and govern the present\n assessment year. Consequently, the judicial interpretation in Ghanshyam\n(HUF) (supra) applies only to pre-amendment years and cannot be relied\nupon to exclude such income from fax under the amended scheme. The\nauthorities below have correctly applied the statutory provisions inserted by\nthe Finance Act, 2010, and the taxability of the impugned receipt under\nSection 56(2)(viii) stands confirmed. The assessee has placed reliance on the\ndecisions of the Hon'ble Supreme Court in Union of India v. Hari Singh & Ors.\n(2018) 408 ITR 1 (SC) and Commissioner v. Braham Prakash (SLP (C) Diary No.\n22662/2018, SC) to contend that interest awarded under Section 28 of the\nLand Acquisition Act continues to partake the character of compensation\nand, therefore, cannot be brought to tax under the head “Income from\nOther Sources”. We have carefully examined these authorities. It is noted that\nboth decisions merely reiterate the principles laid down in CIT v. Ghanshyam\n(HUF) (2009) 315 ITR 1 (SC), particularly directing the tax authorities to treat\ninterest under Section 28 as part of compensation for the assessment years\ngoverned by the pre-amendment law.\nEffect of Hari Singh (supra) and Braham Prakash (supra)\n64. Importantly, neither Hari Singh (supra) nor Braham Prakash (supra)\nconsidered or dealt with the effect of the statutory amendment introduced\nby the Finance Act, 2010, inserting Section 56(2)(viii) read with Section\n145B(1). These judgments were rendered in the context of the legal\nframework prior to the insertion of the specific charging provision, and are\nsilent on the income tax consequences post-amendment. The Hon'ble\nSupreme Court in these cases did not examine, interpret, or pronounce upon\nthe effect, scope, or applicability of Section 56(2)(viii).\n65. It is a settled principle that a precedent is an authority only for what it\nexplicitly decides, and cannot be extended to situations or statutory regimes\nwhich the Court did not consider. [See State of Orissa v. Sudhansu Sekhar\nMisra (1968) AIR SC 647; Union of India v. Major Bahadur Singh (2006) 1 SCC\n368]. In the latter decision it was noted by Hon'ble SC\nCourts should not place reliance on decisions without discussing as to how\nthe factual situation fits in with the fact situation of the decision on which\nreliance is placed. Observations of Courts are neither to be read as Euclid's\ntheorems nor as provisions of the statute and that too taken out of their\ncontext. These observations must be read in the context in which they\nappear to have been stated. Judgments of Courts are not to be construed\nas statutes. To interpret words, phrases and provisions of a statute, it may\nbecome necessary for judges to embark into lengthy discussions but the\ndiscussion is meant to explain and not to define. Judges interpret statutes,\nthey do not interpret judgments. They interpret words of statutes; their words\nare not to be interpreted as statutes.\nIn London Graving Dock Co. Ltd. V. Horton (1951 AC 737 at p.761), Lord Mac\nDermot observed:\n'The matter cannot, of course, be settled merely by treating the ipsissima\nvertra of Willes, Jas though they were part of an Act of Parliament and\napplying the rules of interpretation appropriate thereto. This is not to detract\nfrom the great weight to be given to the language actually used by that\nmost distinguished judge.\nIn Home Office v. Dorset Yacht Co. (1970 (2) All ER 294) Lord Reid said, \"Lord\nAtkin's speech.....is not to be treated as if it was a statute definition. It will\nrequire qualification in new circumstances.\" Megarry, Jin (1971) 1 WLR 1062\nobserved: \"One must not, of course, construe even a reserved judgment of\nRussell L.J. as if it were an Act of Parliament.\" And, in Herrington v. British\nRailways Board (1972 (2) WLR 537) Lord Morris said:\n\"There is always peril in treating the words of a speech or judgment as though\nthey are words in a legislative enactment, and it is to be remembered that\njudicial utterances made in the setting of the facts of a particular case.\"\nCircumstantial flexibility, one additional or different fact may make a world of\ndifference between conclusions in two cases. Disposal of cases by blindly\nplacing reliance on a decision is not proper.\nThe following words of Lord Denning in the matter of applying precedents\nhave become locus classicus:\n\"Each case depends on its own facts and a close similarity between one\ncase and another is not enough because even a single significant detail may\nalter the entire aspect, in deciding such cases, one should avoid the\ntemptation to decide cases (as said by Cordozo) by matching the colour of\none case against the colour of another. To decide, therefore, on which side\nof the line a case falls, the broad resemblance to another case is not at all\ndecisive.\"\n*** *** *** \"Precedent should be followed only so far as it marks the path of\njustice, but you must cut the dead wood and trim off the side branches else\nyou will find yourself lost in thickets and branches. My plea is to keep the\npath to justice clear of obstructions which could impede it.\"\nTherefore, the reliance placed by the assessee on these decisions to govern\nthe post-amendment regime is misplaced.\n66. With the introduction of Section 56(2) (viii) and Section 145B(1),\nParliament has enacted a specific charging mechanism to tax interest\nreceived on compensation or enhanced compensation as “Income from\nOther Sources” on receipt basis, thereby legislatively modifying the tax\ncharacter of such receipts for assessment years commencing 01.04.2010\nonwards. Once a direct charging provision exists, the characterisation of such\nreceipt under the Land Acquisition Act or the judicial interpretation rendered\nunder the erstwhile regime cannot prevail over the express statutory\nmandate of the Income-tax Act.\n67. Accordingly, Hari Singh (supra) and Braham Prakash (supra) are\nconfined to the legal position prevailing prior to the amendment and do not\nassist the assessee for post-amendment assessment years. The statutory\nchange having altered the tax treatment expressly, reliance on these cases\nfor the present assessment year is untenable.\nDealing With Per-Incuriam Argument\n68. The assessee has argued that the decisions of the Hon'ble Delhi High\nCourt and the Hon'ble Punjab & Haryana High Court, which have upheld the\npost-amendment taxability of interest on enhanced compensation under\nSection 56(2)(viii), are per incuriam as they did not expressly consider the\nHon'ble Supreme Court's rulings in Hari Singh and Braham Prakash. We are\nunable to accept this contention.\n69. At the outset, it is trite law that a lower forum cannot declare a\njudgment of a High Court per incuriam, much less when such a judgment\nbinds this Tribunal within its territorial jurisdiction. The doctrine of per incuriam is\na narrow exception to stare decisis and applies only in exceptional situations\nwhere a court ignores a binding statute or binding precedent—not where the\nlater decision arises in a different statutory context or post-amendment\nframework. As observed in Bajaj Allianz decision of supreme court, the rule of\nper incuriam cannot be invoked merely because another decision or line of\nreasoning exists.\n70. In the present factual and legal matrix, both Hari Singh and Braham\nPrakash dealt with the pre-amendment legal regime and reiterated\nGhanshyam (HUF) in that context. Neither decision examined nor interpreted\nthe effect of the Finance Act, 2010 inserting Sections 56(2)(viii) and 145B(1).\nAs held by the Hon'ble Supreme Court in Sedco Forex (279 ITR 310), a judicial\ninterpretation governs only until the statute is amended. Therefore, the High\nCourt decisions dealing with the post-amendment regime cannot be said to\nbe per incuriam for not referring to decisions governing a prior legal regime.\n71. The assessee's reliance on the per incuriam doctrine is also\nmisconceived because a binding High Court judgment cannot be\ndisregarded by the Tribunal on the ground that the Court did not refer to\nsome Supreme Court decision, particularly where the subject judgments (Hari\nSingh and Braham Prakash) did not adjudicate upon the statutory\namendment now in issue. In State of Orissa v. Sudhansu Sekhar Misra AIR 1968\nSC 647, the Hon'ble Supreme Court cautioned that a decision is an authority\nonly for what it decides and must be read in the factual and statutory\ncontext.\n72. Further as observed in Haryana Vidyut Prasaran Nigam Ltd. [2025] 170\ntaxmann.com 204 (Punjab & Haryana)/[2025] 303 Tax. It was held as under :-\n5. We notice that the judgment passed by the Delhi High Court has failed to\ntake notice of the judgment passed by this Court in case Punjab Financial\nCorporation (supra) and therefore, a different view was taken by the Delhi\nHigh Court and the same could not be binding upon this Court as it is a\nsettled law that earlier judgment passed by this Court would have a binding\nprecedential value over and above any different view taken by any other\nHigh Court. The law has been settled by the Supreme Court in Official\nLiquidator v. Dayanand (2008)10 SCC 1, wherein it was held as under:\n\"66. In State of Bihar v. Kalika Kuer and others [2003 (5) SCC 448], the Court\nelaborately considered the principle of per incuriam and held that the earlier\njudgment by a larger Bench cannot be ignored by invoking the principle\nof per incuriam and the only course open to the coordinate or smaller Bench\nis to make a request for reference to the larger Bench. In State of\nPunjab v. Devans Modem Breweries Ltd. [2004 (11) SCC 26], the Court\nreiterated that if a coordinate Bench does not agree with the principles of\nlaw enunciated by another Bench, the matter has to be referred to a larger\nBench. In Central Board of Dwaoodi Bohra Community v. State of\nMaharashtra [2005 (2) SCC 673], the Constitution Bench interpreted Article\n141, referred to various earlier judgments including Bharat Petroleum Corpn.\nLtd. v. Mumbai Shramik Sangha (supra), Pradip Chandra Parija and others v.\nPramod Chandra Patnaik and others (supra) and held that \"the law laid\ndown in a decision delivered by a Bench of larger strength is binding on any\nsubsequent Bench of lesser or co-equal strength and it would be\ninappropriate if a Division Bench of two Judges starts overruling the decisions\nof Division Benches of three Judges. The Court further held that such a\npractice would be detrimental not only to the rule of discipline and the\ndoctrine of binding precedents but it will also lead to inconsistency in\ndecisions on the point of law; consistency and certainty in the development\nof law and its contemporary status - both would be immediate casualty\"\n73.\nIn the case of citvs Thana Electricity Supply Ltd.*1994] 206 ITR 727\n(Bombay)/[1993] 112 CTR 356 (Bombay) hon'ble Bombay high court had held\nas under :-\n\"It is also well-settled that though there is no specific provision making the law\ndeclared by the High Court binding on subordinate courts, it is implicit in the\npower of supervision conferred on a superior Tribunal that the Tribunals\nsubject to its supervision would confirm to the law laid down by it. It is in that\nview of the matter that the Supreme Court in East India Commercial Co,\nLtd. v. Collector of Customs, AIR 1962 SC 1893 (at page 1905) declared :\n\"We, therefore, hold that the law declared by the highest court in the State is\nbinding on authorities or Tribunals under its superintendence, and they\ncannot ignore it. ...\"\nThis position has been very aptly summed up by the Supreme Court\nin Mahadeolal Kanodia v. Administrator-General of West Bengal, AIR 1960 SC\n936 (at page 941) as follows:\n\"Judicial decorum no less than legal propriety forms the basis of judicial\nprocedure. If one thing is more necessary in law than any other thing, it is the\nquality of certainty. That quality would totally disappear if judges of co-\nordinate jurisdiction in a High Court start overruling one another's decisions. If\none Division Bench of a High Court is unable to distinguish a previous decision\nof another Division Bench, and holding the view that the earlier decision is\nwrong, itself gives effect to that view, the result would be utter confusion. The\nposition would be equally bad where a judge sitting singly in the High Court is\nof opinion that the previous decision of another single judge on a question of\nlaw is wrong and gives effect to that view instead of referring the matter to a\nlarger Bench.\"\nThe above decision was followed by the Supreme Court in Baradahanta\nMishra v. Bhimsen Dixit, AIR 1972 SC 2466, wherein the legal position was\nreiterated in the following words (at page 2469) :\n\"It would be anomalous to suggest that a Tribunal over which the High Court\nhas superintendence can ignore the law declared by that court and start\nproceedings in direct violation of it. If a Tribunal can do so, all the\nsubordinate courts can equally do so, for there is no specific provision, just\nlike in the case of Supreme Court, making the law declared by the High\nCourt binding on subordinate courts. It is implicit in the power of supervision\nconferred on a superior Tribunal that all the Tribunals subject to its supervision\nshould conform to the law laid down by it. Such obedience would also be\nconducive to their smooth working; otherwise there would be confusion in\nthe administration of law and respect for law would irretrievably suffer.\"\nHaving decided whose decision binds whom, we may next examine what is\nbinding. It is well-settled that it is only the ratio decidendi that has a\nprecedent value. As observed by the Supreme Court in S.P.\nGupta v. President of India, AIR 1982 SC 149 (at page 231) : \"It is elementary\nthat what is binding on the court in a subsequent case is not the conclusion\narrived at in a previous decision, but the ratio of that decision, for it is the\nratio which binds as a precedent and not the conclusion.\" A case is only an\nauthority for what it actually decides and not what may come to follow\nlogically from it. Judgments of courts are not to be construed as statutes\n(see Amar Nath Om Parkash v. State of Punjab, AIR 1985 SC 218; [1985] 1 SCC\n345).\nWhile following precedents, the court should keep in mind the following\nobservations in Mumbai Kamgar Sabha v. Abdulbhai Faizullabhai [1976] 49\nFJR 15, 32; AIR 1976 SC 1455 (at pages 1467-68):\n\"It is trite, going by Anglophonic principles, that a ruling of a superior court is\nbinding law. It is not of scriptural sanctity but is of ratiowise luminosity within\nthe edifice of facts where the judicial lamp plays the legal flame. Beyond\nthose walls and de hors the milieu we cannot impart eternal vernal value to\nthe decision, exalting the doctrine of precedents into a prison-house of\nbigotry, regardless of varying circumstances and myriad developments.\nRealism dictates that a judgment has to be read, subject to the facts directly\npresented for consideration and not affecting those matters which may lurk\nin the record. Whatever be the position of a subordinate court's casual\nobservations, generalisations and subsilentio determinations must be\njudiciously read by courts of co-ordinate jurisdiction.\"\nDecision on a point not necessary for the purpose of the decision or which\ndoes not fall to be determined in that decision becomes an obiter dictum. So\nalso, opinions on questions which are not necessary for determining or\nresolving the actual controversy arising in the case partake of the character\nof obiter. Obiter observations, as said by Bhagwati J. (as his Lordship then\nwas) in Addl. District Magistrate, Jabalpur v. Shivahant Shukla, AIR 1976 SC\n1207, 1378, would undoubtedly be entitled to great weight, but \"an obiter\ncannot take the place of the ratio. Judges are not oracles\". Such\nobservations do not have any binding effect and they cannot be regarded\nas conclusive. As observed by the Privy Council in Baker v. The Queen [1975] \n3 All ER 55 (at page 64), the court's authoritative opinion must be\ndistinguished from propositions assumed by the court to be correct for the\npurpose of disposing of the particular case. This position has been made\nfurther clear by the Supreme Court in a recent decision in CIT v. Sun\nEngineering Works P. Ltd. [1992] 198 ITR 297, at page 320, where it was\nobserved:\n\"It is neither desirable nor permissible to pick out a word or a sentence from\nthe judgment of this court, divorced from the context of the question under\nconsideration and treat it to be the complete 'law' declared by this court.\nThe judgment must be read as a whole and the observations from the\njudgment have to be considered in the light of the questions which were\nbefore this court. A decision of this court takes its colour from the questions\ninvolved in the case in which it is rendered and, while applying the decision\nto a later case, the courts must carefully try to ascertain the true principle laid\ndown by the decision of this court and not to pick out words or sentences\nfrom the judgment, divorced from the context of the questions under\nconsideration by this court, to support their reasoning.\"\nIn the above decision, the Supreme Court, also quoted with approval, the\nfollowing note of caution given by it earlier in Madhav Rao Jivaji Rao Scindia\nBahadur v. Union of India, AIR 1971 SC 530, at page 578 (at page 320 of 198\nITR) :\n\"It is not proper to regard a word, a clause or a sentence occurring in a\njudgment of the Supreme Court, divorced from its context, as containing a\nfull exposition of the law on a question when the question did not even fall to\nbe answered in that judgment.\"\nIt is thus clear that it is only the ratio decidendi of a case which can be\nbinding-not obiter dictum. Obiter, at best, may have some persuasive\nefficacy.\"\n74. In the case of Mylan Laboratories Ltd. [2022] 137 taxmann.com 178\n(Telangana) it was held as under :-\n34. We are afraid such a view taken by the Assessing Officer can be justified. \nRather, it is highly objectionable for an Assessing Officer to say that decision\nof the Income Tax Appellate Tribunal is not acceptable; and that since it has\nbeen appealed against, the issue of allowability of depreciation on goodwill\nhas not attained finality. Unless there is a stay, order/decision of the\njurisdictional Income Tax Appellate Tribunal is binding on all income tax\nauthorities within its jurisdiction.\n35. In Union of India v. Kamlakshi Finance Corporation Ltd. 1992\ntaxmann.com 16, Supreme Court held and reiterated that the principles of\njudicial discipline require that the orders of the higher appellate authorities\nshould be followed unreservedly by the subordinate authorities. The mere\nfact that the order of the appellate authority is not acceptable to the\ndepartment, which in itself is an objectionable phrase, and is the subject\nmatter of an appeal can be no ground for not following the appellate order\nunless its operation has been suspended by a competent court. If this healthy\nrule is not followed, the result will only be undue harassment to the assessee\nand chaos in administration of the tax laws.\n36. Following the above decision, Supreme Court again in Collector of\nCustoms v. Krishna Sales (P.) Ltd. 1994 Supp. (3) SCC 73, reiterated the\nproposition that mere filing of an appeal does not operate as a stay or\nsuspension of the order appealed against. It was pointed out that if the\nauthorities were of the opinion that the goods ought not to be released\npending the appeal, the straight-forward course for them is to obtain an\norder of stay or other appropriate direction from the Tribunal or the Supreme\nCourt, as the case may be. Without obtaining such an order they cannot\nrefuse to implement the order under appeal.\n37. Following the above decisions of the Supreme Court, a Division Bench of\nthe Bombay High Court in Ganesh Benzoplast Ltd. v. Union of India 2020 (374)\nELT 552 held that non-compliance of orders of the appellate authority by the\nsubordinate original authority is disturbing to say the least as it strikes at the\nvery root of administrative discipline and may have the effect of severely\nundermining the efficacy of the appellate remedy provided to a litigant\nunder the statute. Principles of judicial discipline require that the orders of the\nhigher appellate authorities should be followed unreservedly by the\nsubordinate authorities.\n38. This principle has been reiterated by the Bombay High Court\nin HimgiriBuildcon& Industries Ltd. v. Union of India 2021 (376) ELT 257.\n39. Therefore, the stand taken by the Assessing Officer that since the decision\nof the Income Tax Appellate Tribunal in the case of the petitioner itself for the\n assessment year 2014-15 has been appealed against the issue in question\nhas not attained finality, is not only wrong but is required to be deprecated in\nstrong terms being highly objectionable.\n40. The second view expressed by the Assessing Officer vis-à-vis the decision\nof the Supreme Court in SMIFS (1 supra) is still more problematic. It is not open\nto the Assessing Officer to try to evade from the binding effect of a Supreme\nCourt decision by trying to find out 'distinguishing features'. Though\nunnecessary, we are still compelled to refer to Article 141 of the Constitution\nof India which says that the law declared by the Supreme Court shall be\nbinding on all Courts within the territory of India. Therefore, it is the bounden\nduty of all authorities whether administrative or quasi judicial or judicial to\nfollow the law declared by the Supreme Court.\n75. In view of above decision jurisdictional discipline and hierarchy of\ncourts prohibit the Tribunal from questioning the binding force of a High Court\njudgment on the ground of alleged oversight.\n76.\nRespectfully following the principle that a Tribunal cannot sit in appeal\nover, or test for per incuriam, a judgment of the High Court, we hold that the\ndecisions of the Hon'ble High Courts upholding the applicability of Section\n56(2) (viii) post-amendment cannot be disregarded. The assessee's argument\nthat such judgments are per incuriam is accordingly rejected.\n77.\nIn the light of the above discussion, the common legal ground raised in\nthe lead matter stands decided against the assessee. Consequently, the\nappeal of the assessee is dismissed. Since the common legal issue has been\nadjudicated against the assessee, we do not find it necessary to adjudicate\nupon the individual grounds raised in these sets of appeals, as the same have\nbecome academic in nature.\n78.\nIn view of the foregoing, all the appeals filed by the assessee are\ndismissed, and the order passed by the Assessing Officer is hereby restored\nand upheld.\n79.\nAs regards the appeals filed by the Revenue, the same are allowed,\nand the order of the Assessing Officer is accordingly sustained\n80.\nThe summary of the outcome of each appeal isasunder:\nSr.\nNo.\nITA No.\nAppeal filed by\nAssessee\n/ Revenue\nResult\n1\nITA No. 463/Chd/2023\nAssessee\nDismissed\n2\nITA No. 1043/Chd/ 2019\nAssessee\nDismissed\n3\nITA No. 1044/Chd/2019\nAssessee\nDismissed\n4\nITA No. 432/Chd/2022\nAssessee\nDismissed\n5\nITA No. 596/Chd/2022\nAssessee\nDismissed\n6\nITA No. 635/Chd/2022\nAssessee\nDismissed\n7\nITA No. 641 /Chd/2022\nAssessee\nDismissed\n8\nITA No. 668/Chd/2022\nAssessee\nDismissed\n9\nITA No. 731 /Chd/2022\nAssessee\nDismissed\n10\nITA No. 6 /Chd/2023\nAssessee\nDismissed\n11\nITA No. 50 /Chd/2023\nAssessee\nDismissed\n12\nITA No. 51 /Chd/2023\nAssessee\nDismissed\n13\nITA No. 100 /Chd/2023\nAssessee\nDismissed\n14\nITA No. 116/Chd/2023\nAssessee\nDismissed\n15\nITA No. 129/Chd/2023\nAssessee\nDismissed\n16\nITA No. 180/Chd/ 2023\nAssessee\nDismissed\n17\nITA No. 219/Chd/2023\nAssessee\nDismissed\n18\nITA No. 275/Chd/2023\nAssessee\nDismissed\n19\nITA No. 292 /Chd/2023\nAssessee\nDismissed\n20\nITA No. 317/Chd/2023\nAssessee\nDismissed\n21\nITA No. 539/Chd/2023\nAssessee\nDismissed\n22\nITA No. 565/Chd/2023\nAssessee\nDismissed\n23\nITA No. 566/Chd/2023\nAssessee\nDismissed\n24\nITA No. 613/Chd/2023\nRevenue\nAllowed\n25\nITA No. 615/Chd/2023\nRevenue\nAllowed\n26\nITA No. 617/Chd/2023\nAssessee\nDismissed\n27\nITA No. 656 /Chd/2023\nAssessee\nDismissed\n28\nITA No. 697/Chd/2023\nAssessee\nDismissed\n29\nITA No. 779/Chd/2023\nAssessee\nDismissed\n30\nITA No. 92 /Chd/2024\nAssessee\nDismissed\n31\nITA No. 172 /Chd/2024\nAssessee\nDismissed\n32\nITA No. 176/Chd/2024\nAssessee\nDismissed\n33\nITA No. 208 /Chd/2024\nAssessee\nDismissed\n34\nITA No. 245/Chd/2024\nRevenue\nAllowed\n35\nITA No. 435/Chd/2024\nAssessee\nDismissed\n36\nITA No. 458/Chd/2024\nAssessee\nDismissed\n37\nITA No. 503/Chd/2024\nAssessee\nDismissed\n38\nITA No. 531 /Chd/2024\nRevenue\nAllowed\n39\nITA No. 563/Chd/2024\nAssessee\nDismissed\n40\nITA No. 663 /Chd/2024\nAssessee\nDismissed\n41\nITA No. 876 /Chd/2024\nAssessee\nDismissed\n42\nITA No. 1112/Chd/2024\nAssessee\nDismissed\n43\nITA No. 1176 /Chd/2024\nAssessee\nDismissed\n44\nITA No. 1184/Chd/2024\nAssessee\nDismissed\n45\nITA No. 153 /Chd/ 2025\nAssessee\nDismissed\n46\nITA No. 165/Chd/2025\nAssessee\nDismissed\n47\nITA No. 243/Chd/2025\nAssessee\nDismissed\n48\nITA No. 458/Chd/2025\nAssessee\nDismissed\n49\nITA No. 483/Chd/2025\nAssessee\nDismissed\n50\nITA No. 725/Chd/2025\nAssessee\nDismissed\n51\nITA No. 1025 /Chd/2025\nAssessee\nDismissed\n52\nITA No. 1153/Chd/2025\nAssessee\nDismissed\n53\nITA No. 486/Chd/2025\nAssessee\nDismissed\n54\nITA No. 992 /Chd/2025\nAssessee\nDismissed\n55\nITA No. 528 /Chd/2025\nAssessee\nDismissed\nOrder pronounced in the open Court on 11/11/2025\nSd/-\nकृणवन्त सहाय\n(KRINWANT SAHAY)\nलेखा सदस्य / ACCOUNTANT MEMBER\nSd/-\nललित कुमार\n(LALIET KUMAR)\nन्यायिक सदस्य / JUDICIAL MEMBER\nAG\nआदेश की प्रतिलिपि अग्रेषित /

SARVAN SINGH,AMBALA vs. INCOME TAX OFFICER-WARD 4, AMBALA