KAKA SINGH ALIAS GULJAR SINGH,PATIALA vs. INCOME TAX OFFICER , PATIALA

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\n\n41\n\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\"\n41\n\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\n42\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***\n[(viii)\nincome 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\ncontrary contained in section 145, the interest received by an assessee on\nany compensation or on enhanced compensation, as the case may be,\nshall be deemed to be the income of the previous year in which it is\nreceived.\n\n43\n\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---\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\n\n44\n\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\nany 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\n\n[Emphasis supplied]\n\n45\n\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•\n•\n•\n•\n•\n•\n•\nDr.Shamlal Narula Vs. CIT (SC) India 53 ITR 151 dt. 09/04/1964\nT.N.K. Govindaraju Chetty Vs. CIT (SC) 66 ITR 465 dt. 17/04/1967\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\nK.S. Krishna RAO Vs CIT (SC) 54 Trueman 339 dt. 08/11/1989\nBikram Singh Vs Land Acquisition Collector 89 Trueman 119 dt. 12/09/1996\nSunder vs Union of India, Civil Appeal No. 6271 of 1998 (SC) dt. 19/09/2001\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\n46\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•\n•\nITO Gurdev vs. in Singh. 176 laxmann.com 91 ITAT, Delhi: (2025) dated\n16.05.2025\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. We 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\n50\n\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\n47\n\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;]\n\n48\n\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 ;]\n\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\n49\n\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;\n\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.\n\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\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:-\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 :\n\n51\n\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.]\n\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];]\n\nTaxability of certain income.\n145B. (1) Notwithstanding anything to the contrary 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.]\"\n\n52\n\nPayment of compensation on acquisition of certain immovable property.\n20194LA. Any person responsible for paying to a resident any sum 21, being in\nthe nature of compensation or the enhanced compensation 21 or the consi-\nderation or the enhanced consideration on account of compulsory\nacquisition, under any law for the time being in force, of any immovable\nproperty (other than agricultural land), shall, at the time of payment of such\nsum in cash or by issue of a cheque or draft or by any other mode 21,\nwhichever is earlier, deduct an amount equal to ten per cent of such sum as\nincome-tax thereon:\nProvided that no deduction shall be made under this section where the\namount of such payment or, as the case may be, the aggregate amount of\nsuch payments to a resident during the financial year does not exceed 22[five\nlakh] rupees:\n23 [Provided further that no deduction shall be made under this section where\nsuch payment is made in respect of any award or agreement which has\nbeen exempted from levy of income-tax under section 96 of the Right to Fair\nCompensation and Transparency in Land Acquisition, Rehabilitation and\nResettlement Act, 2013 (30 of 2013).]\nExplanation.-For the purposes of this section,-\n(i)\n(ii)\n\"agricultural land\" means agricultural land in India including land\nsituate in any area referred to in items (a) and (b) of sub-clause (iii)\nof clause (14) of section 2;\n\"immovable property\" means any land (other than agricultural\nland) or any building or part of a building.]\n\nHaving mentioned the relevant provisions of the Income tax Act, now we are\nrequired to examine the core issue raised before us, i.e\n\"Whether the amendment brought by the Finance Act, 2010, inserting Section 56(2)(viii) read\nwith Section 145B(1), can be invoked to tax the interest received by the assessee on enhanced\ncompensation under the head \"Income from Other Sources\" for the assessment year under\nconsideration, or whether the legal position as declared by the Hon'ble Supreme Court in CIT v.\nGhanshyam (HUF) (2009) 315 ITR 1 (SC) continues to govern such receipts\"\n\n53\n\nBefore we answer this question, we are reiterating that the law\napplicable to an assessment is the law in force for the relevant assessment\nyear unless a subsequent amendment is expressly made retrospective.\n53. The Constitution Bench of the Hon'ble Supreme Court in CIT v. Scindia\nSteam Navigation Co. Ltd. (1961) 42 ITR 589 (SC) held that taxability must be\n\n54\n\ndetermined by the law existing for the assessment year in question. This\nprinciple was reiterated in Karimtharuvi Tea Estates Ltd. v. State of Kerala\n(1966) 60 ITR 262 (SC), holding that the law on the first day of the assessment\nyear governs the assessment unless specifically provided otherwise.\n54. In Govind Das v. ITO (1976) 103 ITR 123 (SC), it was emphasised that\ntaxing provisions imposing a new liability are presumed to be prospective\nunless the statute clearly indicates otherwise. Likewise, in CIT v. Hindustan\nElectro Graphites Ltd. (2000) 243 ITR 48 (SC), the Hon'ble Court held that a\nsubsequent amendment cannot impose a tax burden for a period when such\nliability did not exist.\n55. The Constitution Bench in CIT v. Vatika Township (P) Ltd. (2014) 367 ITR\n466 (SC) further clarified that fiscal amendments affecting substantive rights\nare presumed to be prospective, unless expressly or by necessary implication\nmade retrospective. The jurisprudence thus recognises the settled principle\nthat new charging provisions operate prospectively.\n56. We are reproducing the relevant paras of some of these judgments for\ncompleteness of record :-\nIn the case of Karimtharuvi Tea Estate Ltd. [1966] 60 ITR 262 (SC) it was held by\nSUPREME COURT OF INDIA\n\"13. This court affirmed this decision in Commissioner of Income-\ntax v. Scindia Steam Navigation Co. Ltd. [1961] 42 I.T.R. 589; [1962] 1 S.C.R.\n788, where it was stated at page 816 as follows:\n\"On the merits, the appellant had very little to say. He sought to contend that\nthe proviso though it came into force on May 5, 1946, was really intended to\noperate from April 1, 1946, and he referred us to certain other enactments as\nsupporting that inference. But we are construing the proviso. In terms, it is not\nretrospective, and we cannot import into its construction matters which\nare ad extra legis, and thereby alter its true effect.\"\n14. In Commissioner of Sales Tax, Uttar Pradesh v. Modi Sugar Mills Ltd. [1961]\n2 S.C.R. 189; 12 S.T.C. 183 this court held by a majority at page 199 as follows:\n\n55\n\n\"A legal fiction must be limited to the purpose for which it has been created,\nand cannot be extended beyond its legitimate field. The turnover of the\nprevious year is fictionally made the turnover of the year of assessment : it is\nnot the actual or the real turnover of the year of assessment. By the\nimposition of a different tariff in the course of the year, the incidence of tax\nliability may competently be altered by the legislature, but for effectuating\nthat alteration, the legislature must devise machinery for enforcing it against\nthe taxpayer and if the legislature has failed to do so, the court cannot resort\nto a fiction which is not prescribed by the Legislature and seek to effectuate\nthat alteration by devising machinery not found in the statute.\n18. The Surcharge Act having come into force on September 1, 1957, and\nthe said Act not being retrospective in operation, it could not be regarded as\nlaw in force at the commencement of the year of assessment 1957-58. Since\nthe Surcharge Act was not the law in force on April 1, 1957, no surcharge\ncould be levied under the said Act against the appellant in the assessment\nyear 1957-58.\"\nSimilarly In the matter Commissioner of Income-tax v. Shah Sadiq & Sons*\n81987] 31 Taxman 498 (SC)the sc held\n66\n8. This Court in Karimtharuvi Tea Estate Ltd. v. State of Kerala [1966] 60\nITR 262 observed that it was well settled that the Income-tax Act as\nit stands amended on the first day of April of any financial year must apply to\nthe assessment of that year. Any amendments in that Act which came into\nforce after the first day of April of a financial year, would not apply to\nthe assessment for that year, even if the assessment was actually made after\nthe amendments came into force. There, the Kerala Surcharge on Taxes Act,\n1957, having come into force on 1-9-1957, being the date appointed by the\nKerala Government under section 1(3) of that Act, and not being\nretrospective in operation, by express intendment or necessary implication,\ncould not be made applicable from 1-4-1957. Since the Act was not the law\nin force on 1-4-1957, no surcharge on agricultural income-tax could be levied\nunder that Act in respect of the assessment year 1957-58. That decision had\nalso not dealt with the question of affecting vested rights.\n9. In our opinion, the right given to the assessee for the assessment year 1961-\n62 under section 24(2) was an accrued right and a vested right. It could have\nbeen taken away expressly or by necessary implication. It has not been so\ndone. Neither section 297(2)(b) nor any other sub-clauses of sub-section (2)\nof section 297 indicates contrary intention of the Legislature\nregarding any vested right of the assessee under the 1922 Act. On the\ncontrary, section 6(c) indicates that that right should be preserved.”\nSimilarly in vatika town ship [2014] 49 taxmann.com 249 (SC), hon'ble\nsupreme court held as under;-\n31. Of the various rules guiding how a legislationhas to be interpreted, one\nestablished rule is that unless a contrary intention appears, a legislation is\npresumed not to be intended to have a retrospective operation. The idea\nbehind the rule is that a current law should govern current activities. Law\npassed today cannot apply to the events of the past. If we do something\ntoday, we do it keeping in view the law of today and in force and not\n\n56\n\ntomorrow's backward adjustment of it. Our belief in the nature of the law is\nfounded on the bed rock that every human being is entitled to arrange his\naffairs by relying on the existing law and should not find that his plans have\nbeen retrospectively upset. This principle of law is known as lex prospicit non\nrespicit: law looks forward not backward. As was observed in Phillips v. Eyre\n[1870] LR 6 QB 1, a retrospective legislation is contrary to the general principle\nthat legislation by which the conduct of mankind is to be regulated when\nintroduced for the first time to deal with future acts ought not to change the\ncharacter of past transactions carried on upon the faith of the then existing\nlaw.\n32. The obvious basis of the principle against retrospectivity is the principle of\n'fairness', which must be the basis of every legal rule as was observed in the\ndecision in L'OfficeCherifien des Phosphates v. YamashitaShinnihon\nSteamship Co. Ltd. [1994] 1 AC 486. Thus, legislations which modified accrued\nrights or which impose obligations or impose new duties or attach a new\ndisability have to be treated as prospective unless the legislative intent is\nclearly to give the enactment a retrospective effect; unless the legislation is\nfor purpose of supplying an obvious omission in a former legislation or to\nexplain a former legislation. We need not note the cornucopia of case law\navailable on the subject because aforesaid legal position clearly emerges\nfrom the various decisions and this legal position was conceded by the\ncounsel for the parties. In any case, we shall refer to few judgments\ncontaining this dicta, a little later\n57. In view of the foregoing discussion, it is a settled proposition of law that\nthe law in force at the time of the assessment year or the law in force at the\nbeginning of the assessment year is the law to be applied for the purpose of\ndetermining the tax liability of the assessee.\n58. Now turning to the legal position prior to the Finance Act, 2010, the\nHon'ble Supreme Court in Ghanshyam (HUF) (supra) held that interest\nawarded under Section 28 of the Land Acquisition Act, 1894 forms part of the\ncompensation and is taxable u/s 45(5) of the Income-tax Act in the year of\nreceipt. This view was based on the statutory scheme prevailing at the time\nand the deeming fiction under the Land Acquisition Act, which treated such\ninterest as compensation. Admittedly, there is no change in the Land\nAcquisition Act and the decisions rendered on section 28 and the scope\nthereof. However, the legal landscape governing the taxation of interest on\ncompensation or enhanced compensation has undergone a material\nchange post the Finance Act, 2010, in the Income Tax Act, 1961.\n\n57\n\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\n\n58\n\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\n59\n\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\n\n60\n\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\n61\n\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.\"\n\n60\n\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\n\n61\n\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\n\n62\n\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\"\n\n63\n\n73. In 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\n64\n\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] 3 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.\n\n65\n\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.\n\n66\n\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. Respectfully 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. In 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. In 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. As 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:\n\nSr.\nNo.\nITA No.\nAppeal filed by\nAssessee\nResult\n/\nRevenue\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\n\n67\n\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\n\n68\n\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 /