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Facts
The assessee challenged an addition of Rs. 1,66,05,363/- made by the Assessing Officer, upheld by the CIT(A), on account of enhanced compensation and interest received from land acquisition, treated as 'income from other sources'. The assessee also disputed the validity of an intimation order under Section 143(1) and claimed an alternative 50% deduction under Section 57 of the Income Tax Act.
Held
The Tribunal dismissed the assessee's appeal regarding the taxability of enhanced compensation and interest, confirming the application of Section 56(2)(viii) based on a Coordinate Bench precedent. The appeal challenging the Section 143(1) intimation order was also dismissed. However, the Tribunal allowed the assessee's claim for a 50% deduction under Section 57, directing the Assessing Officer to recompute the income accordingly.
Key Issues
1. Whether enhanced compensation and interest from land acquisition are taxable as 'income from other sources' after the insertion of Section 56(2)(viii) of the Income Tax Act. 2. Whether the intimation order passed under Section 143(1) was without proper jurisdiction. 3. Whether the assessee is entitled to a 50% deduction under Section 57 of the Income Tax Act on such receipts.
Sections Cited
28 of the Land Acquisition Act, 23(I-A) of Income Tax Act, 23(2) of Income Tax Act, 28 of Income Tax Act, 143(1) of Income Tax Act, 57 of Income Tax Act, 56(2)(viii) of Income Tax Act
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Income Tax Appellate Tribunal, “A” BENCH, CHANDIGARH
Before: HON’BLE SHRI LALIET KUMAR, JM & HON’BLE SHRI KRINWANT SAHAY, AM
आदेश / O R D E R Krinwant Sahay (Accountant Member) 1. Appeal in this case has been filed by the Assessee against the order dated 29.11.2024 passed by the Ld. Addl./JCIT(A)-2, Delhi herein referred to as ‘Addl. CIT(A)’. 2. Grounds of appeal
are as under:
1. That the order of Ld. CIT(A) is against the law AMD facts of the case.
1.
That the Learned CIT(A) has grossly erred in uploading the illegal order passed by the Assessing Officer wherein an addition of amount of Rs. 1,66,05,363/- was made on account of amount received by the assessee as enhanced compensation alongwith the interest u/s 28 of the Land Acquisition Act, as income from other sources, whereas the enhanced compensation AMD interest received u/s 23(I-A), 23(2) AMD 28 is exempt as held by the Hon'ble Supreme Court AMD various Hon'ble Courts.
3. That the Learned CIT(A) has grossly erred in uploading the intimation order passed u/s 143(1) by the AO, CPC, Bangalore without appreciating the fact that intimation order is without proper jurisdiction AMD passed beyond the scope AMD powers enshrined u/s 143(1).
4. Without prejudice to the aforesaid grounds of appeal AMD strictly in the alternative the Ld. AO AMD CIT(A), has grossly erred in not allowing the benefit of 50% deduction of said sum duly allowable u/s 57 of the Income Tax Act.
5. That the appellant craves leave to add OR amend the grounds of appeal before the appeal is finally heard AMD disposed off.
3. The Registry has pointed out that there is a delay of 113 days in filing of the appeal before the Tribunal. The Counsel of the Assessee has filed an application along with Affidavit on behalf of the Assessee, making prayer for condonation of delay. The affidavit of the Assessee is as under:
We have considered the reasons given in the Application / Affidavit and keeping in view the facts and circumstances mentioned therein, we are inclined to condone the delay.
The ld. DR did not have any objection for condonation of delay. Accordingly, the delay in filing of the appeal is hereby condoned and we proceed to decide the appeal on merit.
Appeal on ground Nos. 1 and 5 are general in nature.
Appeal on ground No. 2 is against the addition of Rs. 1,66,05,363/- made on account of amount received by the Assessee as enhanced compensation along with interest of the Land Acquisition Act under as ‘income from other sources’.
During proceedings before us, ld. Counsel for the Assessee made submissions that the Assessee is entitled for enhanced compensation alongwith interest u/s 28 of the Income Tax Act, 1961 (in short 'the Act') of the Land Acquisition Act and for this purpose he relied on the case laws i.e. ‘CIT vs Ghanshyam (HUF) [(2009) 315 ITR 1 (SC) ]. But the Ld. CIT(A) did not accept the arguments of the Assessee and by noting down the provisions of Section 56(2)(viii) inserted by Finance Act No. 2 of 2009 w.e.f 1.4.2010, disallowed the claim of the Assessee and sustained the addition made by the lower authority. Against the said order of the Ld. CIT(A), the Assessee has filed this appeal before the Tribunal.
During proceedings before us, ld. Counsel for the Assessee again cited the case laws of ‘CIT vs Ghanshyam’ (supra) and argued that the Assessee should be allowed enhanced compensation and interest thereon.
Per contra, the ld. DR relied on the order of the Coordinate bench of ITAT Chandigarh wherein, the issue in question has been dealt and the Tribunal has already given detailed findings on this issue in its order passed on 11.11.2025 in a group of cases with leading case i.e. ‘Ajay Kumar and Others vs ITO’ in for assessment year 2018-19. It has been pointed out by Ld. DR that in the said case (supra), it has been clearly held that after insertion of section 56(2)(viii), the Assessee cannot be allowed the benefit of enhanced compensation and interest thereon in land acquisition cases.
We find that this ground is squarely covered by the detailed findings given by the Coordinate Bench on this issue in the case of ‘Ajay Kumar and Others vs ITO (supra). Accordingly, we are of this considered view that the findings given by the Ld. CIT(A) on this issue does not require any interference. Accordingly, following our own order cited above, Assessee’s appeal on this ground is dismissed
The appeal on ground No. 3 is against the order of the Ld. CIT(A) in upholding the intimation order u/s 143(1) by the AO-CPC, Banglore on the ground that it was without proper justification. On this issue, the Ld. Addl. CIT(A) given a very clear and categorical finding in her order and we are of the considered view that the findings given by the her on this issue needs no interference. Accordingly, Assessee’s appeal on this issue is dismissed.
Appeal on ground No.4 is for allowing benefit of 50% deduction of the said sum allowable u/s 57 of the Act. During proceedings before us, ld. Counsel for the Assessee argued that alternatively the Assessee should be allowed 50% deduction as allowable u/s 57 of the Act.
Per contra, the Ld. DR relied on the orders of the authorities below.
We have considered the arguments of the ld. Counsel for the Assessee as well as that of the Revenue. After considering the submissions, we direct the Assessing Officer to recompute the income of the Assessee keeping in view the allowable deduction to the extent of 50% of the Act, Thus, Assessee’s appeal on this ground is allowed.
In the result, Assessee’s appeal is partly allowed.
Order pronounced on 06.01.2026.