SH. MAHANDER SINGH,NEW DELHI vs. ITO, GURGAON

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ITA 5533/DEL/2016Status: DisposedITAT Delhi09 June 2017AY 2013-143 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the interest received on compensation or enhanced compensation is taxable in the year of receipt due to the insertion of clause (viii) to Section 56(2) and Section 145A(b). The CIT(A)'s decision to treat the amount as chargeable to tax was upheld.

What were the facts?

The assessee received interest under Section 28 of the Land Acquisition Act, which was claimed as exempt. The Assessing Officer, invoking Section 56(2)(vii), added a portion of this interest to the total income after allowing for expenses.

What were the issues?

Whether interest received under Section 28 of the Land Acquisition Act is taxable as income from other sources. Whether the provisions of Section 56(2)(viii) and Section 145A are applicable to such interest income.

Which sections of the Income-tax Act were involved?

Section 56,Section 145A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH : SMC : NEW DELHI

Before: SHRI R.S. SYAL

For Appellant: Shri Sudhir Yadav, Shri Amrit Lal, Sr.DR
Hearing: 08.06.2017Pronounced: 09.06.2017

(Appellant) (Respondent) Assessee by : Shri Sudhir Yadav Deptt. By : Shri Amrit Lal, Sr.DR Date of Hearing : 08.06.2017 Date of Pronouncement: 09.06.2017 ORDER

This appeal by the assessee is directed against the order passed by the CIT(A) on 08.08.2016 in relation to Assessment Year 2013-14.

2.

The only issue raised in this appeal is against the treating the net interest of Rs.10,03,335/-, being the amount of interest u/s 28 of the Land Acquisition Act, 1894 as chargeable to tax u/s 56 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’)

3.

Briefly stated, the facts of the case are that the assessee received interest u/s 28 of the Land Acquisition Act which was claimed as exempt.

Invoking the provisions of section 56(2)(vii), the Assessing Officer, after allowing deduction @ 50% of receipt towards expenses, added Rs.10,03,335/- to the total income. The ld. CIT(A) approved the decision of the Assessing Officer. The assessee is aggrieved.

4.

Having heard both the sides and perused the relevant material on record, it is seen that the amount of interest received by the assessee is chargeable to tax in the year of receipt in view of insertion of clause (viii) to section 56(2) by the Finance No. (2) Act 2009 w.e.f 01.04.2010. This provision read with section 145A(b) makes it clear that interest received by assessee on compensation or an enhanced compensation shall be deemed to the income of the year in which it is received. The learned CIT(A) has rightly set out and relied on the of Hon’ble Punjab and Haryana High Court judgment in the case of Manjeet Singh (HUF) vs. UOI (CWP No. 15506 of 2013) dated 14.1.2014, being the jurisdictional High Court. In view of foregoing discussion, I am of the considered opinion that the ld. CIT(A) was right in treating the amount as chargeable to tax.

5.

In the result, the appeal filed by the assessee is dismissed. The decision was pronounced in the open court on 09th June, 2017.

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