Section 56(2)(viii) of the Income Tax Act
Income-tax Act, 2025: s.92
Section 56(2)(viii) falls under section 56 of the Income-tax Act, 1961, which corresponds to section 92 (Income from other sources) of the Income-tax Act, 2025.
Read section 92 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 56(2)(viii) is CIT v. Sunbeam Auto Ltd. (332 ITR 167), cited in 897 of the 364 judgments on BharatTax that turn on this section.
Leading authorities on Section 56(2)(viii)
The Commissioner cannot revise an assessment under Section 263 merely because the assessment order does not explicitly reflect an inquiry, or because the Commissioner holds a different opinion. An inquiry, even if considered inadequate, or an assessment based on a plausible view by the Assessing Officer after due examination, does not automatically make the order erroneous or prejudicial to the interests of the revenue.
For exercising revisional jurisdiction under Section 263, the Commissioner must first find that the Assessing Officer's order is erroneous and unsustainable in law, as this is a condition precedent. An order is not erroneous merely because two views are possible, or if the Commissioner disagrees with the Assessing Officer's permissible view, or to simply remit the matter for further enquiries.
Interest received under Section 28 of the Land Acquisition Act, 1894, is considered part of the enhanced compensation on compulsory acquisition of land. It is taxable as 'capital gains' and not separately as 'interest income' under the head Income from Other Sources.
The law declared by the Supreme Court is binding on all courts in India, and decisions of a High Court are binding on subordinate courts and tribunals within its jurisdiction but not on courts or tribunals outside its jurisdiction.
Interest income is taxable on either an accrual or cash basis, determined by accounting principles. This method was applicable prior to legislative changes that simplified the taxation of interest income.
The judgment in Kotak Mahindra Co. Ltd. does not appear to be directly cited for a specific income tax proposition in the provided passages. The passages merely list it as one of several cases cited in subsequent judgments, without detailing its specific contribution to the legal reasoning.
Interest on enhanced compensation received under Section 28 of the Land Acquisition Act, 1894, is considered part of the compensation, not merely interest income, and is exigible to tax on a receipt basis.
An order by the Supreme Court dismissing a Special Leave Petition (SLP) at the threshold without detailed reasons does not constitute a declaration of law or a binding precedent. Such dismissal in limine offers no legal assistance.
A mere audit objection, by itself, is insufficient to infer that an Assessing Officer's order is erroneous or prejudicial to the interest of the Revenue for the purpose of initiating revisional proceedings.
Interest received as enhanced compensation under Section 28 of the Land Acquisition Act, 1894, for compulsory acquisition of land is taxable as "income from other sources" under Sections 56(2)(viii) and 57(iv) of the Income-tax Act, 1961, and is not exempt under Section 10(37).
