आयकर अपील(cid:547)य अ(cid:876)धकरण,चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, ‘B’ CHANDIGARH BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 1236/CHD/2016 (cid:467)नधा(cid:91)रण वष(cid:91) / Assessment Year: 2007-08 Shri Paras and Shubham Chaudhary The ITO, LH of Shri Kanhaiya Lal, House No.99, Vs Ward No. 2, Sector 4, Panchkula. Panchkula.

èथायी लेखा सं./PAN NO: CAHPP6878A अपीलाथ(cid:568)/Appellant (cid:292)×यथ(cid:568)/Respondent Assessee by : Shri Rishab Gupta & Shri Mukesh Aggarwal,CAs Revenue by : Shri Vivek Vardhan, Addl. CIT Sr.DR Date of Hearing : 10.09.2025 Date of Pronouncement : 24.09.2025 PHYSICAL HEARING O R D E R PER RAJ PAL YADAV, VP The present appeal is directed at the instance of the assessee against the order of ld. Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 22.09.2016 passed for assessment year 2007-08.

2. The assessee has taken three grounds of appeal, out of which Ground No.2 and 3 are peripheral argument in support of the issue agitated under Ground No.1, hence, the solitary grievance of the assessee is whether interest amounting to Rs.1,64,03,967/- received by the assessee u/s 28 of the Land Acquisition Act, 1894 is taxable in the hands of the assessee in assessment year 2007-

08 or not.

3. The brief facts of the case are that Haryana Government has issued a Notification u/s 4 of the Land Acquisition Act, 1894 on 23.08.2001 proposing to acquire 18.98 Acres of land situated in village Devinagar, Hadbast No. 384 for public purpose, namely, for the development and utilization of land as recreational and commercial area. Ultimately, after fulfilling the procedure contemplated u/s 5, 6 & 9 of the Land Acquisition Act, this land was acquired and an Award was issued by the Land Acquisition Collector vide which Rs.6 lacs per acre was granted as a compensation to the land owners.

4. Dissatisfied with this, the land owners have filed references u/s 18 of the Land Acquisition Act for adjudication of their claims by the District Judge and accordingly, these land acquisition cases have been decided by the District Judge, Panchkula vide his order dated 28.02.2006. The ld. Addl. District Judge has granted relief as under :

“RELIEF

30. In view of my findings recorded on issue no.1, all the ten L.A. References are accepted and the petitioners re awarded compensation of the acquired land at the rate of Rs.440/- per square yard instead of Rs.6 lacs per acre as awarded by the Land Acquisition Collector.

31. The petitioners are not entitled for enhancement of compensation pertaining to structure/building and tubewell etc. 32. The petitioners are also entitled for all statutory benefits.

33. These references are accordingly returned in favour of the petitioners with costs. Memo of costs be prepared. File be consigned to the record room.”

5. The assessee Shri Kanhaiya Lal has received the compensation in the Accounting Year relevant to assessment year 2007-08. Thus, issue arose whether interest received u/s 28 as a consequential statutory benefit is taxable in the hands of the assessee or not ? The AO was of the view that it is taxable and accordingly, taxed it.

6. Appeal to the ld.CIT (Appeals) did not bring any relief to the assessee.

7. Before us, ld. counsel for the assessee submitted that interest received u/s 28 of the Land Acquisition Act 1894 is not interest as construed under the Income Tax Act, rather the Land Acquisition Act contemplated this interest as a part of the compensation. This aspect has been interpreted by the Hon'ble Supreme Court in the case of CIT Faridabad Vs Ghanshyam, HUF reported in 315 ITR page 1. He drew our attention towards paragraph No. 19 to 36 of this judgement. The ld. counsel for the assessee, thereafter, made reference to certificates issued by Land Acquisition Collector whereby it has been provided that this compensation was received by the assessee u/s 28 of the Land Acquisition