Interest received on enhanced compensation for compulsory land acquisition under Section 28 of the Land Acquisition Act is taxable under the head 'Income from Other Sources' per Sections 56(2)(viii) and 145B of the Income Tax Act, and is not eligible for exemption under Section 10(37).

PER NAVEEN CHANDRA, AM :-

This appeal by the assessee is directed against the order of the ld. CIT(A)/NFAC dated 12.12.2024 pertaining to A.Y 2017-18.

2. None appeared for and on behalf of the assessee. We decided to proceed with the assistance of the ld. DR. Therefore, the ld. DR was heard at length and the case records were carefully perused.

3. The sum and substance of the grievance of the assessee is that the CIT(A) erred in confirming the action of the Assessing Officer in taxing the interest received on enhanced compensation of compulsory acquisition of agricultural land u/s 28 of the Land Acquisition Act, 1894.

4. We have heard the ld. DR and have perused the relevant material on record. In the present case it is not in dispute that the assessee received interest of Rs 33,03,628/- u/s 28 of the Land Acquisition Act, 1984 during the year on enhanced compensation for acquisition of land. The issue for adjudication is whether the interest received under section 28 of the Land Acquisition Act on enhanced compensation for acquisition of land, is exempt u/s 10(37) or will be exigible to tax under the "income from other sources" in view of amendment w.e.f 01.04.2010 in the provisions of section 56(2)(viii) and 57(iv) of the Act.

5. The issue is no longer integra. The issue has been decided by the Delhi ITAT Benches in the case of Shri Bhim Singh Vs. The I.T.O in ITA No. 255/DEL/2024 [A.Y 2019-20] against the assessee in which the author of this decision was a party. The ITAT held as under:

“15. Before proceeding further, we find it appropriate to deal with the various provisions of the laws that comes under play in the present controversy. The two sections that deals with the interest on compensation in the Land Acquisition Act, 1894 are section 34 and section 28. The section 34 of the Land Acquisition Act provides for payment of interest on delayed payment of compensation and Section 28 of the Land Acquisition Act provides for the interest on enhanced compensation awarded by the Court. The sections 28 and 34 of the Land Acquisition Act read as under: -

"28. Collector may be directed to pay interest on excess compensation.− If the sum which, in the opinion of the court, the Collector ought to have awarded as compensation is in excess of the sum which the Collector did award as compensation, the award of the Court may direct that the Collector shall pay interest on such excess at the rate of [nine per centum] per annum from the date on which he took possession of the land to the date of payment of such excess into Court."

"34. Payment of interest.− When the amount of such compensation is not paid or deposited on or before taking possession of the land, the Collector shall pay the amount awarded with interest thereon at the rate of nine per centum per annum from the time of so taking possession until it shall have been so paid or deposited.

Provided that if such compensation or any part thereof is not paid or deposited within a period of one year from the date on which possession is taken, interest at the rate of fifteen per centum per annum shall be payable from the date of expiry of the said period of one year on the amount of compensation or part thereof which has not been paid or deposited before the date of such expiry."

16. The taxability of interest on delayed payment of compensation u/s 34 of LAA was not under dispute. The controversy raised is with regard to the taxability of the interest received on enhanced compensation u/s 28 of LAA. This issue of taxability of interest received on enhanced compensation u/s