IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI 'C' BENCH, NEW DELHI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER, AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 2695/DEL/2024 [A.Y 2015-16]

Kanta Rani Yadav Vs. The P.C.I.T H-35/IA, H Block, Faridabad DLF Phase-Il Sector 26, Gurgaon, Haryana PAN: AAUPR 0861 J (Applicant) (Respondent)

Assessee By : None Department By: Shri Dayainder Singh Sidhu, CIT-DR Date of Hearing : 03.01.2025 Date of Pronouncement : 22.01.2025 ORDER PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:-

This appeal by the assessee is preferred against the order of the ld. PCIT, Faridabad u/s 263 of the Income Tax Act dated 21.03.2024 pertaining to A.Y 2015-16.

2. The assessee has been issued several notices on the address given in the Form 36. There has been no response from the assessee compelling us to decide the issue ex-parte on the basis of materials on record.

3. The grounds raised by the assessee read as under:

“1. On the basis of Facts & circumstances of the case there is no legal warrant or valid justification on the part of learned The PCIT to make addition of Rs.17,20,330/- being interest on enhanced compensation on acquisition of agriculture land u/s 28 of Land Acquisition Act, 1894 claimed as exempt in return filled. The action of learned the PCIT is totally unlawful, unjustified and unreasonable. Whereas I had also presented before him the several orders passed by the ITAT, in which clearly written that compensation & enhanced compensation on compulsory acquisition of agriculture land u/s 28 of Land Acquisition Act, 1894 is exempt from tax. The addition of Rs.17,20,330/- (50% of Rs.34,40,660/)

made on this account deserves to be deleted.

2. On the basis of Facts & circumstances of the case there is no legal warrant or valid justification on the part of learned the PCIT to treat the said interest of Rs.34,40,660/- granted U/s 28 of Land Acquisition Act, 1894 as income from other source U/s 56 of the Act and allow deduction U/s 57 of the Act i.e. 50% of the said amount and not allowing the said amount as exempt u/s 10(37) of the Act as claimed in the return. The claim of the assesse deserve to be allowed.”

4. The ld DR assisted the Bench with the facts of the case. It is submitted that the assessee had not filed any return of income for AY 2015-16. On the basis of AIMS information that the assessee had received interest of Rs 46,27,628/-, the AO issued notice u/s 148 in response to which the assessee filed a return declaring income of Rs 12,06,370/- being income from other sources. The AO also held that a further amount of Rs 51,41,244/- received by the assessee as enhanced compensation for land acquired under LAA, was exempt from tax u/s 10(37) in view of the decision of Supreme Court in the case of CIT V Ghanshyam (HUF).

5. It is against this decision of the AO regarding non-taxability of interest on enhanced compensation, the PCIT invoked his power u/s 263 of the Income Tax Act and held that the order of the AO was erroneous insofar as prejudicial to the interest of the Revenue and set aside the order of the AO directing him to pass a fresh assessment order. Aggrieved by the order of PCIT u/s 263 dated 21.03.2024, the assessee is before us.

6. As per the grounds of appeal, we find that in the present case, the assessee during the year has received interest amounting to Rs. 34,40,660/- granted u/s 28 of the Land Acquisition Act, 1984 (hereinafter LAA) on enhanced compensation for acquisition of agricultural land which the assessee claimed as exempt u/s 10(37). The PCIT invoking the provision of section 263, directed the AO to treat the interest of Rs 34,40,660/- as income from other sources under amended provisions of section 56(viii) r.w. section 145B and allowing 50%

deduction u/s 57(iv) of the Income Tax Act.

7. We have heard the submissions of 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 u/s 28 of the Land Acquisition A