The Ld.CIT(A) derived from the same that the term interest received on compensation or enhanced compensation used u/s 145A(b),taxing the said interest in the year of receipt, was to be read in that context only and, therefore, it clearly did not refer to /apply to the interest received u/s 28 of the Land Acquisition Act, which had been held by the Hon’ble Apex Court to be in the nature of enhanced compensation in the case of Ghanshyam(HUF) (supra). ITAT states that, it is true that “interest” is not compensation. It is clear from the above that whereas interest under Section 34 is not treated as a part of income subject to tax, the interest earned under Section 28, which is on enhanced compensation, is treated as a accretion to the value and therefore, part of the enhanced compensation or consideration making it exigible to tax. 28 of the Land Acquisition Act, 1894 on compulsory acquisition of agricultural land in the nature of compensation is exempt u/s. 7—Application (1) This Act applies to and in relation to every acquisition of land authorised by a special Act. The issue involved in the present appeal related to the issue of taxability of interest received on enhanced compensation on compulsory acquisition of land u/s 28 of the Land Acquisition Act, 1894. 10. The Ld. 4 (2) Section 16(5a)—delete "and in the same way" (3) Section 16—after subsection (5a) insert: (5b) To avoid doubt, a notice under subsection (5a) need not be given to a person in the same way as the notice of intention to acquire land was given to the person. It is true that “interest” is not compensation. The AO dismissed the contention of the assessee stating that the issue of taxability of interest on enhanced compensation was now covered by the amended provisions of sections 56(2)(viii), 57(iv) and 145A of the Act, which was applicable w.e.f. Exemption under section 10(37) is available only on account of compulsory acquisition of urban agricultural land. So also additional amount under Section 23(1-A) and solatium under Section 23(2) of the 1961 Act forms part of enhanced compensation under Section 45 (5) (b) of the 1961 Act. LAND ACQUISITION AND COMPENSATION ACT 1986 TABLE OF PROVISIONS PART 1--PRELIMINARY 1.Purpose 2.Commencement 3.Definitions PART 2--ACQUISITION OF INTERESTS IN LAND Division 1--General 4.Authority to acquire or purchase in accordance with Part Division 2--Reservation of land 5.Reservation or certification of land required before acquisition Division 3--Notice of intention to … Powers and functions of the Cabinet Secretary in land management. 45/2020-Customs, Dated: 30.12.2020, Join Online Certification Courses on GST covering recent changes, ICAI requests FM to extend Income Tax due dates immediately, Extend Income Tax Audit & ITR Due dates for AY 2020-21, Extend date of filing of GSTR 9, GSTR 9C and IT returns, Extend Income Tax, GST, LLP, Company Law due dates, Summary of Important GST Changes Applicable From 01.01.2021. 5―Conflict with other laws. It is important to note that compensation, including enhanced compensation/consideration under the 1894 Act, is based on the full value of property as on the date of notification under Section 4 of that Act. Whether on the facts and in the circumstances of the case the Ld. Counsels for assessee has further brought our attention the latest decision of the Hon ‘ble Supreme Court in the case of CIT Vs. Chet Ram (HUF) dated 12.09.2017 in Civil Appeal No. Required fields are marked *, Notice: It seems you have Javascript disabled in your Browser. Income-tax Officer-TDS-1-Surat [2016] 70 com45 (Gujarat) it was concluded that interest awarded under section 28 of Land Acquisition Act, 1894 partook the character of compensation paid by government on compulsory acquisition of assessee’s agricultural land and was, accordingly, eligible for exemption under section 10(37). Section 44A of Land Acquisition Act 1894 "Restriction on transfer, etc" No company for which any land is acquired under this Part shall be entitled to transfer the said land or any part thereof by sale, mortgage, gift, lease or otherwise except with the previous sanction of the appropriate Government. PART II – MANAGEMENT OF PUBLIC LAND General Provisions 8. Land Acquisition Act 1969. Acquisition of land at cost of a local authority or Company. For the purpose of this section a person shall be deemed to be interested in land who would be entitled to claim an interest in compensation of the land were acquired under this act. 2 No. 4―Limitation of application. 5. 145A(b) of the Act was for the purpose of mitigating the hardships of the assessee on account of the decision of the Hon’ble Apex Court in the case of Ramabai Vs. CIT(1990) 181 ITR 400 whereby it was held that the arrears of interest computed on the enhanced compensation was to be taxed on accrual basis. Welcome to the Land Acquisition Section (LAS) homepage! The assessee had received enhanced compensation during the year along with interest on the compensation. Departmental Representative relied upon the order of the AO, though he fairly conceded that the issue stood decided in favour of the assessee by the ITAT in appeal for the disputed year, though in different proceedings i.e u/s 154 of the Act. 7 Amendment of section 10—Notice of intention to acquire land. In that case, the court drew distinction between the “interest” earned under Section 28 of the Land Acquisition Act and the “interest” which is under Section 34 of the said Act. Powers and functions of the Cabinet Secretary in land management. LAND ACQUISITION AND COMPENSATION ACT 1986 TABLE OF PROVISIONS PART 1--PRELIMINARY 1.Purpose 2.Commencement 3.Definitions PART 2--ACQUISITION OF INTERESTS IN LAND Division 1--General 4.Authority to acquire or purchase in accordance with Part Division 2--Reservation of land 5.Reservation or certification of land required before acquisition Division 3--Notice of intention to … 2. The five-judge Bench was interpreting Section 24 (2) which concerns land acquisition compensation awards made five years “prior or more” to the coming of existence of the 2013 Act… 1504 of 2017 dated 15.09.2017, as under: “(2) While determining as to whether the compensation paid was for agricultural land or not, the Assessing Officer(s) will keep in mind the provisions of Section 28 of the Land Acquisition Act and the law laid down by this Court in ‘Commissioner of Income Tax, Faridabad V. Ghanshyam (HUF) ‘ [2009 (8) SCC 412] in order to ascertain whether the interest given under the said provision amounts to compensation or not. The relevant extract from the decision of the Hon’ble Apex Court in Ghanshyam(HUF) supra is quoted as under:-. THE LAND ACQUISITION ACT, 1894 (1 OF 1894) (As modified up to the Ist September, 1985) Subordinate legislation – being published separately) GOVERNMENT OF INDIA MINISTRY OF Law and Justice THE LAND ACQUISITION ACT, 1894 ARRANGEMENT OF SECTIONS _____ PART I PRELIMINARY SECTIONS: 1. Application. Interpretation P ART II ACQUISITION 3. 54. One of the most common question is with regard to the taxability of interest received on compensation or enhanced compensation. 48/2020-Customs (ADD), Dated: 30.12.2020, Notification  No. 6. The relevant provision in this regard is Section 28A of the Land Acquisition Act, as amended in 1984. - (1) Subject to the provision of Part VII of this Act, [appropriate Government] is satisfied, after considering the report, if any, made under section 5A, sub-section (2)], that any particular land is needed for a public In view of the above, respectfully following the decision of Hon’ble ITAT, Chandigarh in appellant’s own case in ITA No.551/Chd/2016, it is held that interest u/s 28 of the Land Acquisition Act received by the appellant is in the nature of compensation and is exempt under the provision of Section 10(37) of the I.T. An Act to provide for the acquisition of land for public and certain other specified purposes, the assessment of compensation to be made on account of such acquisition and for purposes connected therewith. Income Tax Appellate Tribunal grossly erred in disregarding the decision of the Hon’ble Jurisdiction High Court in the case of Manjeet Singh Vs. Union of India & Others reported as [2016] 237 TAXMAN 116 (Punj&Har) and the decision in the case of Commissioner of Income Tax, Panchkula Versus Prem Singh decided 2010 wherein the decision of the Hon’ble Apex Court in the case of Commissioner of Income Tax Versus Ghanshyam Dass (HUF) reported as [2009] 315 ITR 1(SC) was considered and it was held that the interest on enhanced compensation under section 28 of the Land Acquisition Act, 1894 is chargeable to tax under section 56 of the Income Tax Act, 1961 as income of the year in which it is received irrespective of the method of deduction of a sum equal to 50% of such income under Clause (iv) of section 57 of the Income Tax Act, 1961 notwithstanding that the compensation or enhanced compensation is exempt under section 10(37) of the Income Tax Act, 1961? Land to be marked out, etc. Section 45(5) read as a whole [including clause (c)] not only deals with reworking as urged on behalf of the assessee but also with the change in the full value of the consideration (computation) and since the enhanced compensation/ consideration (including interest under Section 28 of the 1894 Act) becomes payable/paid under the 1894 Act at different stages, the receipt of such enhanced compensation/consideration is to be taxed in the year of receipt subject to adjustment, if any, under Section 155(16) of the 1961 Act, later on. In this Act "acquisition costs" means the consideration or compensation paid for acquisition of land, or on the expropriation of land, ... need be published as required under section 86 of that Act. A collector's decision to deny an 85-year old woman the benefit of this provision attracted the Court's censure and the imposition of exemplary costs to the tune of Rs 1 lakh ( Smt. Copyright © TaxGuru. Where any land has been acquired under this Act, whether before or after the commencement of this section, no subsequent disposal or use of, or dealing with, the land, whether by the State Authority or by the Government, person or corporation on whose behalf the land was acquired, shall invalidate the acquisition of the land. Inquiry and award. It was contended that the AO had held the same to be taxable u/s 56(2)(viii) read with sections 57(iv) and 145A of the Act. After holding that interest on enhanced compensation under Section 28 of 1894 Act is taxable, the Court dealt with the other aspect namely, the year of tax and answered this question by holding that it has to be tested on receipt basis, which means it would be taxed in the year in which it is received. It is true that “interest” is not compensation. 31—Application for police assistance. Vs Union of India CWP No.2014 of 2015 vide order dated 21.09.2015 and held that interest received u/s 28 of the Land Acquisition Act is in the nature of interest and is taxable but recently the issue was once again decided by the Hon’ble Supreme Court vide its order dated 15.09.2017 in the case of Union of India vs Hari Singh and Ors. THE LAND ACQUISITION ACT, 1894 (Act I of 1894) C O N T E N T S PART I PRELIMINARY SECTIONS 1. Act. 13053/2017 wherein also the Hon ‘ble Supreme Court has again reiterated the proposition laid down in the case of Ghanshyam (HUF) (supra), which we find has been further reiterated in the case of Union of India Vs. Hari Singh & others in Civil Appeal No. was also decided in ITA No.551/Chd/2016 has discussed the issue of taxability of interest u/s 28 received on enhanced compensation on lands compulsorily acquired by the Government as under: “7. 2—Interpretation. Previous enquiry 22 41. Maintained by V2Technosys.com, Taxguru Consultancy & Online Publication LLP, 509, Swapna Siddhi, Akurli Road, Near Railway Station, Kandivali (East), Interest on Enhanced Compensation u/s 28 of Land Acquisition Act, 1894 is Exempt u/s 10(37), Tax Exemption For LTA Under Special Cash Voucher LTC Scheme, Income Tax Department conducts searches in Delhi, Govt extend due dates of Tax Audit/ITR/VSV Scheme/GSTR 9/9A/9C, An Interplay – Income Tax Search and Seizure & Income Tax Settlement Commission, Extension of Due date for TAR & IT Returns- Gujarat HC fixes next hearing on 31.12.2020, Majors below permissible age can legally Live- in but cannot marry- a legal anomaly, GST annual returns due date for FY 2019-20 extended till 28.02.2021, Courier Imports and Exports (Electronic Declaration and Processing) Amendment Regulations, 2020, Investigation cannot be stalled on apprehension of contracting COVID-19, Important Amendment in E-way bill w.e.f 01st January 2021, Input Tax Credit Dilemma: Analysis of 14th Amendment to CGST Rules, 2017, Notification No. LAND ACQUISITION (JUST TERMS COMPENSATION) ACT 1991 - As at 23 September 2020 - Act 22 of 1991 TABLE OF PROVISIONS Long Title PART 1 - PRELIMINARY 1.Name of Act 2.Commencement 3.Objects of Act 4. Objects of Act 4. [17th June 1967] PART I. Date of determination of market value of land. Whether on the facts and in the circumstances of the case, the Ld. 9. Arrangement of sections. 50. Arrangement of sections. Further, as per section 56(2)(viii) of the Income Tax Act, income by way of interest received on compensation or on enhanced compensation referred to in section 145A(b) above shall be taxable under the head income from other sources in the previous year in which such interest is received. The Ld.CIT(A) further noted that identical issue had been considered in the case of the assessee by the I.T.A.T. Interest u/s 28 is a part of enhanced value of land which is not the case in the matter of payment of interest u/s 34. Therefore, interest u/s 28 of the Land Acquisition Act received by the appellant is in the nature of compensation and is exempt under the provision of Section 10(37) of the Income Tax Act. 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