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Interest Awarded under Land Acquisition Act is not Taxable: ITAT Delhi quashes Revision Order
Category: INCOME TAX, Posted on: 17/04/2023
Visitor Count:190

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has quashed the revision order holding that the interest awarded under land acquisition act would not be Taxable.

The assessee, Ashwani Kumar was an agriculturist and the assessee’s land had been acquired by the Govt of Haryana under the Provisions of Land Acquisition Act. The amount of compensation awarded by the Additional District Judge in had been challenged by the assessee before Punjab and Haryana High Court for enhancement of compensation and the compensation had been enhanced by the Hon’ble High Court. Thereafter, the assessee filed her return of income for the year under consideration showing interest accrued on the said FDRs and also interest received on acquisition of land under the head “Income from other sources”. The Land Acquisition Collector deducted the tax at source from the interest which was deposited to the account of Central Govt. In the return filed by the assessee the interest was shown as taxable income since the issue regarding taxability of interest of compensation was not settled. The said return was processed under Section 143(1) of the Income Tax Act. Subsequently, a decision of the Hon’ble Supreme in the case of CIT v. Ghanshyam Dass (HUF) had held that the interest awarded under the Land Acquisition Act was not taxable. The assessee filed application under Section 154 requesting to amen. The AO allowed the application filed by the assessee under Section 154 of the Income Tax Act by rectifying the mistake and held that the interest awarded was not taxable

Satish Khosla,on behalf of the assessee submitted that the Commissioner of Income Tax (CIT) had not appreciated that at the time of examining the records of the assessee and the order passed by the AO was not prejudicial to the interest of revenue.

H. K. Choudhary on behalf of the revenue submitted that the AO travelled beyond the jurisdiction in exercising the power conferred under Section 154 of the Income Tax Act when there was no error apparent from the record.

The Division Bench of B.R.R. Kumar, (Accountant Member) and Yogesh Kumar US, (Judicial Member) allowed the appeal observing that, referring to judgement in the case of Ghanshyam HUF observing that, “the interest awarded under Land Acquisition Act is not taxable as held by the Hon’ble Supreme Court, the department cannot demand to pay the tax on the same by way of invoking section 263 of the Act, therefore, we hold that the order of the CIT is erroneous. Accordingly, we quash the impugned order passed by the CIT u/s 263 and uphold the order passed by the AO u/s 154 of the Act.”

Ashwani Kumar vs CIT CITATION:   2023 TAXSCAN (ITAT) 744


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