Income Tax Appellate Tribunal - Delhi
Hans Raj,Jhajjar Haryana vs Income Tax Officer, New Delhi on 21 April, 2026
1 ITA No. 1761/Del/2026
HANS Raj Vs ITO
IN THE INCOME TAX APPELLATE TRIBUNAL,
DELHI BENCH: "SMC" NEW DELHI
BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER
ITA No.1761/Del/2026
Assessment Year:2020-21
Hans Raj Vs Income Tax Officer
S/O Raje Ram VPO Goria New Delhi
Tehsil, Matanhail, Jhajjar,
Haryana
PAN: AVEPR19351
(Appellant) (Respondent)
Assessee by (Assessee in Person)
Department by Sh. Ravi Kant Chaudhary, Sr. DR
Date of hearing 08.04.2026
Date of pronouncement 08.04.2026
ORDER
This assessee's appeal for assessment year 2020-21, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, [in short, the "Ld. CIT(A/NFAC"], Delhi's order dated 05/02/2026 passed in case no. CIT(A), Delhi-
NFAC/2019-20/10429913, involving proceedings under section 147 r.w. Section of the Income-tax Act, 1961 (hereinafter referred to as 'the Act').
2. Heard both the parties. Case file perused.
2 ITA No. 1761/Del/20262. It emerges during the course of hearing that the sole substantive issue between the parties is that of correctness of the learned lower authorities action assessing the assessee's interest component of land acquisition compensation u/s 28 of the Land Acquisition Act, 1894, while invoking section 57(iv) r.w.s. 56(1)(a) r.w.s. 145A(b) of the Act.
3. Learned Sr. DR representing the department vehemently argued that the instant issue is no more res integra in light of Mahender Pal Narang Vs. CBDT (2020) 423 ITR 13 (P&H) as well as PCIT Vs. Inderjit Singh Sodhi HUF (2024) 161 taxmann.com 301 (Del.) wherein the department has succeeded before their lordships that the impugned interest component ought to be assessed as income from "other" sources only.
4. I have given my thoughtful consideration to the assessee's pleadings and Revenue's foregoing vehement contention. It emerges that this tribunal's recent decision 3 ITA No. 1761/Del/2026 HANS Raj Vs ITO in Pawan Kumar Vs. PCIT (2024) 159 taxmann.com 61 (Del.-Trib.) has distinguished the said case law as under:
" 3. B ri ef l y s tate d , t he ass ess ee is an i nd iv i d u al . He f il ed h is re tu r n f or AY 2 0 1 8 - 1 9 o n 2 9. 0 8 . 2 0 1 8 decl ar i n g i n co me of Rs . 6, 3 5 , 4 7 0/- . H is r e tu r n was p ro ces se d u n de r sec ti o n 1 4 3( 1 ) ( a) o n 2 8. 0 6 . 2 0 1 9. H is c as e wa s sel e c ted f or compl e te s cr u ti n y as ses sm e n t u n de r th e e- ass ess me n t S c he me, 2 0 1 9 o n t wo i ss ue s, n am el y r ef und cl a im an d wi n n i n g f rom Lo tte r y/c ro ss wo r d pu z zl e/ ho rs e r ac es . T he L d. As ses si n g O f f icer (" AO ") se rve d n o tice u n de r s ec ti o n 1 4 3 ( 2 ) up o n th e ass ess ee o n 2 2 . 0 9. 2 0 1 9 f ol l o we d b y iss u e of no ti ce u n de r sec ti o n 1 4 2( 1 ) of th e A c t o n 2 3. 1 1. 2 0 2 0 . T he Ld . A O c om pl e ted t he as se ss me n t o n 2 2. 0 1 . 2 0 2 1 u nd er se c tio n 1 4 3 ( 3) r . w. sec ti o n 1 4 3 ( 3A ) an d 1 4 3( 3 B ) of th e Ac t o n i nc ome re tu r n ed wi th th e o bse rv a ti o n th a t o n af ores ai d t wo is s ue s n o ad d i ti o n is m ad e.
4. In ex er ci se of his po we r s v es te d i n hi m u n de r s ec tio n 2 6 3 of the Ac t, th e L d. P C IT hel d th e i mp u g ne d or de r of the Ld . A O as er ro ne o us an d p re ju di ci al to th e i n te res t of Reve n ue. A cco r di n g to Ld . P C IT , th e L d. A O s ho ul d h av e tak e n i n to c o ns id er a ti o n , the bi n di n g de ci si o n of Ho n' bl e J ur is d ic ti o n al Hi g h C o u r t i. e. H on' bl e Pu n j ab & H ar y an a H i g h C o ur t d a te d 1 9. 0 2 . 2 0 2 0 i n th e c a se of M ah e n de r P al N ar an g vs. C B DT ( 2 0 2 0) 4 2 3 IT R 1 3 (P & H) wh ere i n th e Ho n' bl e H i g h C o u r t h as de al t wi th th e co n tr ov er sy ar is i n g f rom th e ju d g me n t of Hon' bl e S up re me C o u r t i n th e c ase of C IT vs . G h an s hy am H U F d at ed 1 6 th J ul y , 2 0 0 9 rel ati n g to th e tax ab il i ty of in te re s t r ece iv ed o n co mpe n s a ti o n o r e n h an ce d co mp e ns a ti o n an d al so th e am en d me n ts/ pr ov is io ns of sec ti o n 5 6( 2 ) (v ii i ) i n tro d uc ed th r o u g h F i n an ce Ac t, 2 0 0 9 ef f ec tive f rom 0 1 . 0 4. 2 0 1 0 o n th e ab ove iss u e, wh ic h th e L d. AO f ai l ed to do . T he Ld . PC IT poi n te d o u t th a t th e S LP f il ed ag ai n s t the o r de r of the de ci sio n (s up r a) of the H o n' bl e P& H H i g h C o u r t h as bee n di sm is se d b y the Ho n' bl e S up re me C o u r t v i de i ts o r de r d a te d 4 th M ar c h, 2 0 2 1 i n M ah e n de r P al N ar an g vs . C B DT ( 2 0 2 1) 2 7 9 T ax m an 7 4 ( SC ). He, th e ref ore, se t as i d e the im p u g ne d a sses sm e n t or de r wi th a di re c tio n to p as s an or de r af resh af ter m ak i n g re q u is i te e n q u ir ie s an d pr o pe r ve rif ic at io n wi th r e g ar d to t ax ab il i ty of in te res t o n en h an c e d c om pe ns a t io n.
5. A g g r iev ed , th e as s esse e is i n ap pe al b e f ore the T ri b u n al an d al l th e g ro u n ds r el ate th ere to .4 ITA No. 1761/Del/2026
HANS Raj Vs ITO
6. T he L d. A R s ub m i tte d th a t th e as se s sme n t or de r was n e i th er er ro ne o us no r p re ju d ic i al to th e i n te re s t o f Reven u e bec au s e (i ) th e Ld . AO h as p as se d t he o rd er af ter m ak i n g pr o p er e n q u ir ie s d u ri n g as ses sm e n t p ro ce ed i n gs; (i i ) th e L d. PC IT h as e xe rc ise d th e ju r is d ic ti o n u nd er s ec tio n 2 6 3 me rel y b as ed o n au d i t o b jec ti o n, wh i c h is no t pe rm is s ibl e an d ( i ii ) th e L d. AO h as v al i dl y hel d th at i n ter es t u n de r sec ti o n 2 8 of L an d Ac q u is i ti o n Ac t, 1 8 9 4 g r an te d b y th e co u r t is an i n te g r al p ar t of enh an c ed c omp e ns a ti o n an d exe mp t u n de r s ec ti o n 1 0 ( 3 7) of the A c t i n c as e of th e as se sse e.
6. 1 El abo r ati n g th e ab ove co n te n ti o ns , t he L d. A R po i n ted o u t th at i n n o tic e u n d er s ec ti on 1 4 2 ( 1) of the A c t d ate d 2 3. 1 1 . 2 0 2 0 ( co py a t P ape r B oo k p ag e 1- 2 ), th e L d. A O r e q ui re d th e as ses see to f ur ni s h doc u me n t ar y ev i de nc e i n s upp or t of cl ai m th a t th e am o u n t o f Rs. 6, 8 6 , 1 7, 7 6 7/- i s rec eiv ed u nd er se c tio n 2 8 of th e L an d Ac q u i si ti o n Ac t. T h e ass ess ee r es po n de d v i de l e tte r (co py a t p ag e s 3- 5 8 of P ape r B ook ) th a t th e asse sse e re ce ive d e n h an c ed co mp e ns a ti on o n com p ul so ry ac q u is i ti on of hi s ag r i c ul tu r a l l an d by H ar y an a Gov t. of Rs. 6, 8 6, 1 7 , 7 6 7/- wh i c h i ncl ud ed i n te res t u n de r s ec ti o n 2 8 of L an d A c q ui si ti o n Ac t of Rs. 3, 9 7, 5 6 , 4 6 0/- wh i c h was p ar t of en h an c e d co mpe n s at io n as h el d by th e Ho n' bl e S up re me C o u r t i n C IT v s. G h an s h y am H U F ( 2 0 0 9) 3 1 5 IT R 1 ( SC ). It was cl ai m ed th at th e as se sse e was e n ti tl ed to exe mp ti o n u nd er sec ti o n 1 0 ( 3 7) of the Ac t. T he ex pl an a ti o n of th e as se s see wa s ac ce p te d b y th e Ld . A O wh o p as s ed th e i mp u g ne d as ses sm e n t o r de r d ate d 2 2. 0 1 . 2 0 2 1 wi th o u t m ak i n g an y ad d i ti on . T he ass ess me n t was com pl e ted af te r c ar r yi n g o u t p ro p er e n q u ir ie s wh i c h he o u g h t to h av e c ar r i ed o u t i n r es pe c t of the e n h a n c ed co mpe n s ati o n r ec eiv ed by th e asse sse e. It is no t a c ase of 'l ack of enq u i ry' . M erel y bec au s e i n h is o rd er th e L d. AO d id no t m ak e el abo r ate d is c us sio n bu t wa s s ati sf ied wi th th e e x pl an ati o n of th e as se sse e, th e o rd er co ul d no t b e hel d to be e r ro n eo us . In su ppo r t th e dec is io n s of Ho n' bl e Del hi Hi g h C ou r t i n C IT vs. S u n b e am A u to L td. ( 2 0 1 1 ) 3 3 2 IT R 1 6 7 ( Del ) an d de cis io n of Ho n' bl e R aj as th an H i g h C o u r t i n C IT vs. G an p a t R am B is n oi 2 9 6 IT R 2 9 2 ( R aj. ) we r e c i ted .
6. 2 T he L d. AR i nv i t ed o u r a t te n ti o n to A u di t Me mo at p ag es 3 9 9- 4 0 2 of Pape r B oo k i n the c as e of the as se ssee wh e r e i n IT O ( A u di t) H is ar r ai se d an au di t ob je c tio n o bse rv i n g th a t i n te res t u n de r sec ti o n 2 8 of L an d A c q ui si ti o n A c t of R s. 3, 9 7, 5 6 , 4 6 0/- wa s ch ar g e abl e to tax u n de r se c tio n 5 6 ( 2 )( v ii i ) of th e A c t an d al so ref erred to th e dec is i on s i n th e c as es of Sh ri M an je e t Si n g h H U F v. U O I & O th e rs i n C W P N o. 1 5 5 0 6 of 20 1 3; S hr i P u n ee t S i n g h v s . C IT ( 2 0 1 9) 1 1 0 tax m an . com 1 1 6 an d S h ri M ah e n d r a P al N ar a n g vs . C B DT i n C W P N o. 1 7 9 7 1 of 20 1 9. T h e L d. A R c o n te nd ed th a t th e 5 ITA No. 1761/Del/2026 HANS Raj Vs ITO or de r of th e L d. P C IT i s m er el y b as e d o n th e au d i t ob j ec tio n wi t h o u t ap pl y i n g hi s i n de pe n de n t m i n d an d wi th o u t co ns i d er i n g th e s ub se q ue n t de ci s io ns of Ho n' bl e S up r eme C o u r t i n th e c as es of (i ) C IT vs. G ov i nd b h ai M am ai y a ( 2 0 1 4) 5 2 t ax m an n . co m 2 7 0 ( SC ) ; (i i ) U O I vs. H ar i S i n g h ( 2 0 1 8 ) 9 1 t ax m a n n. co m 2 0 ( SC ); an d ( ii i ) IT O, T D S v . M uk t an a n g ir i M ah e s h g ir i i n C iv il App e al N o . 1 8 4 7 5 of 2 0 I7 d a te d 1 0. 1 1 . 2 0 1 7, wh e r ei n th e r ati o of decis io n of C IT vs. G h an s hy am ( HU F ) ( 2 0 0 9 ) 1 8 1 T axm an 3 6 8 (S C ) h as b ee n af f irme d. T he L d. A R ci te d d eci si o ns wh e r ei n as su mp ti o n of ju ri sd ic ti o n u n de r s ec ti o n 2 6 3 o n th e b as is of au d i t o b jec tio n by th e A u di t wi n g of the D e p ar tm e n t h as be e n hel d to b e i n v al i d.
6. 3 T he L d. A R e x pl ai ne d th a t th e en h an c e d c om pe ns a ti o n a war d e d by th e a ppel l ate au th o ri ty /c ou r t to an as ses se e o n ac q u is i ti o n of capi t al as se t is c h ar g e abl e to t ax as c ap i t al g a i n i n th e ye ar of receip t a s pe r se c tio n 4 5( 5 ) o f the A c t. Ho we v e r, i n th e c ase of an i nd iv i d u al or HU F s u c h c ap i t al g ai n f rom co mp u l sory ac q u is i ti o n of ag ri c ul tu r al l an d be i n g c ap i t al as s e t is exe m p t f ro m t ax u n de r sec ti o n 1 0 ( 3 7 ) of the A c t.
6. 4 T he Ld . AR p oi n te d o u t th e di s ti nc ti o n b e t we e n i n t ere s t a war d e d u n de r se c tio n 3 4 an d i n t ere s t p ai d o n ex cess com pe ns a ti o n u n de r sec ti o n 2 8 of Lan d Ac q u is i tio n A c t. W h e re as i n ter es t u n de r s ec ti o n 3 4 i s p ay abl e f or del ay i n m ak i n g p ay me n t af ter tak i n g po sse s sio n of the ac q u i re d l an d , i n ter es t u n de r sec ti o n 2 8 i s a war d ed f or acc re ti o n i n t he v al u e of l and an d i s th e ref ore p ar t of enh an c ed co mp e ns a ti o n.
6. 5 In G h an s h y am ' s c ase (s u pr a) , th e H o n' bl e S u pr em e C o u r t hel d th at i n te re s t u n de r s ec tio n 2 8, u nl ik e i n tere s t u n de r s ec ti o n 3 4 is an ac cr e tio n to th e v al ue an d he n ce i t i s a p ar t of en h a nc ed com pe ns a ti o n or co n si de r ati o n wh i c h i s n o t th e c as e u n de r se c tio n 3 4 of th e 1 8 9 4 Ac t.
6. 6 As to th e al l e g ed no n- c o ns id er a ti o n of th e de ci si o n of Hon' bl e P & H H i g h C o ur t i n M ah e n de r P al N ar an g ' s c as e (s up r a) by th e L d. AO , i t is s ub mi t te d t h a t th e Ho n' bl e S u p r eme C o u r t d is m iss ed the SL P of th e ass ess ee f il ed ag ai n s t th e s ai d d ec is io n of Hon' bl e P & H H i g h C o u r t i n l i m i ne an d i t i s a se t tl ed l a w th a t th e d is m is s al of SL P i n l im i ne doe s n o t am o u n t to af f irm a ti o n of th e vi e w t ake n by th e Hi g h C o ur t. U nl e ss th e ju d g me n t of the H i g h C o u r t is af f irm ed , 6 ITA No. 1761/Del/2026 HANS Raj Vs ITO a t l e as t, wi th s ho r t re as o n i n g, th e s a me wo u l d no t am o u n t to bi n di n g p rec ed e n t.
6. 7 T he Ld . A R el a bor a te d th at th e i n ser ti o n of sec ti o n 1 4 5 A, sec ti o n 1 4 5 B , s ec ti o n 5 6( 2 ) (v ii i ) an d s ec t io n 5 7( iv ) b y th e F i n an c e (N o . 2) A c t, 2 0 0 9 w. e .f . 0 1. 0 4. 2 0 1 0 doe s no t c h an g e th e c h ar ac te r of in te res t u n de r sec ti o n 2 8 of the L an d A cq u is i ti o n Ac t g r an te d b y th e c o ur t f rom ' cap i t al re ce ip t' f ormi n g p ar t of enh an c ed com pe ns a ti o n as e n v is ag e d i n sec ti o n 4 5 ( 5 ) of the A c t to ' r ev e n ue rec ei p t' c h ar g e abl e to tax as i n co me f rom o th e r so u rce s. T he vi e w t ake n by th e L d. AO th a t i n te re s t u n de r s ec ti o n 2 8 of L an d Ac q u is i tio n Ac t rec ei ved b y th e ass ess ee i s e xe mp t u n de r se c tio n 1 0 ( 3 7) of th e Ac t i s no t co n tr ar y to l a w. H is as se ss me n t o rd e r is, th e ref ore, no t e rr o ne ou s an d n o t l i abl e to be rev is ed u n de r se c tio n 2 6 3 of th e Ac t.
7. T he L d. C IT - D R s up po r ted th e o rd er o f the Ld . P C IT . H e pl ac ed on re co rd a co p y of the de ci si o n of Hon' bl e P u n jab & H ar y an a H i g h C o ur t i n M ah e n de r P al N ar an g v. C B DT r e po r ted i n ( 2 0 2 0) 4 2 3 IT R 1 3 (P &H ) wh e re i n th e Ho n' bl e H i g h C o ur t hel d th a t i n t ere s t rec ei ve d o n co mpe n s a ti o n o r e n h an c e d c omp e ns a ti o n u n de r L an d Ac q u is i tio n A c t, 1 8 9 4 is to b e tr e ate d as ' i n co me f rom o th er so ur ces' an d no t u n de r th e h e ad ' c ap i t a l g ai n s' . T he L d. C IT - DR dr e w o u r a tte n ti o n to p ar a 9 an d 1 0 of th e de ci si o n (s up r a) .
8. W e h av e g iv e n o u r c ar ef ul tho u g h t to the r iv al s ub m iss io n s an d per u se d th e rec or ds . T he f ac ts ar e n o t i n d is p u te. T he as se ssee rec ei ve d i n te re s t of Rs. 3 , 9 7, 5 6, 4 6 0 /- o n e n h an c e d co mp e ns a ti o n f rom HU D A af ter th e co mp ul so ry ac q u i si ti o n of his ag r i c ul tu r al l and o n wh i c h T DS a mo u n ti n g to Rs . 3 9, 7 5, 6 4 6 /- @ 1 0% was al so de d uc te d. T h e asse s see cl ai m ed th e s ai d i n te re s t as exe mp t. O n per u s al of c ase r eco r ds, th e L d. PC IT g ath ere d th a t th e L d. A O h ad com pl e ted th e as se ssm e n t wi th o u t c ar r yi n g o u t nec ess ar y an d pro pe r e n q ui ry wh i c h s ho ul d h av e be e n m ad e r e g ar d i n g ap pl i c abl e ju d g me n ts o n th e t ax ab il i ty of in te res t o n en h an c e d c om pe ns a ti o n. T he H o n' bl e P u n j ab & H ar y an a H i g h C o u r t h as g iv e n th e f in di n g th at i n te r es t r ece iv e d o n co mp e ns a ti o n o r e n h an c ed c om pe ns a ti o n wi l l be t ax ed as per am e n de d pr ov i sio n s i n tr od u ce d th ro u g h F i n an ce (N o . 2) Ac t, 2 0 0 9 w. e.f . 0 1. 0 4 . 2 0 1 0 an d th e ju d g me n t of th e Ho n' bl e S u pr em e C o ur t i n th e c ase of C IT vs. G h an s h y am HU F wo u l d n o t c om e to the r esc u e of the as ses see . T he Ld . PC IT th e ref ore re q u i re d t he ass ess ee to s ho w c au s e as to wh y an ap pr o p ri a te o r de r u n de r sec ti o n 2 6 3 of the Ac t be n o t p as se d. In 7 ITA No. 1761/Del/2026 HANS Raj Vs ITO res po ns e th e as se ss ee s u bm i tte d th a t th e am o u n t re ce ive d u n de r sec ti o n 2 8 of L an d Ac q u is i tio n Ac t i s ex emp t f rom tax rel y i n g o n th e d ec is io n of Del h i B e nc h of th e T r ib u n al i n th e c ase of S h r i Pu n ee t S i n g h, K ar n a l vs. A C IT pr o no u nc ed o n 0 8 . 1 2. 2 0 2 2 f or A Y 2 0 1 1- 1 2 wh e re i n pl ac i n g rel i an ce upo n the d ec isi o n of Ho n' bl e S up re me C o u r t i n th e c as e of Gh an s h y a m H U F (s u pr a) d ec id ed i n f avour of th e as ses s ee. T he s ub mi ss io n of the ass ess ee was n o t ac ce p t abl e to th e L d . P C IT i n v ie w of the d ec is io n of Ho n' bl e P& H H i g h C o ur t i n M ah e n de r P al N ar an g v s, . C B DT an d d is mi ss al of SL P f il ed ag ai n s t i t by th e H o n' bl e S up r eme C o u r t. H e, th e r ef ore, se t as id e th e ass ess me n t o r de r an d d ir ec te d th e L d. A O to p a ss an or de r af resh.
9. As to th e is s ue of l ac k of neces s ar y a n d pr o pe r e n q ui ry d u ri n g as ses sm e n t p roc ee di n g, th e L d. A R de mo ns tr ate d th a t i n r es p on se to no ti ce u n de r s ec ti on 1 4 2 ( 1 ) of th e A c t iss u ed by th e Ld . A O th e as ses see s u bm i tte d th at i n te r es t of Rs. 3, 9 7 , 5 6, 4 6 0/- rec ei v ed by th e as se sse e f ormed p ar t of enh an c ed c omp e ns a ti o n as hel d b y th e H o n' bl e S up re m e C o u r t i n G h an s h y am H U F' s c ase ( s up r a) wh i c h th e as ses see cl aim ed as e xe mp t u n de r s ec tio n 1 0( 3 7 ) of the Ac t. P ag es 1 to 6 1 o f the P ap er B o ok ref er. In o ur o p i n io n, i n th e l ig h t of evide n ce av a il abl e o n rec or ds , i t c an n o t b e al l e ge d as do ne by th e L d. PC IT th a t i t is a c as e of ' no e n q u ir y' or ' l ac k of enq u ir y' . N o do ub t th at th e Ld . AO d id n o t d is cu ss el abo r atel y i n the as ses sm e n t o rd er b u t th a t al o n e c an n o t m ake th e o rd er er ro ne o us as h el d b y th e Ho n' bl e D el h i H i g h C o u r t i n S u n be am A u to L td .' s c ase (s u pr a) an d H on' bl e R aj as th an H i g h C o u r t i n G an p a t R am B is n oi' s c as e ( s up r a) . A n i n co rr ec t as su mp ti o n of f ac ts o r an i nco r rec t ap pl ic a ti o n of l a w wi l l s a ti sf y the r e q u ir em e n t of the or de r be i n g er ro n eo us as hel d by th e Ho n' bl e S up re me C o u r t i n M al ab ar In d u s tr i al C o. L td . v s. C IT 2 4 3 IT R 8 3 (S C ). N o ne of the se el eme n ts ex is t i n th e c ase at h an d .
1 0. Pe r us al of the o rd er of the Ld . PC IT sh o ws th a t he as s u me d th e rev is io n ar y po we r u nd er sec ti o n 2 6 3 of the Ac t m ai n l y o n the g ro u n d th a t th e Ld . AO p ass ed th e or de r no t i n ac co r d an ce wi t h th e b i n di n g d ec is io n of Hon' bl e P & H H i g h C o u r t i n M ah e n d er P al N ar an g ' s c ase (s up r a ) ag ai n s t wh i c h S LP s tan d s d is m iss e d by th e Ho n' bl e S up re me C ou r t. T hi s is n o t so. D u r i n g as ses s me n t pro cee d i n gs i n re s po ns e to n o tic e u n de r sec ti o n 1 4 3 ( 2 ) an d 1 4 2 ( 1) of the A c t, wi th ref ere nc e to s pe cif ic q u e ry o n rec ei p t of in te res t u n de r s ec ti o n 2 8 of L an d A c q ui si ti o n A c t, th e as ses se e e x pl a i ne d vi de l e tte r at p ag es 3- 5 of P ape r B ook th a t i n te re s t r ece iv ed u n de r sec ti o n 2 8 of the L a n d Ac q u is i tio n Ac t h as be e n h el d to b e p ar t of com pe ns a ti o n b y A p ex C o u r t i n th e c as e of C IT v s. G h an s hy am 8 ITA No. 1761/Del/2026 HANS Raj Vs ITO HU F r e po r te d as ( 2 0 0 9 ) 3 1 5 IT R 1, th e s am e be i n g e xe mp t u n de r sec ti o n 1 0( 3 7 ) of the Ac t h as n o t bee n i n cl u de d i n th e to tal i n com e of the ass ess ee wh il e f il in g r e tu r n of inc ome . T he Ld . A O acc e p ted th e ex pl an a ti o n of th e ass ess ee.
1 1. T h e iss u e of am en de d p rov is io n s of sec ti o n 5 6 ( 2) (v i ii ) by the F i n an ce Ac t, 2 0 0 9 a n d th e d ec is io n of Hon' bl e P & H Hi g h C o u r t i n M ah e n de r P al N ar an g' s c as e wa s r ai se d by th e Ld . P C IT i n n o tice u n de r s ec tio n 2 6 3 o n th e b as is of au d i t ob jec ti o n (co py of au d i t me mo of IT O H is ar a t p ag es 3 9 9- 4 0 2 of P ap er B ook ). B ef ore th e Ld . P C IT th e as se sse e ex pl ai ne d th at th e am e n de d p ro vi si o ns we r e no t i n co n ne c tio n wi th th e de ci si o n of Hon' bl e S up re me C o u r t i n G h an s hy am H U F' s c as e b u t to m ak e si m pl e th e t ax a ti o n of in te res t i nco me as e ar l i er i t wa s t ax abl e o n ac cr u al /c as h b as is o n th e b asi s of ac co u n ti n g pr i nc ipl es as hel d b y th e d ec is io n of Ho n' bl e S up re me C o u r t i n R am a B ai vs . C IT ( 1 9 9 0 ) 1 8 1 IT R 4 0 0 . It wa s al so e x pl ai n ed th a t i ns er ti o n of sec ti o n 1 4 5 A, 1 4 5B, 5 6( 2 ) (v ii i ) an d
5 7 (i v ) by th e F i n an c e (N o. 2 ) Ac t, 2 0 0 9 d id n o t c h an g e th e c h ar ac te r of in ter es t u nd er s ec tio n 2 8 of the L an d A c q ui si ti o n Ac t f rom ' c api t al re ce ip t' f ormi n g p ar t of en h an c ed c om pe ns a ti o n as en vi s ag e d i n se c ti on 4 5 ( 5 ) of the Ac t to ' rev e n ue re cei p t' ch ar g e abl e to t ax a s ' i nco m e f rom o th e r so u rce s' . It was al so ex pl ai n ed to th e L d. PC IT th at af te r an al ys i n g th e p ro vi si o ns of sec ti o n 2 8 an d 3 4 of Lan d Ac q u is i tio n Ac t th e H o n' bl e S u p re me C o ur t h el d i n th e c as e of G h an s hy am H U F th at i n te r es t is d if f ere n t f rom comp e ns a ti o n. Ho we v e r, i n te res t p a id o n th e e xce ss am ou n t u n de r se c tio n 2 8 d e p en ds u po n a cl ai m b y a pe rso n wh o se l a n d i s ac q u i re d wh e re as i n t ere s t u n de r sec ti o n 3 4 i s f or d el ay i n m ak i n g p aym e n t. T h is vi t al d if f erence ne ed s to b e ke p t i n m i n d i n de ci di n g th i s m at te r. In te re s t u n de r sec ti o n 2 8 i s p ar t of th e am o u n t of com pe ns a ti o n wh e r e as i n ter es t u n de r se c tio n 3 4 is o nl y f or del ay i n m ak i n g p ay me n t af ter th e co mp e ns a ti on am o u n t is de te rm i ne d. In te res t u n de r s ec ti o n 2 8 is a p ar t of enh an c ed v al ue of the l and wh i c h is n o t th e c as e i n th e m at te r of pay me n t of in te re s t u n de r sec ti o n 3 4. It is th u s ev i de n t th a t th e v ie w t ak e n by th e L d . A O th at i n te r es t u n de r s ec tio n 2 8 of L an d Ac q u is i tio n Ac t re ce ive d by th e as se sse e i s e xe mp t u n de r se c tio n 1 0 ( 3 7) of th e Ac t i s no t co n tr ar y to l a w.
1 2. W e n o tic e th a t i n C B DT C i rc ul ar N o. 5, d a te d 0 3. 0 6 . 2 0 1 0 re p or te d i n ( 2 0 1 0) 3 2 4 IT R ( S t.) 2 9 3, i t i s s t a te d th a t th e Ho n' bl e S up re me C o u r t i n th e c as e of R am a B ai Vs . C IT (s u pr a) h as hel d th at ar re ar s of inte res t c om p u te d o n del ay ed or e n h a nc ed com pe ns a ti o n s h al l be t ax abl e o n acc r u al b as is. T hi s h as c au s ed u n d ue h ar d s hi p to th e tax p ay e rs. W i th a v ie w to m i ti g a te th e 9 ITA No. 1761/Del/2026 HANS Raj Vs ITO h ar d s hi p s ec ti o n 1 4 5 A h as be e n s u bs ti t u te d an d cl au s e (v ii i) i n su b- sec ti o n ( 2 ) of sec tio n 5 6 h as bee n i nse r te d by th e F i n an c e (N o . 2) Ac t, 2 0 0 9 so as to pr ov id e th a t th e i n te res t r ece iv ed o n com pe ns a ti o n o r o n en h an c e d c om pe ns a t io n ref erred to i n cl au s e (b ) of sec tio n 1 4 5 A s h al l be as ses se d as i nc om e f rom o the r so u rce s i n th e y e ar i n wh i c h i t i s re ce ive d. It is th u s ev id e n t th at th e am e n de d pr ov is io ns of sec ti o n 5 6 ( 2 )( vi i i ) of th e Ac t r. w. s e c tio n 1 4 5 A we r e b ro u g h t on th e s t atu te to n u l l if y the ef f ect of Ho n' bl e S up re me C o u r t' s r ul i n g i n th e c as e of R am a B ai an d n o t G h an s hy am H U F. M ore ove r, i t is b ro u g h t to o u r no ti ce by th e Ld . AR th at th e d ec is io n i n G h an s hy am H U F wa s pr o no u nc ed i n J ul y, 2 0 1 6 an d th e F i n an c e B il l pr o po si n g am e n dm e n t to s ec ti o n 5 6 wa s l ai d i n Fe br u ar y 2 0 1 6. So th e i n te n ti o n of the l e g isl atu r e c oul d ne ve r be th e ove r r ul i n g of the r ati o l ai d do wn i n G h an s h y am HU F c ase. T h e iss u e i n R am a B ai c ase i nvo l ved th e t ax ab il i ty i n th e ye ar of recei p t. T h e f ac ts an d q ues ti o ns f or de te r mi n a ti o n i n R am a B ai' s c as e we r e d if f ere n t f rom th os e of G h an s hy am H U F' s c as e. T he p os i tio n i n G h a ns h y am HU F' a c ase h as be e n af f irmed b y th e Ho n' bl e S u pr em e C o u r t i n H ar i S i n g h' s c ase. F u r th e r, th e L d. A R su bm i tte d bef ore us th at S LP f il ed by th e Rev e n ue i n H ar i Si n g h' s c ase h as be e n wi th dr a wn b y th e Re ve n ue m e an i n g th e re by th a t no w th e i ss ue h as a t t ai n ed ce r t ai n ty .
1 3. W e h av e g o ne th ro u g h th e dec is io n o f the Ho n' bl e P & H H i g h C o ur t i n th e c ase of M ah e n de r P al N ar an g ( s up r a) . In th a t c as e th e l and of th e ass ess e e was ac q u ir ed i n A Y 2 0 0 7 - 0 8 an d 2 0 0 8- 0 9. T he e n h an c e d c om p en s ati o n wa s rec ei v ed o n 2 1. 0 3 . 2 0 1 6. In h is re tu r n f il ed f or AY 2 0 1 6- 1 7 he tr e ate d the i n te re s t re ce iv ed u n de r sec ti o n 2 8 of the 1 8 9 4 A c t as i n co me f rom o th er s o ur ces an d cl aim ed de d uc ti o n f or 5 0% as pe r se c tio n 5 7( iv ) of the 1 9 6 1 A c t. T he re tu r n was p ro cess ed u n de r sec ti o n 1 4 3( 1 ) of the Ac t . A n ap pl ic a ti o n u n de r s e c tio n 2 6 4 was m ad e cl aim i n g th at by m is t ake th e as ses see tre a te d th e i n te r es t i n co me as i n co me f rom o the r so ur ces wh e r e as th e s am e is p ar t of en h an c ed co m pe ns a ti o n. T he rev is io n al au th o r i ty re jec te d th e appl ic a t io n u n de r sec ti o n 2 6 4 o n 3 0. 1 . 2 0 1 9. It was i n th i s f ac tu al m a tr i x th a t th e as ses se e f il ed wr i t pe ti ti o n bef ore the H o n' bl e P & H H i g h C o ur t. T he q u es ti o n f or co ns id er a ti o n was " wh e th e r af ter th e i ns er ti o n of sec tio n 5 6 ( 2 )( vi i i) an d 5 7 (i v ) of the Ac t w. e .f . 01. 0 4 . 2 0 1 0, c an th e as se sse e c l ai m th at i n te res t rec ei ve d u nd er sec ti o n 2 8 of the L an d Ac q u is i ti o n Ac t, 1 8 9 4 wi l l p ar t ak e the c h ar ac te r of the com pe ns a ti o n an d woul d f al l un de r th e he ad "c ap i t al g ai n " an d n o t " i nco me f rom o the r so ur ces " ? It was ar g u ed b y th e as sess ee th a t th e r e i s no am e n dm e n t i n sec t io n 1 0( 3 7 ) an d b y i nse r ti o n of secti o ns 5 6 ( 2) (v i ii ) an d 5 7( iv ), th e n a tu r e of in ter e s t u nd er s ec ti o n 2 8 o f the 1 8 9 4 Ac t wil l re m ai n th a t of compe n s at io n an d de ci si o ns of the 10 ITA No. 1761/Del/2026 HANS Raj Vs ITO Ho n' bl e S up re me C o u r t i n th e c ase of Gh an s h y am ( HU F ) an d th e dec is io n of Hon' bl e G u jr a t H i g h C o ur t i n Mo v al iy a B h ik h ub h ai B al ab h ai vs. IT O T D S ( 2 0 1 6) 3 8 8 IT R 3 4 3 we r e r el ie d u po n.
1 4. It m ay b e m e n ti o ne d th a t th e Ho n ' bl e S up re me C o u r t h as af f irmed i ts v ie w t ak e n i n G h an s hy a m HU F' s c as e an d the dec is io n of Gu jr a t Hi g h C o u r t i n Mov al iy a ' s c as e i n i ts dec is io n i n th e c as e of U O I v s. H ar i Si n g h ( 2 0 1 8) 9 1 t ax m an n . co m 2 0 ( SC ). T he dec is io n of the H o n' b l e S up re me C o u r t i n H ar i S i n g h' s c as e (s up r a) wa s n o t b ro u g h t to t he no ti ce of Ho n' bl e P & H H i g h C o ur t wh i l e re n de ri n g dec is io n i n M ah e n de r P al N ar an g' s c as e ( s up r a) . H o n ' bl e P& H H i g h C o u r t h as th us re n de re d th e dec is io n i n M ah e n de r P al N ar an g ' s c as e i n i ts pec ul i ar f ac ts an d ci rc u ms t an ce s. A cco r di n gl y, th e o pi n io n of the Ld . PC IT th a t th e L d. A O s ho ul d h ave p ass e d th e as ses sm e n t i n ac co rd an c e wi th t h e a me n de d l a w an d b i n di n g dec is io n i n M ah e n d er P al N ar an g ' s c as e (s up r a) ov erl o ok i n g th e dec is io n of Hon' bl e S up re me C o ur t i n G h an s h y am' s HU F' s c as e i s no t s u s t ai n abl e. Rel i an ce of th e L d. C IT - DR o n th e d ec is io n i n M ah e n de r P al N ar an g' s c as e is m is pl ac e d. N ee dl es s to em p h as is th at i n V. M . S al g aoc ar an d B ros Pv t. L td. vs . C IT 2 4 3 IT R 3 8 3 (S C ) , th e Ho n' bl e S up re me C o u r t h as h el d th a t an or de r d is m iss i n g th e SL P a t th e th r es hol d wi th o u t de t ail ed r e as o ns do es no t co ns ti tu te an y de cl ar a ti o n of l a w o r a b i n di n g p re ce de n t. T he re f ore, ove re mp h as is i n g th e f ac t of dis m iss al of SLP i n l im i ne b y th e Ho n' bl e S u pr em e C o u r t i n M ah e n de r P al ' s c as e b y th e Re ve n ue is no t of any l e g al as s i s tan c e to i t.
1 5. Re co rd re ve al s t h a t th e o rd er of the Ld . PC IT wa s p ro m p te d sol el y by th e au d i t o b je c tio n . Ho n' bl e P & H H i g h C o ur t h as h e l d i n C IT v s. S o h an a W ool l en M il l s ( 2 0 0 8 ) 2 9 6 IT R 2 3 8 (P & H) th a t me re au d i t ob je c tio n c an n o t l e ad to an i nf erenc e th a t th e or de r o f the Ld . AO i s e r ro ne o us or pr e ju d ic i al to th e i n te res t of th e Rev e n u e.
1 6. Si n ce th e o rd er of th e L d. AO is b as ed o n th e d ec is io n o f the Ho n' bl e S up re me C o u r t i n G h an s h y am H U F ( s up r a) o n th e i s su e of t ax ab il i ty of in te re s t r ece iv ed b y th e as s esse e u n de r se c tio n 2 8 of L an d Ac q u is i ti o n Ac t, i t c an a t bes t b e s ai d to b e a d e b at abl e iss u e o n wh i c h t wo v ie ws ar e pos si bl e an d th e Ld . AO acc e p ts o ne of the v ie ws . In th is vie w of the m at te r too , th e L d. PC IT c a n no t as s um e re vi si o n al ju ri sd ic ti o n as h el d b y th e H o n' bl e Del hi H i g h C o ur t i n C IT vs . H i n d us t an C o c a C ol a B e ver ag e s P L td. ( 2 0 1 1 ) 3 3 1 IT R 1 9 2 ( D el .) 1 7. Acc or d i n gl y, o n the f ac ts an d i n th e c ir c um s tan c es of th e c ase as se t o u t ab ove , we hol d th at th e o r de r of the Ld . P C IT is n o t 11 ITA No. 1761/Del/2026 HANS Raj Vs ITO su s tai n abl e . Ac co rd i n gl y, we al l o w th e a ppe al of th e as se sse e an d q u as h th e im p u g ne d or de r of the L d. PC IT .
1 8. In th e re s ul t, app e al of th e as ses see i s al l o we d ."
5. I adopt the above extracted detailed reasoning mutatis mutandis to accept the assessee's instant sole argument in very terms. Ordered accordingly.
6. This assessee's appeal is allowed.
Order pronounced in the open court on 08th April, , 2026 Sd/-
(SATBEER SINGH GODARA) JUDICIAL MEMBER Dated: 21st April, 2026.
R. N, Sr. PS Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR Asst. Registrar, ITAT, New Delhi