P. Susheela, Hyd, Hyderabad V. ITO, Ward-6(2), Hyderabad, Hyderabad

ITA 100/HYD/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5982 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 27-10-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 01-02-2016
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Keywords: Non-deduction of tax
• Section: 56(2); 145; 56; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 100/HYD/2016 ASSESSMENT YEAR: 2011-12 SMT. P. SUSHEELA, HYDERABAD [PAN: AGTPP2500K] VS THE INCOME TAX OFFICER, WARD-6(2), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.C. DEVDAS, AR FOR REVENUE : SHRI A. SITARAMA RAO, DR DATE OF HEARING : 27-10-2016 DATE OF PRONOUNCEMENT : 07-12-2016 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E LD. COMMISSIONER OF INCOME TAX (APPEALS)-9, HYDERAB AD DATED 04-12-2015. THE ISSUE IN THIS APPEAL IS WHETHER THE E NHANCED COMPENSATION RECEIVED BY ASSESSEE WOULD BE TAXABLE AS INCOME FROM OTHER SOURCES. 2. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS AN INDIVI DUAL AND HER AGRICULTURAL LAND ADMEASURING 37.23 ACRES S ITUATED AT PATANCHERU VILLAGE, MEDAK DISTRICT WAS COMPULSORILY AC QUIRED BY I.T.A. NO. 100/HYD/2016 SMT P. SUSHEELA :- 2 -: THE APIIC LIMITED FOR THE PURPOSE OF INDUSTRIAL PARK IN 1976-77. THE SAID LAND WAS ACQUIRED BY THE LAND ACQUISITION OF FICER UNDER THE LAND ACQUISITION ACT, 1894. THE LAND ACQUISITION OFFICER INITIALLY ORDERED COMPENSATION AND AN AMOUNT OF RS. 12 ,96,950/- WAS PAID. ASSESSEE APPROACHED THE ADDITIONAL DISTRICT JUDGE, SANGAREDDY, WHO GRANTED A DECREE FIXING THE RATE AT 1 9 PER SQ. YD., VIDE DECREE DT. 31-12-1979. NOT SATISFIED WITH THE AWA RD, ASSESSEE APPROACHED THE HONBLE HIGH COURT FOR ENHANCEMENT OF COMPENSATION. THE HONBLE HIGH COURT OF A.P. VIDE AP PEAL NO. 1054/80 DT. 18-04-2003 GRANTED FOLLOWING ENHANCEMENT O F COMPENSATION ALLOWED BY THE ADDITIONAL DISTRICT JUDGE, SANGAREDDY: I. MARKET VALUE OF THE LAND WAS DETERMINED AT 19 PER SQ. YD; II. ASSESSEE WAS ALLOWED STATUTORY BENEFITS LIKE SOLATIUM ETC., AND GRANTED INTEREST AT 4% FROM THE DATE OF NOTIFICATION TILL 30-04-1982 AND THEREAFTER @ 9%; III. ASSESSEE WAS ELIGIBLE FOR ADDITIONAL MARKET VALUE U/S . 23(1A) OF THE LAND ACQUISITION ACT; 2.1. HONBLE HIGH COURT ALSO GRANTED INTEREST @ 15% F ROM 01-05-1983 TILL THE PAYMENT OF ORDER. THE MATTER WAS FURTHER CARRIED TO THE HONBLE SUPREME COURT AND THE HONBLE S UPREME COURT IN CIVIL APPEALS NOS. 1661 & 1662 AND 2982/04 HAS CONFIRMED THE ORDER OF THE HONBLE HIGH COURT AND ALLO WED THE PARTIES TO DRAW THE AMOUNTS. CONSEQUENT TO THAT, THE ADDITIO NAL DISTRICT JUDGE, SANGAREDDY, HAS ISSUED MEMO DT. 11-02 -2011 I.T.A. NO. 100/HYD/2016 SMT P. SUSHEELA :- 3 -: SANCTIONING THE COMPENSATION TO ASSESSEE WHICH INCLUD ED THE INTEREST PORTION. ASSESSEE HAS RECEIVED A TOTAL AMOUNT O F RS. 1,78,07,048/-. THE BIFURCATION OF WHICH IS AS UNDER : RS. I. LAND VALUE FIXED 34,55,497 II. SOLATIUM 10,00,000 III. ADDITIONAL MARKET VALUE (RS. 63,404+RS.45,350) 1,08,754 IV. INTEREST AT RATE OF 4% FROM 2.9.76 TO 30.4.1982 7,48,021 V. INTEREST AT 9% FROM 1.5.1982 TO 30.04.1983 2,97,343 VI. INTEREST AT 15% FROM 1.5.1983 TO 26.06.2010 1,34,57,862 2.2. SINCE THE AMOUNT WAS RECEIVED DURING THE YEAR RE LEVANT FOR AY. 2011-12, ASSESSEE FILED RETURN OF INCOME CLA IMING EXEMPTION U/S. 10(37) AS LANDS ACQUIRED WERE AGRICUL TURAL LANDS AND THE COMPENSATION WAS EXEMPT FROM TAXATION. RELYING ON THE PROVISIONS OF SECTION 56(2)(VIII) AND 57(IV) R.W. 145A(B), THE AO HAS TREATED THE INTEREST INCOME OF RS. 1,45,03,227/- RECEI VED DURING THE YEAR AS TAXABLE AND BY ALLOWING 50% OF THE AMOUNT AS EXPENDITURE BROUGHT TO TAX AN AMOUNT OF RS. 72,51,613/ - UNDER THE HEAD INCOME FROM OTHER SOURCES. IT WAS THE CONTEN TION OF ASSESSEE THAT THE INTEREST GRANTED U/S. 28 OF THAT ACT IS TO BE CONSIDERED AS COMPENSATION WHICH IS EXEMPT FOLLOWING THE PRINCIPLES LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. GHANSHYAM HUF [315 ITR 1]. THE AO, HOWEVER HAS NEGATIVED THE ABOVE CONTENTION STATING THAT THE JUDGEMENT WAS DELIVERED ON 16-07-2009 AND SUBSEQUENTLY, THE FINANCE ACT WAS I.T.A. NO. 100/HYD/2016 SMT P. SUSHEELA :- 4 -: AMENDED BY INSERTION OF SECTION 145A(B) W.E.F. 01-04- 2010, THEREFORE, THE AMOUNT RECEIVED DURING THE YEAR WAS TAXAB LE IN THE YEAR OF RECEIPT. ASSESSEE ALSO MADE AN ALTERNATE CON TENTION THAT AN AMOUNT OF RS. 99,11,460/- WAS THE AMOUNT RECEIVABL E AS PER THE ORDER OF THE HONBLE HIGH COURT AS ON THAT DATE, HE NCE THAT AMOUNT HAS ALREADY ACCRUED PRIOR TO THE AMENDMENT THAT W AS BROUGHT. THEREFORE, FOLLOWING THE PRINCIPLES LAID D OWN BY THE HONBLE SUPREME COURT IN THE CASE RAMABAI VS. CIT [18 1 ITR 400], THE ACCRUED AMOUNT WAS TAXABLE IN EARLIER YEARS. THE SAME CANNOT BE BROUGHT TO TAX IN THE YEAR UNDER CONSIDERATION. THIS CONTENTION WAS ALSO NEGATIVED BY THE AO STATING THAT THE ACT WAS AMEND ED TO AVOID THE HARDSHIP TO ASSESSEES AND ACCORDINGLY, ENTI RE AMOUNT WAS TAXABLE IN THE YEAR OF RECEIPT. 3. AGGRIEVED BY THE ORDER OF AO, THE MATTER WAS CARRIE D TO THE LD. CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE AND THE FACTS, HOWEVER, REJECTED THE CONTENTIONS STATING A S UNDER: 4.4. HOWEVER, THE ASSESSEES CONTENTIONS ARE NOT A CCEPTABLE AS IT IS SEEN FROM RECORD THAT THE COMPENSATION AWA RDED TO THE ASSESSEE INCLUDES INTEREST COMPONENT OF RS. 1,45,03 ,226/-. I HAVE ALSO PERUSED THE HIGH COURT ORDER DT. 18.04.2003 IN APPEAL NO. 1054 OF 1980 WHERE IN IT IS CLEARLY HELD THAT THE CLAIMANTS APART FROM OTHER STATUARY BENEFITS ARE ENTITLED TO INTEREST AT 4% FROM THE DATE OF NOTIFICATION TO 30.04.1982 AND 9% INTEREST FOR A PERIOD OF ONE Y EAR AND THEREAFTER 15% FROM THIS IT IS CLEARLY EVIDENT THAT THE AMOUNT OF RS. 1,45,03,227/- REPRESENTS INTEREST PAID FOR DELAY IN PAYMENT OF EN HANCED COMPENSATION. THEREFORE, THE ASSESSEES CONTENTION THAT IT DOES NOT AMOUNT TO INTEREST IS NOT CORRECT. THE ASSESSEES RELIANCE ON THE CASE OF SRI GHANSHYAM DAS VS. CIT (SC) ALSO CANNOT BE ACCEPTED AS THE ASSESSING OFFICER HAS CLEARLY STATED IN THE ASS ESSMENT ORDER THAT THE JUDGEMENT IN THIS CASE WAS DELIVERED ON 16 .07.2009 BUT SUBSEQUENTLY IN THE FINANCE ACT 2009, THE IT ACT HA S BEEN SPECIFICALLY AMENDED TO BRING TO TAX INTEREST RECEI VED ON COMPENSATION OR ENHANCED COMPENSATION IN THE YEAR O F RECEIPT. A I.T.A. NO. 100/HYD/2016 SMT P. SUSHEELA :- 5 -: PLAIN READING OF THE SECTIONS 145A(B) AND 56(2)(VII ) ALSO CLEARLY INDICATE THAT THE INTEREST RECEIVED ON COMPENSATION OR AN ENHANCED COMPENSATION ARE TAXABLE IN THE YEAR OF RECEIPT. F OR THE SAKE OF CONVENIENCE THE SECTION 56(2)(VIII) AND SECTION 145 A(B) ARE REPRODUCED AS UNDER: SEC. 56(2) IN PARTICULAR, AND WITHOUT PREJUDICE TO THE GENERALITY OF THE PROVISIONS OF SUB-SECTION (1), THE FOLLOWING INCOME S SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD INCOME FROM OTHER SOURCES , NAMELY (VIII) INCOME BY WAY OF INTEREST RECEIVED ON COMPEN SATION OR ON ENHANCED COMPENSATION REFERRED TO IN CLAUSE (B) OF SECTION 1 45A. SECTION 145A(B) INTEREST RECEIVED BY AN ASSESSEE O N COMPENSATION OR ON ENHANCED COMPENSATION AS THE CASE MAY BE, SHALL BE DEEMED TO BE THE INCOME OF THE YEAR IN WHICH IT IS RECEIVED 4.5. IN VIEW OF THE ABOVE PROVISIONS OF THE IT ACT , THE ASSESSEE IS CLEARLY LIABLE FOR TAXATION OF INTEREST RECEIVED ON ENHANCED COMPENSATION AS INCOME FROM OTHER SOURCES IN THE YEAR OF RECEIPT. FURTHER, THE ASSESSEES CONTENTION THAT T HE INTEREST SHOULD BE TAXED ON ACCRUAL BASIS ALSO CANNOT BE ACCEPTED A S THE AMENDED PROVISIONS OF SECTION 145A(B) ARE VERY CLEAR IN SPE CIFYING THAT THE INTEREST SHALL BE DEEMED TO BE THE INCOME OF THE YE AR IN WHICH IT IS RECEIVED. IN VIEW OF ALL THE ABOVE MENTIONED FACTS AND CIRCUMSTANCES, I FIND NO INFIRMITY IN THE ORDER OF THE ASSESSING OFFICER AND THEREFORE THE ORDER IS HEREBY UPHELD. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 4. ALL THE GROUNDS RAISED ARE WITH REFERENCE TO THE TAXABILITY OF THE SAID AMOUNT AND THE GROUNDS RAISED A RE AS UNDER: 2. THE HON'BLE CIT(A) OUGHT TO HAVE OBSERVED THAT THE INTEREST RECEIVED IS IN RESPECT OF COMPENSATION FOR ACQUIRIN G AGRICULTURE LAND AND THEREFORE THE SAME IS EXEMPT U/S. 10(37) OF THE IT ACT. 3. THE HON'BLE CIT(A) OUGHT TO HAVE OBSERVED THAT T HE INTEREST ON COMPENSATION WAS PAID U/S. 28 OF THE LAND ACQUISITI ON ACT AND THEREFORE THE SAME WOULD FORM PART OF THE COMPENSAT ION AND CANNOT BE ASSESSED AS INCOME FROM OTHER SOURCES U/S. 56 OF THE IT ACT. I.T.A. NO. 100/HYD/2016 SMT P. SUSHEELA :- 6 -: 4. THE HON'BLE CIT(A) OUGHT TO HAVE OBSERVED THAT T HE PAYMENT MADE BY THE AUTHORITIES FOR THE DELAY IN PAYMENT OF COMPENSATION ALSO FORM PART OF COMPENSATION AND CAN NEVER BE TER MED AS INTEREST AND HENCE THE SAME IS BEYOND THE DEFINITION OF SECT ION 2(28A) OF THE IT ACT. 5. THE HON'BLE CIT(A) OUGHT TO HAVE OBSERVED THAT I N THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE SECTION 145A OR 56 WO ULD NOT HAVE ANY APPLICATION. 6. THE HON'BLE CIT(A) OUGHT TO HAVE OBSERVED THAT E VEN FOR ARGUMENT IT IS AGREED THAT THE INTEREST ON COMPENSATION WAS LIABLE FOR TAX THE SAME SHOULD BE BROUGHT TO TAX ON ACCRUAL BASIS IN T HE LIGHT OF PRE- AMENDMENT PROVISIONS I.E. PROVISIONS STANDING EARLI ER TO 01.04.2010 AND SETTLED LEGAL POSITION AS THE ACQUISITION AND A CCRUAL OF INTEREST TOOK PLACE DURING THAT PERIOD. 7. WITHOUT PREJUDICE TO THE ABOVE, THE HON'BLE CIT( A) OUGHT TO HAVE OBSERVED THAT THE APPLICABILITY OF AMENDMENTS TO SE CTION 145A AND 56 WITH EFFECT FROM 01.04.2010 IS PROSPECTIVE ONLY AND CANNOT BE APPLIED FOR INTEREST RECEIVABLE ON COMPENSATION FOR THE PERIOD EARLIER TO 01.04.2010. GROUND NOS. 1 & 8 ARE GENERAL IN NATURE. 5. LD. COUNSEL REFERRING TO THE JUDGEMENT OF THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. GHANSHYAM HUF [3 15 ITR 1] (SUPRA) AND SUBSEQUENT JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF MOVALIYA BHIKHUBHAI BALABHAI VS . ITO [138 DTR (GUJ) 223 & 2016-TIOL-854-HIGH COURT-AHM-IT] SU BMITTED THAT THE AMOUNT SANCTIONED U/S. 28 OF THE LAND ACQUISITIO N ACT PARTAKES THE CHARACTER OF COMPENSATION, WHICH IN THIS C ASE IS EXEMPT U/S. 10(37) ON WHICH THERE IS NO DISPUTE. HE F URTHER REFERRED TO THE ORDERS OF THE HONBLE HIGH COURT AND TH E HONBLE SUPREME COURT, SUBMITTED THAT THE SO CALLED INTEREST WAS N OTHING BUT THE ENHANCED COMPENSATION PAYABLE U/S. 28 OF THE L AND ACQUISITION ACT, 1894 WHICH IS TO BE CONSIDERED AS ENHANCED I.T.A. NO. 100/HYD/2016 SMT P. SUSHEELA :- 7 -: COMPENSATION. SINCE THE COMPENSATION PAID ON ACQUISI TION OF AGRICULTURAL LANDS THE ENTIRE AMOUNT WAS EXEMPT U/S. 1 0(37). 6. LD. DR, HOWEVER, SUBMITTED THAT THE ACT WAS AMENDED TO BRING TO TAX THE INTEREST GRANTED TO ASSESSEE ON THE COMPENSATION AND ACCORDINGLY, THE AMOUNT OF INTEREST CA LCULATED BY THE AO IS CORRECTLY BROUGHT TO TAX IN THE YEAR OF RECE IPT AS PER THE PROVISIONS OF SECTION 56(2)(VIII) AND SECTION 145A . 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUS ED THE ORDERS OF THE AUTHORITIES. WE ARE OF THE OPINION T HAT ASSESSEE SUCCEEDS IN ITS GROUNDS AS THE INTEREST IS NOT PAID U/S. 34 OF THE LAND ACQUISITION ACT, BUT U/S. 28 OF THE ACT OF 1894. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. GHANSHYAM HUF [ 315 ITR 1] (SUPRA) HAS ANALYSED THE INTEREST COMPONENT SANCTIONED ON THE COMPENSATION AND HELD THAT: .INTEREST IS DIFFERENT FROM COMPENSATION. IN TEREST PAID ON THE EXCESS AMOUNT UNDER SECTION 28 OF THE L AND ACQUISITION ACT, 1894, DEPENDS UPON A CLAIM MADE BY THE PERSON WHOSE LAND IS ACQUIRED, WHEREAS INTEREST UNDER SECTION 34 IS FOR DELAY IN MAKING PAYMENT; IT POSTULATES AWARD OF INTEREST AT 9 PER C ENT PER ANNUM FROM THE DATE OF TAKING POSSESSION ONLY UNTIL IT IS PAID OR DEPOSITED. INTEREST UNDER SECTION 28 WOULD INCLUDE WITHIN ITS AMBIT BOTH THE MARKET VALUATION AND THE SOLATIUM AND IS PART OF TH E AMOUNT OF COMPENSATION WHEREAS INTEREST UNDER SECTION 34 IS O NLY FOR DELAY IN MAKING PAYMENT AFTER THE COMPENSATION AMOUNT IS DET ERMINED. INTEREST UNDER SECTION 28 IS A PART OF THE ENHANCED VALUE OF THE LAND, WHICH IS NOT THE CASE IN THE MATTER OF PAYMEN T OF INTEREST UNDER SECTION 34. 7.1. ACCORDINGLY, THE INTEREST RECEIVED U/S. 28 OF TH E LAND ACQUISITION ACT WOULD BE INCLUDED WITHIN ITS AMBIT O F BOTH THE MARKET VALUE AND SOLATIUM AS PART OF AMOUNT OF COMPEN SATION. I.T.A. NO. 100/HYD/2016 SMT P. SUSHEELA :- 8 -: 8. THE ARGUMENT OF THE REVENUE IS THAT CONSEQUENT TO THE AMENDMENT BROUGHT TO THE ACT W.E.F. 01-04-2010, THE INTE REST RECEIVED IS TAXABLE IN THE YEAR OF RECEIPT. THERE IS NO DISPUTE THAT THE INTEREST RECEIVED WAS MADE TAXABLE IN THE YEAR OF R ECEIPT U/S. 145A RWS 56(2)(VII). BUT THAT CAN ONLY APPLY TO INTER EST U/S. 34 OF THE LAND ACQUISITION ACT BUT NOT TO THE INTEREST U/S. 28 U NDER THE LAND ACQUISITION ACT WHICH BECOMES PART OF COMPENSATI ON. THE PRINCIPLES LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. GHANSHYAM HUF [315 ITR 1] (SUPRA) HAVE NOT B EEN AMENDED. THE SAME CONTENTION WAS CONSIDERED BY THE HO NBLE GUJARAT HIGH COURT IN THE CASE OF MOVALIYA BHIKHUBHAI BALABHAI VS. ITO [138 DTR (GUJ) 223 & 2016-TIOL-854-HIGH COU RT-AHM-IT] (SUPRA). IN THAT CASE THE ASSESSEE WAS THE ORIGINAL C LAIMANT IN LAND REFERENCE CASE NO.1737/1999 WHICH WAS DECIDED BY THE PRINCIPAL SENIOR CIVIL JUDGE BY AN AWARD DATED 23RD MARCH, 2011 WHEREBY THE REFERENCE WAS PARTLY ALLOWED AND ADDITIONA L COMPENSATION WAS AWARDED AT THE RATE OF RS.41.60 PER S QUARE METRE FOR THE IRRIGATED LANDS AND RS.33.28 PER SQUARE METRE FOR NON-IRRIGATED LANDS ALONG WITH OTHER BENEFITS UNDER TH E LAND ACQUISITION ACT, 1894. PURSUANT TO THE AWARD PASSED BY THE REFERENCE COURT, THE EXECUTIVE ENGINEER, IRRIGATION SCH EME DIVISION SUBMITTED A CALCULATION SHEET WHICH SHOWED AN AMOUNT OF INTEREST OF RS.20,74,157/- AND THE AMOUNT OF TDS TO BE DEDUCTED AS PER SECTION 194A WAS SHOWN TO BE RS.2,07,416/-. TH E ASSESSEE MADE AN APPLICATION TO THE INCOME TAX DEPARTMENT U/S 1 97(1) FOR DECIDING THE TAX LIABILITY OF INTEREST AND TO ISSUE A CE RTIFICATE AS TO NIL TAX LIABILITY. BY THE IMPUGNED COMMUNICATION DATED 9TH FEBRUARY, 2015, THE APPLICATION HAD BEEN REJECTED ON THE GROUND THAT THE INTEREST AMOUNT ON THE DELAYED PAYMENT OF COMPENS ATION I.T.A. NO. 100/HYD/2016 SMT P. SUSHEELA :- 9 -: AND ENHANCED VALUE OF COMPENSATION WAS TAXABLE AS PER THE PROVISIONS OF SECTION 57(IV) READ WITH SECTIONS 56(2 )(VIII) AND 145A(B). IN THE SAID CASE, IT WAS HELD THAT: IT IS AN ADMITTED POSITION THAT THE INTEREST ON W HICH THE TAX IS SOUGHT TO BE DEDUCTED AT SOURCE U/S 194A IS INTE REST U/S 28 OF THE ACT OF 1894 AND NOT UNDER SECTION 34 THEREOF. A S ALREADY NOTED, THE PETITIONER'S APPLICATION FOR A CERTIFICATE U/S 197 FOR NO DEDUCTION OF TDS HAS BEEN REJECTED ON THE GROUND THAT THE INT EREST AMOUNT RECEIVED U/S 28 OF THE ACT OF 1894 IS TAXABLE AS PE R THE PROVISIONS OF SECTION 57(IV) READ WITH SECTION 56(2)(VIII) AND SE CTION 145A(B). SECTION 145A BEARS THE HEADING 'METHOD OF ACCOUNTIN G IN CERTAIN CASES'. SECTION 145A(B) PROVIDES THAT NOTWITHSTANDI NG ANYTHING TO THE CONTRARY CONTAINED IN SECTION 145, INTEREST REC EIVED BY AN ASSESSEE ON COMPENSATION OR ON ENHANCED COMPENSATIO N, AS THE CASE MAY BE, SHALL BE DEEMED TO BE THE INCOME OF TH E YEAR IN WHICH IT IS RECEIVED. CLAUSE (VIII) OF SUBSECTION (2) OF SECTION 56 PROVIDES FOR INCOME BY WAY OF INTEREST RECEIVED ON COMPENSATION OR ON ENHANCED COMPENSATION REFERRED TO IN CLAUSE (B) OF SECTION 1 45A WHICH IS CHARGEABLE AS INCOME FROM OTHER SOURCES. THE FIRST RESPONDENT INCOME TAX OFFICER SEEKS TO TAX THE INTEREST RECEIV ED BY THE PETITIONER UNDER SECTION 28 OF THE ACT OF 1894 AS I NCOME FROM OTHER SOURCES U/S 56(2)(VIII) READ WITH SECTION 145A(B). IN THE OPINION OF THIS COURT, IN THE LIGHT OF THE LAW LAID DOWN BY TH E SC IN THE CASE OF GHANSHYAM (HUF), THE INTEREST RECEIVED UNDER SECTIO N 28 OF THE ACT OF 1894 WOULD NOT FALL WITHIN THE AMBIT OF THE EXPR ESSION 'INTEREST' AS ENVISAGED UNDER SECTION 145A(B) INASMUCH AS, THE SC IN THE ABOVE DECISION HAS HELD THAT INTEREST U/S 28 OF THE ACT OF 1894 IS NOT IN THE NATURE OF INTEREST BUT IS AN ACCRETION T O THE COMPENSATION AND, THEREFORE, FORMS PART OF THE COMPENSATION. THU S, IT IS CLEAR THAT THE SC AFTER CONSIDERING THE SCHEME OF SECTION 45(5 ) HAS CATEGORICALLY HELD THAT PAYMENT MADE UNDER SECTION 28 OF THE ACT OF 1894 IS ENHANCED COMPENSATION, AS A NECESSARY COROL LARY, THEREFORE, THE CONTENTION THAT PAYMENT MADE UNDER S ECTION 28 OF THE ACT OF 1894 IS INTEREST AS ENVISAGED UNDER SECTION 145A OF THE I.T. ACT AND HAS TO BE TREATED AS INCOME FROM OTHER SOUR CES, DESERVES TO BE REJECTED; IT HAS BEEN VEHEMENTLY CONTENDED ON BEHALF OF THE FIRST RESPONDENT THAT THE ABOVE DECISION HAS BEEN RENDERE D PRIOR TO THE SUBSTITUTION OF SECTION 145A OF THE I.T. ACT BY FIN ANCE (NO.2) ACT, 2009 WITH EFFECT FROM 1ST APRIL, 2010, AND HENCE, W OULD HAVE NO APPLICABILITY TO THE FACTS OF THE PRESENT CASE. THU S, THE SUBSTITUTION OF SECTION 145A BY FINANCE (NO.2) ACT, 2009 WAS NOT IN CONNECTION I.T.A. NO. 100/HYD/2016 SMT P. SUSHEELA :- 10 -: WITH THE DECISION OF THE SC IN GHANSHYAM (HUF) BUT WAS BROUGHT IN TO MITIGATE THE HARDSHIP CAUSED TO THE ASSESSEE ON ACCOUNT OF THE DECISION OF SC IN SMT. RAMA BAI V. CIT, (1990) 181 ITR 400 (SC) WHEREBY IT WAS HELD THAT ARREARS OF INTEREST COMPUT ED ON DELAYED OR ENHANCED COMPENSATION SHALL BE TAXABLE ON ACCRUAL B ASIS. THEREFORE, WHEN ONE READS THE WORDS 'INTEREST RECEI VED ON COMPENSATION OR ENHANCED COMPENSATION' IN SECTION 1 45A, THE SAME HAVE TO BE CONSTRUED IN THE MANNER INTERPRETED BY T HE SC IN GHANSHYAM (HUF). THE UPSHOT OF THE ABOVE DISCUSSION IS THAT SINCE INTEREST UNDER SECTION 28 OF THE ACT OF 1894, PARTA KES THE CHARACTER OF COMPENSATION, IT DOES NOT FALL WITHIN THE AMBIT OF THE EXPRESSION 'INTEREST' AS CONTEMPLATED IN SECTION 145A. THE FIR ST RESPONDENT - ITO WAS, THEREFORE, NOT JUSTIFIED IN REFUSING TO GR ANT A CERTIFICATE U/S 197 TO THE ASSESSEE FOR NON-DEDUCTION OF TAX AT SOU RCE, INASMUCH AS, THE PETITIONER IS NOT LIABLE TO PAY ANY TAX UND ER THE HEAD 'INCOME FROM OTHER SOURCES' ON THE INTEREST PAID TO IT U/S 28 OF THE ACT OF 1894. THE PETITIONER HAD EARLIER CHALLENGED THE COM MUNICATION DATED 9TH FEBRUARY, 2015 WHEREBY ITS APPLICATION FO R A CERTIFICATE U/S 197 HAD BEEN REJECTED, AND SUBSEQUENTLY, TAX ON THE INTEREST PAYABLE U/S 28 OF THE ACT OF 1894 HAS ALREADY BEEN DEDUCTED AT SOURCE. CONSEQUENTLY, THE CHALLENGE TO THE ABOVE CO MMUNICATION HAS BECOME INFRUCTUOUS AND HENCE, THE PRAYER CLAUSE CAME TO BE MODIFIED. HOWEVER, SINCE THE AMOUNT PAID UNDER SECT ION 28 OF THE ACT OF 1894 FORMS PART OF THE COMPENSATION AND NOT INTEREST, THE SECOND RESPONDENT WAS NOT JUSTIFIED IN DEDUCTING TA X AT SOURCE U/S 194A IN RESPECT OF SUCH AMOUNT. THE PETITIONER IS, THEREFORE, ENTITLED TO REFUND OF THE AMOUNT WRONGLY DEDUCTED U/S 194A. FOR THE FOREGOING REASONS, THE PETITION SUCCEEDS AND IS ACC ORDINGLY ALLOWED. THE SECOND RESPONDENT HAVING WRONGLY DEDUCTED AN AM OUNT OF RS.2,07,416/- BY WAY OF TAX DEDUCTED AT SOURCE OUT OF THE AMOUNT OF RS.20,74,157/- PAYABLE TO THE PETITIONER U/S 28 OF THE ACT OF 1894 AND HAVING DEPOSITED THE SAME WITH THE INCOME- TAX AUTHORITIES, TAKING A CUE FROM THE DECISION OF THE PUNJAB AND HARYANA HIGH COURT IN JAGMAL SINGH V. STATE OF HARY ANA, THE FIRST RESPONDENT IS DIRECTED TO FORTHWITH DEPOSIT SUCH AM OUNT WITH THE REFERENCE COURT, WHICH SHALL THEREAFTER DISBURSE SU CH AMOUNT TO THE PETITIONER HEREIN. RULE IS MADE ABSOLUTE ACCORDINGL Y WITH COSTS. 8.1. RESPECTFULLY FOLLOWING THE PRINCIPLES LAID DOW N BY THE HONBLE GUJARAT HIGH COURT WHICH CONSIDERED THE AMEND ED PROVISIONS OF THE ACT (JUDGMENT WAS RENDERED AFTER THE ORDER OF LD. CIT(A) ON 31-03-2016) AND THE HONBLE SUPREME COURT REFERRED ABOVE, WE HAVE TO HOLD THAT THE INTEREST RECEIVED U/S. 28 OF THE I.T.A. NO. 100/HYD/2016 SMT P. SUSHEELA :- 11 -: LAND ACQUISITION ACT, 1894 IS NOTHING BUT ENHANCED CO MPENSATION ON THE LANDS ACQUIRED. SINCE THE LANDS ARE AGRICULTU RAL LANDS ORIGINALLY, THE COMPENSATION IS EXEMPT U/S. 10(37). I N VIEW OF THAT, WE UPHOLD THE CLAIMS OF ASSESSEE AND THE GROUNDS ARE CONSIDERED ALLOWED. AO IS DIRECTED TO GRANT EXEMPTION AS CLAIMED. 9. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH DECEMBER, 2016 SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMB ER HYDERABAD, DATED 7 TH DECEMBER, 2016 TNMM COPY TO : 1. SMT. P. SUSHEELA, HYDERABAD. C/O. B. NARSING RAO & CO., CHARTERED ACCOUNTANTS, PLOT NO. 554, ROAD NO. 92, JUBILEE HILLS, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-6(2), HYDERABAD. 3. CIT (APPEALS)-9, HYDERABAD. 4. PR.CIT-6, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.