KRISHAN PAL SINGH HUF,JAIPUR V. ASSESSING OFFICER, JAIPUR

ITA 1268/JPR/2024

AI Insights

The case revolves around the taxability of interest received on enhanced compensation for land acquired under the Land Acquisition Act, 1894. The appellant, Krishan Pal Singh HUF, contested the assessment order which treated the interest as taxable income. The primary legal contention was whether the interest received under section 28 of the Land Acquisition Act should be considered part of the compensation and thus exempt from tax under section 10(37) of the Income Tax Act, 1961. The Tribunal examined various precedents and statutory provisions, ultimately deciding in favor of the appellant based on the interpretation that the interest is integral to the compensation package and should not be taxed separately.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 469931 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Other Referred Cases: Ghanshyam Dass (HUF) vs. CIT, Union Of India And Ors. Versus Hari Singh And Ors, CIT v. Ghanshyam (HUF), In re: Sanjay Bhimrao Patil Vs Income Tax Officer, In re : Income Tax Officer Vs Sangappa S. Kudarikannur, In re : Income Tax Officer Vs Vinayak Hari Palled, In re : Baldev Singh Vs Income Tax Officer, In re : Smt Lakshmamma Vs Income Tax Officer, In re : I T O Vs Basavaraj M Kudarikannur, Sumesh Kumar Vs I T O, Narender Kumar Vs ITO, Jai Parkash Vs Principal Commissioner of Income Tax, Shri Kusum Jayram Thakur Dhutum Vs Income Tax Officer, Pawan Kumar Vs Principal Commissioner of Income Tax, Commissioner of Income Tax Shimla Vs Joginder Singh, CIT v. Keshwa Devi
• Laws Referred To: Income Tax Act, Land Acquisition Act 1894
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SWAPNIL PARIHAR
• Assessee Lawyers: N. K. AGARWAL; MANISH
• Keywords: Capital asset; Question of law; Capital receipt; Capital Gains; TDS; Earning of tax free income; Competent authority; FORM 26AS
• Section: 143(3); 142(1); 143(2); 119; 56; 153; 56(2); 10; 2; 45(5); 20

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 1268/JP/2024 fu/kZkj.k o\"kZ@Assessment Year : 2018-19 Krishan Pal Singh HUF Krishan Pal Singh 124 Dhaka Nagar Opp, Platinum Upasana Rosewood Sirsi Road, Jaipur cuke Vs. ITO, Ward 1(4), Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAMHK2914H vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri N. K. Agarwal, CA & Shri Manish, Adv. jktLo dh vksj ls@ Revenue by : Mrs. Swapnil Parihar, JCIT-DR lquokbZ dh rkjh[k@ Date of Hearing : 13/02/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 19/02/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM By way of the present appeal the assessee challenges the order of the National Faceless Appeal Centre, Delhi [for short NFAC / CIT(A)] dated 19/08/2024 for assessment year 2018-19. The said order of the ld. CIT(A) arises because the assessee has challenged the assessment order dated 31.08.2021 passed under section 143(3) r.w.s 144B of the Income Tax Act, [ for short “Act”] by the National Faceless Assessment Unit [ for short AO ]. 2 ITA No. 1268/JP/2024 Krishan Pal Singh vs. ITO 2. In this appeal, the assessee has raised following grounds: - “1. That the appellant humbly reiterates all the facts and grounds of appeal raised before the Ld CIT (Appeals). 2. That the CIT(A) has blindly confirmed the Assessment Order. That the appellant hereby raises the grounds of appeal from the said order. 3. The CIT (A) has committed a mistake by not considering the grounds of appeal while deciding the issue that the interest (U/s 28 of the Land Acquisition Act 1894) is part and parcel of the land acquisition compensation and exempt u/s 10(37) of the Income Tax Act 1961. 4. The CIT (A) has committed a mistake on facts and circumstances prevailing in the case by holding and confirming the AO that income from interest (Under Section 28 of Land Acquisition Act 1894) on enhanced compensation of Land Acquisition as assessable under the head 'Income from other sources'. 5. That CIT (A) has committed a grave mistake in respect law of precedents that by not following case laws decided by Supreme Court. The AO as well as CIT(Appeals) has not followed the case laws: Ghanshyam Dass (HUF) and subsequent decisions delivered by the Supreme Court. 3. Succinctly, the fact as culled out from the records is that the the case of the assessee was selected for Complete Scrutiny assessment under the E-assessment Scheme, 2019 for the reasons '1. Income from Other Sources 2. Refund Claim'. Notice u/s 143(2) was issued on 28.09.2019 and notice u/s 142(1) was also issued. In response to notice u/s 142(1) dated 01.01.2020, the assessee has submitted that no business activities were done during the relevant year. Regarding income from other sources, the assessee submitted that he has received interest during the financial year 2017-18 as per provision of section 28 of the land acquisition Act. 3 ITA No. 1268/JP/2024 Krishan Pal Singh vs. ITO 3.1 As is evident that in the return of income for assessment year 2018- 19, as per 26AS, Rs. 1,27,13,420/- was received by the assessee from Land Acquisition Office for which TDS was deducted. The assessee has claimed that Rs. 1,27,13,420/- received by him. The said amount was received enhanced compensation of his land under the Land Acquisition Act 1894. Such income has been claimed as exempt income in the statement of income under section 10(37) of the Act on the grounds that the interest received was under section 28 of the Land Acquisition Act 1894. The assessee has shown an amount of Rs. 12,71,342/- as TDS and has been deducted by the deductor -Land Acquisition Office. While verifying it ld. AO noted that TDS has been deducted on the interest of the Land Acquisition Compensation, and the LAC interest has wrongly shown exempt under 10(38) instead of exempt under section 10(37). Details were called for regarding land has been acquired compulsorily, orders issued by the competent authority to acquire the land, details of compensation etc. The assessee vide his reply attached population certificate issued by village Gokalgarh. The assessee also stated land parcels acquired by the land acquisition office viz. survey No. District, village, location of land, total area of land, date of acquisition / possession by Land Acquisition officer, Compensation received, date of receipt of compensation. Compensation 4 ITA No. 1268/JP/2024 Krishan Pal Singh vs. ITO received on 28.11.2017 compensation amount Rs.90,11,360 and interest on compensation Rs.1,27,13,424 and TDS amount of Rs. 12,71,342 also paid by the assessee. The assessee has submitted the Land Acquisition Officer's order of acquisition, the break-up of the award of interest on enhanced compensation u/s 28 of the Land Acquisition Act 1894 and relevant documents pertaining to agricultural activity on the said land from competent authorities. The assessee has put forth the claim that interest received u/s 28 of the Land Acquisition Act on enhanced compensation forms part of the compensation and hence is exempt in the case of agricultural land. 3.2 On the issue of Interest on enhanced compensation as part of compensation the assessee submitted that his agricultural land has been acquired by the State of Haryana. The refund has been claimed since the assessee has been paid an interest under section 28 of the land Acquisition Act on land Acquisition Award of Rs. 1,27,13,424/- by Land Acquisition Authority paid on LAC award (as directed by Court). The fact is itself self-evident from Form 26AS and LAC Officer Letter. The assessee has claimed that amount as exempt under section 10 in view of the Supreme Court rulings and CBDT Circular No. 36/2016 dated 25th Oct 2016,\". 5 ITA No. 1268/JP/2024 Krishan Pal Singh vs. ITO 3.3 Whereas ld. AO noted that the assessee relying on the judgment of the Supreme Court in Union Of India And Ors. Versus Hari Singh And Ors, which further places reliance on CIT v. Ghanshyam (HUF) [2009] 182 Taxman 368. The decisions of the apex court in these cases are relied upon by the assessee to claim the interest on enhanced compensation as an exempt income. Since there is reference to the judgement of the Supreme Court in CIT v. Ghanshyam (HUF) [2009] 182 Taxman 368, it is necessary to understand the judgement. The question before the Supreme Court was regarding whether interest paid on excess compensation under section 28 of the Land Acquisition Act 1894 could be treated as part of the compensation under section 45(5) of the Income-tax Act 1961. The ld. AO then referring to clause (viii) which was inserted in the sub-section (2) of the section 56 so as to provide that income by way of interest received on compensation or on enhanced compensation referred to in clause (b) of section 145A shall be assessed as income from other sources in the year in which it is received. Since that amendment was after the decision cited by the assessee the claim of the assessee was rejected and accordingly amount of Rs. 1,12,13,424/- was charged to tax as income of the assessee u/s. 56(2)(viii) r.w.s. 145B(1) after allowing the benefit of section 57(iv) of the Act. 6 ITA No. 1268/JP/2024 Krishan Pal Singh vs. ITO 4. Aggrieved from the order of Assessing Officer, assessee preferred an appeal before the ld. CIT(A)/NFAC. Apropos to the grounds so raised the relevant finding of the ld. CIT(A)/NFAC is reiterated here in below: 6.2.1 I have gone through the facts of the case and the submissions of the appellant and also the assessment order. Vide Finance (No.2) Act, 2009 (with effect from 01.10.2010), Clause (viii) of sub-Section 2 to Section 56 of the Act was inserted and the same is reproduced hereunder:- \"56. Income from other sources - Section 56 (2)(viii): The Finance (No.2) Act, 2009 (with effect from 01.10.2010), Clause (viii) of sub- Section 2 to Section 56 of the Act was inserted and the same is extracted hereunder as: - (2) In particular and without prejudice to the generality of the provisions of sub- section (1), the following incomes shall be chargeable to income tax under the head \"Income from other sources\", namely: - [(viii) income by way of interest received on compensation or on enhanced compensation referred to in (sub-section (1) of Section 145-BJ 6.2.2) For the sake of clarity, Section 145-B of the Act is reproduced as under- \"[145-B. Taxability of certain income. (1) Notwithstanding anything to the contrary contained in Section 145, the interest received by an assessee on any compensation or on enhanced compensation, as the case may be, shall be deemed to be the income of the previous year in which it is received. (2) Any claim for escalation of price in a contract or export incentives shall be deemed to be the income of the previous year in which reasonable certainty of its realization is achieved (3) The income referred to in sub-clause (xviii) of clause (24) of Section 2 shall be deemed to be the income of the previous year in which it is received, if not charged to income-tax in any earlier previous year.]\" 7 ITA No. 1268/JP/2024 Krishan Pal Singh vs. ITO 6.2.3) A conjoint reading of the aforementioned provisions i.e.. Sections 56(2)(viii) and 145-B of the Act vividly stipulate that the income received by way of interest on compensation or on enhanced compensation shall be chargeable to tax under the head \"Income from other sources\". Therefore, since the position with respect to the imposition of tax on interest on compensation or enhanced compensation, as it exists today, came into being only in the year 2010, the contention drawn by the appellant from the decision in the case of Ghanshyam (supra), which was passed in the year 2009, are unsustainable to the facts of the present case. 6.2.4) Thus, interest, whether on compensation or on enhanced compensation, received on account of acquisition of land under section 28 and 34 of Land Acquisition Act, 1894 shall be considered as income from other sources under section 56(2)(viii) and shall be exigible to income-tax. In view of the above, the action of the AO is upheld and the addition made u/s 56(2)(viii) of the Act is sustained and the relevant grounds are dismissed.” 5. As the assessee did not find any favour, from the appeal so filed before the ld. CIT(A)/NFAC, the assessee has preferred the present appeal before this Tribunal on the ground as reproduced hereinabove. To support the various grounds raised by the ld. AR of the assessee, has filed a written submissions which reads as follows : “That in a nutshell it has undisputed fact that the appellant has been paid interest under Section 28 of the Land Acquisition Act,1894. It is only issue remains with the taxability of the Interest paid under Section 28 of Land Acquisition of the Act is taxable or not. The appellant hereby submits Paras nos. from the relevant Cases Laws being relied upon by the Appellant as part and parcel of his written submission being submitted in support of his appeal. [2009] 182 taxman 368(SC)/ [2009] 315 ITR 1(SC) / [2009] 224 CTR 522 (SC) [16-07-2009] SUPREME COURT OF INDIA Commissioner of income tax, Faridabad v. Ghanshyam (HUF) S.H KAPADIA AND AFTAB ALAM, JJ. CIVIL APPEAL NOS.4401 TO 4420, 4422 TO 4426 OF 2009 JULY 16, 2009 8 ITA No. 1268/JP/2024 Krishan Pal Singh vs. ITO Section 45 read with section 155 of the income tax act 1961 and Sec 23, 28 and 34 of the Land Acquisition Act 1894 capital gains year in which assessable – assessment year 1999- 2000 whether even in cases where pending appeal court /tribunal/ authority, before which appeal is pending permits claimant to withdraw against security or otherwise enhanced compensation (which is in dispute) same is liable to be taxed under section 45(5) in year of receipt- Held, yes - Whether additional amount under section 23(1A) solatium under section 23(2) and Interest on excess compensation under section 28 of Land Acquisition act form part of enhanced compensation under section 45(5) in year of receipt- held, yes. [2018] 91 taxmann.com 20 (SC) [2018] 254 TAXMAN 126(SC) [2018]302 CTR 458(SC) [15-09-2017] In re: Union of India Vs Hari Singh IT: where land acquisition collector while disturbing compensation had deducted tax at source and deposited same with income tax department matter should have been remitted to assessing officer to decide nature of land acquired and whether tax was payable on compensation/enhanced compensation received on said land. In the said decision in para 8(2) has re-affirmed the decision of the CIT Vs Ghanshyam (HUF) (2009) 182 Taxman 368/315 ITR 1 (SC) as follows : “(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 CIT V. Ghanshyam (HUF) (2009) 182 Taxman 368/315 ITR 1 (SC) in order to ascertain whether the interest given under the said provisions amounts to compensation or not.” (2016) 70 Taxmann.Com 45/388ITR 343 (Gujarat) Para 14 : In re : Movaliya Bhikhubhai Balabhai Vs ITO In the above mentioned case the HC has held while relying upon the judgment upon the Apex Court decision Ghanshyam (HUF) in respect of the amount paid under Section 28 of the Land Acquisition Act 1894 forms part of compensation and not interest. The same principles has been followed by the various ITAT from since long a few of them are as follows : 1. [2023] 150 taxmann.com 153 (Pune- Trib.) / [2023] 200 ITD 575 (Pune- Trib.) [08-02-2023] In re: Sanjay Bhimrao Patil Vs Income Tax Officer (Para 21 to 23) IT: Interest received by assessee u/s 28 of Land Acquisition Act 1894 on enhanced compensation received for compulsory acquisition agriculture land for period from acquisition of land till payment of compensation to assessee was part of compensation and thus same was not taxable and amendment by way of substitution of section 145A and insertion of clause (iii) in section 56 (2) would not be applicable on same. 9 ITA No. 1268/JP/2024 Krishan Pal Singh vs. ITO 2. [2018] 96 taxmann.com 541 (Bangalore – Trib.) \\ [2018] 172 ITD 332 (Bangalore – Trib.) [20-07-2018] In re : Income Tax Officer Vs Sangappa S. Kudarikannur : (See Par 14) : Interest awarded to assessee U/s 28 of Land Acquisition act 1894 on enhanced compensation paid for acquisition of agriculture land would be eligible for exemption under section 10 (37). 3. [2018] 99 taxmann.com 90 (Bangalore ITAT): 173 ITD 399. [12-10-2018]: In re : Income Tax Officer Vs Vinayak Hari Palled (See Para 13) IT: interest awarded on enhanced compensation paid by government for acquisition of agricultural land of assessee u/s 28 of Land Acquisition act would partake of character of compensation and would be eligible for exemption under section 10(37) 4. [2019] 104 taxmann.com 99 (Delhi ITAT):176 ITD 1 In re: Baldev Singh Vs Income Tax Officer (See Para 9 and 10) IT: where assessee’s agriculture land was acquired by government enhanced compensation including interest received would be eligible for exemption. 5. [2020]113 taxmann.com 572 (Bangalore ITAT); 182 ITD 408 [22-11-2019] In re : Smt Lakshmamma Vs Income Tax Officer (See Para 16,17) Income tax: interest received on enhanced compensation u/s 28 of Land Acquisition Act 1894 is eligible for exemption under section 10(37) 6. [2018] 95 taxmann.com 106 (Bangalore –Trib.) [01-06-2018] In re : I T O Vs Basavaraj M Kudarikannur (See Para 11 and 14) IT: interest awarded u/s 28 of the Land Acquisition Act 1894 on enhanced compensation paid for compulsory acquisition of agriculture land would be eligible for exemption under section 10(37) 7. In re: Sumesh Kumar Vs I T O (ITAT New Delhi ) (Paras 7) IT: Para 7: … The Assessing Officer as well as the CIT (A) have not given any finding as to the fact that the assessee has not received interest under Section 28 of the Land Acquisition Act,1894. This issue has been decided Hon’ble Apex Court in case of Union of India vs Hari Singh (Civil Appeal No. 15041/2017) order dt 15th Sept 2017). 8. In re: Narender Kumar Vs ITO (ITAT New Delhi) (Para 7) IT: Para 7. Thus the interest received on compensation to the assessee is nothing but a capital receipt and the addition is against the law. From the perusal of the Order of the CIT(A), it can be seen that the CIT(A) has not given a separate finding as to why the Assessing Officer is justified in making the addition. This issue has been decided by the Hon’ble Apex Court in the case Union of India vs Hari Singh (Civil Appeal No. 15041/2017) order dt 15th Sept 2017) …. 9. Jai Parkash Vs Principal Commissioner of Income Tax (2024) 161 Taxmann.com 735 (Delhi): That in the Judgment the ITAT, Delhi has specifically 10 ITA No. 1268/JP/2024 Krishan Pal Singh vs. ITO once again relied upon the case law decided by the Supreme Court in re Ghanshyam (HUF). 10. Shri Kusum Jayram Thakur Dhutum Vs Income Tax Officer (ITAT Pune) dt. 03/05/2024. It has been held that the Interest under Section 28 of the Land Acquisition Act,1894 is a capital receipt and forms part of compensation under Sectio 10(37) hence exempt from tax. Para 5 and 6 of the Judgement speaks as follows: “ 5.We have heard the foregoing vehement rival contentions. It transpires that the instant issue of taxability of the assessee’s interest income received under section 28 of the Act is covered in assessee’s favour as per the hon’ble high court’s Bombay bench holding that the same is not taxable under section 56(2)(viii) of the Act as against the Revenue’s contentions that the Aurangabad bench of the very hon’ble jurisdictional high court has taken a divergent view against the taxpayer in Shivajirao and Others Vs. State Writ Petition No.5042/2013 dated 27.08.2013(supra). 6. Faced with the situation, we are of the opinion that it is the Bombay and not Aurangabad bench of the hon’ble jurisdictional high court whose decision would prevail in the given facts and circumstances as the assessee, his land/capital asset forming subject matter of compulsory acquisition as well as “situs” of the Assessing Officer who has framed assessment before us dated 28.11.2017, are covered within its territorial jurisdiction notified from time to time. We thus quote PCIT Vs. ABC Paper Limited [2022] 447 ITR 1 (SC) and decide the instant sole substantive ground as well as the main appeal is assessee’s favour. Ordered accordingly.” 11. Pawan Kumar Vs Principal Commissioner of Income Tax (2024) 159 Taxmann.com 61 (ITAT New Delhi) has again held that the Interest under Section 28 of the Land Acquisition Act,1894 is part and parcel of the Compensation. Therefore, Interest under Section 28 of Land Acquisition Act,1894 is exempt from the Income Tax under Section 10(37). The judgement has made an erolabate discussion on the issue referring all the Supreme Court cases there relevant paras : CIT v. Ghanshyam (HUF) [2009] 182 Taxman 368/315ITR 1 (SC) CIT v. Govindbhai Mamaiya [2014] 52 taxmann.com270/[2015] Union of India v.Hari Singh [2018] 91 taxmann.com 20 ITO, TDS v.Muktanangiri Maheshgiri [Civil Appeal No. 18475 of 2017, dated 10- 11-2017] (para6.2), 12. The High Court of Himachal Pradesh in the Commissioner of Income Tax Shimla Vs Joginder Singh has follows the Supreme Court ruling of Ghanshyam (HUF) and allowed the appeal holding as follows in para 4: 11 ITA No. 1268/JP/2024 Krishan Pal Singh vs. ITO “4. In view of the aforesaid judgment of the Apex Court, this amount is to be treated as part of compensation itself and is not to be treated as interest. Therefore, the question of law framed above does not survive any more.” Hon'ble Himanchal Pradesh High Court in the case of CIT v. Keshwa Devi (2012) 19 Taxman.com 220 (HP) which after relying upon the judgment of Hon'ble Supreme Court in the case of Ghanshyam, HUF [2009] 182 Taxman 368 /315ITR 1 (SC) has held that interest received under section 28 of the Land Acquisition Act on enhanced compensation is not interest under section 34 but is in the nature of compensation and therefore, was not taxable as interest. That therefore it is requested to please consider the above mentioned ruling while deciding the appeal.” 6. The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that the assessee is in receipt of enhanced compensation as provisions of section 28 of the Land Acquisition Act for the compulsory acquisition of the land and to support that contention, ld. AR of the assessee has filed the copy of order demonstrating that the compensation so received by the assessee was in accordance with the provisions of section 28 of the Land Acquisition Act which is exempt from income tax as per provision of section 10(37) of the Act. He also submitted that though there has been an amendment in the provision of section 56 and 145B of the Act but when there is no consequential amendment in the provision of section 10(37) of the Act the said section considered the income as not chargeable to tax that prevails over the other provisions of the Act. 12 ITA No. 1268/JP/2024 Krishan Pal Singh vs. ITO 13 ITA No. 1268/JP/2024 Krishan Pal Singh vs. ITO 7. Per contra, ld. DR vehemently supported the orders of lower authorities and submitted that the interest chargeable to tax subjected to tax as per provisions of section 56C(2)(viii) of the Act. Ld. DR also submitted that the assessee received interest on which TDS has also been deducted as the same is chargeable to tax and therefore, it covers as per provisions of section 56(2)(viii) r.w.s 145(B) of the Act. Based on that argument ld. DR supported the finding recorded in the order of ld. CIT(A) vide para 6.2 and prayed to sustain the addition made by the lower authorities. 8. In the rejoinder to the submission of the ld. DR, ld. AR of the assessee submitted that it is not under dispute that the acquisition was made, and compensation was received as per provisions of section 28 of the Land Acquisition Act. Ld. AR of the assessee stated that though the provisions of section 56(2)(viii) was amended but the benefit which is granted as per provisions of section 10(37) of the Act shall prevail. 9. We have heard the rival contentions and perused the material placed on record. The bench noted that in the present appeal the assessee raised multiple grounds of appeal. However, at the time of hearing of the appeal we note that the only issue raised in this appeal was income of Rs. 14 ITA No. 1268/JP/2024 Krishan Pal Singh vs. ITO 1,27,13,420 claimed to have been exempt as per provision of section 10(37) of the Act or is chargeable to tax as per provision of section 56(2)(viii) of the Act. As is evident from the record that the assessee has received enhanced compensation as per provision of section 28 of the Land Acquisition Act for an amount of Rs. 1,27,13,424/-. The assessee while filling the return of income claimed the said income as exempt as per provision of section 10(37) of the Act and claimed the refund of TDS deducted on the said compensation. In the assessment proceeding ld. AO treated the said compensation as chargeable to tax as per provision of section 56(2)(viii) r.w.s 145(B) of the Act. When the matter carried to ld. CIT(A) he confirmed the addition based on the reasoning supported by the ld. AO. Before us the ld. AR of the assessee supported the claim as per provision of section 10(37) of the Act and he serviced the various judicial precedent cited on the issue and thereby prayed for the relief as claimed. 10. The issue raised by the assessee and the contention of the revenue both has been discussed in detailed in the decision given by the co-ordinate bench of ITAT Pune in the case of Kusum Jayram Thakur Dhutum Vs. ITO [162 taxmann.com 388 (Pune - Trib.) ] wherein the bench at length deal with the issue as reproduced herein below: 15 ITA No. 1268/JP/2024 Krishan Pal Singh vs. ITO 3. Suffice to say, the assessee's sole substantive grievance raised herein seeks to reverse both the learned lower authorities action assessing it's interest received u/sec.28 of the Land Acquisition Act, 1894 granted by the learned Reference Court, u/sec.56(2)(viii) r.w.s.145A of the Act qua the amount in question of Rs.2,65,38,689/- in the Assessing Officer's assessment herein dated 27.12.2018. Both the learned Assessing Officer as well as the NFAC herein are of the opinion that in light of the foregoing statutory amendment in the Act, such an interest income of enhanced land acquisition compensation is no more exempt from taxation. 4. Both the learned representatives reiterated their respective stands during the course of hearing. It transpires during the course of hearing that the Assessing Officer before us is learned ITO, Ward-3, Panvel. This being the clinching fact, it is noticed that the tribunal's recent coordinate bench(es) order in Raghunath Budhaji Patil, Uran v. ITO [IT Appeal No. 235 (PUN.) of 2023, dated 27-4-2023] has already settled the issue in assessee's favour and against the department going by jurisdictional bench of hon'ble high court as under : \"3. We have given our thoughtful consideration to vehement rival stands against and in support of the lower authorities findings holding the assessee's interest income received under section 28 of the Land Acquisition Act, 1894 as taxable under the head income from \"Other\" sources under section 56(2)(viii) of the Act. The assessee's case before us is that such an interest income is part of the land acquisition compensation itself and not taxable, therefore, in light of Ghanshyam (HUF) v. CIT [2009] 224 CTR 522/315 ITR 1/182 Taxman 368 (SC). Learned counsel thereafter quoted [2016] 138 DTR 229 (Guj) Moraliya B Balashai v. ITO and [2019] 471 ITR 169 (Bom), Ruesh R.Shah v. Union of India and vehemently contended that the learned lower authorities action under challenge is hardly sustainable in law. 4. Mr.Jasnani on the other hand has quoted this tribunal's co-ordinate bench's order in Basweshwar Mallikarjun Bidwe v. ITO in ITA No.1012/PUN/2017 dated on 05.10.2020 in department's favour as under : \"3. Succinctly, the facts of the case are that the assessee filed his return declaring total income of Rs.42,370/-. He received enhanced compensation at Rs.38,19,709/- and interest u/s.28 of the LAA amounting to Rs.68,32,020/- on compulsory acquisition from The Special Land Acquisition Officer (MIW), Latur against the land situated at Village Khadgaon, Tq. Latur. In the column of exempt income in the return, the assessee showed figures of total interest at Rs.68,32,020/- and agriculture income at Rs.2,37,900/-. On being called upon to explain as to why the interest was not shown separately as income u/s.56(2)(viii) of the Income-tax Act, 1961 (hereinafter also called 'the Act') Act, the assessee made certain submissions which did not find favour with the Assessing Officer (AO). Treating 50% of the interest income as deductible in terms of section 57(iv), the AO added net interest income of Rs.34,16,010/- u/s. 56(2)(viii) of the Act. The ld. CIT(A), relying on certain decisions, which we will advert to in the later part of the order, jettisoned the claim of the assessee thereby approving the view of the AO in bringing to tax the interest income u/s.56(2)(viii) of the Act. Aggrieved thereby, the assessee has approached the Tribunal. 16 ITA No. 1268/JP/2024 Krishan Pal Singh vs. ITO 4. We have heard both the sides through virtual court and cogitated over the relevant material on record. Indisputably, the amount of net interest income computed by the AO u/s.56(2)(viii) of the Act pertains to section 28 of the LAA. The assessee treated such amount as part of the enhanced compensation of land and claimed the same as exempt from tax on the ground that the land itself was agricultural. To buttress the contention that interest u/s 28 of the LAA is a part of compensation and hence not chargeable to tax, the ld. AR chiefly relied on the judgment of the Hon'ble Supreme Court in CIT v. Ghanshyam (HUF)[2009] 224 CTR 522/315 ITR 1/182 Taxman 368 (SC) before the Tribunal in which it has been held that interest u/s.28 under The Land Acquisition Act, is to be taxed as part of consideration on receipt basis. This judgment was delivered on 16-07-2009. The Finance (No.2) Act, 2009 w.e.f. 01-04-2010 inserted clause (viii) to section 56(2) providing that: \"income by way of interest received on compensation or on enhanced compensation referred to in sub-section (1) of section 145B\" shall be chargeable to income-tax under the head \"Income from other sources\". Section 145B(1) provides that: \"Notwithstanding anything to the contrary contained in section 145, the interest received by an assessee on any compensation or on enhanced compensation, as the case may be, shall be deemed to be the income of the previous year in which it is received\". Thus it is palpable that post the decision in Ghanshyam (supra), a statutory amendment has been carried out providing that income by way of interest received on compensation or on enhanced compensation shall be chargeable to income-tax under the head \"Income from other sources\". 5. The question of taxability of interest received u/s 28 of the LAA came up for consideration before Hon'ble Punjab & Haryana High Court in the case of Manjet Singh (HUF) Karta Manjeet Singh v. Union of India (2016) 237 Taxman 0116 (P&H). It noted another judgment of three Judges of the Hon'ble Apex Court in Bikram Singh v. Land Acquisition Collector, (1997) 224 ITR 551(SC)following Dr. Shamlal Narula v. CIT [1964] 53 ITR 151 (SC) holding that interest under Section 28 of the 1894 Act was a revenue receipt and is taxable. After considering all the available relevant material including the judgment in Ghanshyam (HUF) (supra) and also the statutory amendments carried out w.e.f. A.Y. 2010-11, the Hon'ble High Court, vide its judgment dated 14.01.2014, decided this issue in favour of the Revenue by holding that interest u/s.28 of LAA was chargeable to tax u/s. 56(2)(viii) of the Act. The SLP filed against the judgment in the case of Manjet Singh v. Union of India has since been dismissed by the Hon'ble Supreme Court on 18-12-2014 (SLP No. 34642 of 2014) holding that \"Heard ld. Counsel for the petitioners and perused the relevant material. We do not find any legal and valid ground for interference. The special leave petitions are dismissed.\" 6. Question of deduction of tax at source on interest u/s 28 of the LAA once again came up for consideration before the Hon'ble jurisdictional High Court in a batch of 13 petitions with the lead case of Shivajirao S/o Dnyanoba Ghanwat & Ors. v. The State of Maharashatra & Ors. (WP No. 5402 of 2013). The petitioners contended that the tax was deducted at source on the entire amount of compensation awarded in Land Acquisition proceedings, including the interest u/s 28 of the Land Acquisition Act, which was not deductible in the light of the judgment of the Hon'ble 17 ITA No. 1268/JP/2024 Krishan Pal Singh vs. ITO Supreme Court in Ghanshyam (HUF) (supra). Per contra, the Respondent made out a case that tax at source was rightly deductible as there was no difference between the interest granted u/s 28 and 34 of the LAA. This view was bolstered on the basis of an earlier judgment of the Hon'ble Supreme Court in Bikram Singh (supra)[1997] 139 CTR 475/224 ITR 551/[1996] 89 Taxman 119 (SC). The Hon'ble Bombay High Court, vide its judgment dated 27.08.2013 (copy at pages 69 onwards of the assessee's paper book), recorded the petitioner's contention in para 8 and that of the respondent in paras 3 read with 4. In para 5 of the judgment, their Lordships found that: 'Section 34 casts obligation upon Collector to pay interest after compensation is worked out. Section 28 puts similar obligation upon the Court when the Court finds that the compensation awarded under section 11 was inadequate. Therefore, there is no change in nature of interest either u/s.28 or section 34. Even if court hikes compensation for land and interest is awarded under Section 28 of the Act, upon such increased compensation, in the light of larger Bench judgment, the Department and Disbursing Authorities are bound to effect deduction of TDS'. On the interplay between the Hon'ble Apex Court judgments in Ghanshyam (supra) & Bikram Singh (supra), the Hon'ble Bombay High Court in para 4 found the: 'issue to be squarely covered by the larger Bench judgment of the Apex court' in Bikram Singh (supra). Then it noted in para 9 of the judgment that: \"We have perused para 24 and 25 of the judgment of the Apex Court in Commissioner of Income Tax v. Ghanshyam (supra). We find that the Hon'ble Apex Court there, was not called upon to look into the Larger Bench judgment delivered earlier in case of Bikram Singh (supra). In para 7, the Hon'ble Larger Bench has found that the interest paid u/s.28 is not by way of any charge on compensation determined u/s.23(1). We, therefore, with respect, follow the larger Bench judgment of the Hon'ble Apex Court\". Thus it is plentifully lucid that the Hon'ble jurisdictional High Court has categorically held that interest u/s 28 of the Land Acquisition Act is chargeable to tax. 7. The ld. AR submitted that the Hon'ble jurisdictional High Curt has not correctly appreciated the legal position inasmuch as the decision in the case of Ghanshyam (supra) was binding and ought to have been followed. He unsuccessfully tried to convince the Tribunal that the decision rendered by the Hon'ble Bombay High Court should not be preferred over certain other decisions in favour of the assessee. We find that in certain decisions, the issue has been decided in assessee's favour. Notwithstanding any contrary view expressed by a non- jurisdictional Hon'ble High Court, the Tribunal, being an authority inferior in hierarchy to its jurisdictional High Court, is bound by the verdict of its superior Hon'ble High Court and cannot read, consider or understand the judgments of the Hon'ble Supreme Court in a way different from the one understood by the Hon'ble jurisdictional High Court unless such a view has been subsequently reversed/modified by the Hon'ble Supreme Court. 8. The ld. AR then submitted that the Hon'ble Supreme Court in Union of India and others v. Hari Siingh and others (2018) 302 CTR 0458 (SC) has considered a similar issue and decided the same in favour of the assessee. It was then contended that since the judgment of the Hon'ble jurisdictional High Court was 18 ITA No. 1268/JP/2024 Krishan Pal Singh vs. ITO rendered prior to that of Hon'ble Supreme Court in Hari Singh and others (supra), the latter should be followed in preference to the former. 9. We are unable to find any relevance of the judgment of Hon'ble Supreme Court in Hari Singh and others (supra), insofar as the issue under consideration is concerned. In that case, the Land Acquisition Collector deducted tax at source from compensation on account of compulsory acquisition of land and deposited the same with the exchequer. A writ petition was filed in the High court urging that no deduction of tax at source was permissible in view of the provisions of section 194LA of the I.T. Act, since the land which was acquired was agricultural land and this provision categorically mentions that in respect of agricultural land, tax at source was not to be deducted. The Hon'ble High Court directed the Income-tax Department to refund the amount to the collector and held: \"that the Collector will determine whether the compensation paid is for property other than the agricultural land or otherwise and whether deduction of tax at source was permissible under other provisions of law.\". Aggrieved thereby, the Revenue approached the Hon'ble Supreme Court pleading that the matter should have been remitted to the AO for deciding the nature of land acquired and not the Collector as it was the AO who was to come to the conclusion whether land was agricultural or not. Accepting the contention on behalf of the Revenue, the Hon'ble Supreme Court held that the claimant should approach the concerned AO and raise the issue that no tax was payable on compensation/enhanced compensation which was received by them as their land was agricultural land. It was further observed that, while determining as to whether the compensation paid was for agricultural land or not, the AO will keep in mind the provisions of Section 28 of the Land Acquisition Act and the law laid down by this Court in CIT, Faridabad v. Ghanshyam (HUF) in order to ascertain whether the interest given under the said provision amounts to compensation or not. It is abundantly clear that the judgment in the case of Hari Singh and others (supra) is based an altogether different factual matrix in which the question was as to whether it was the Collector or the AO who will decide as to whether any tax was payable on compensation/enhanced compensation. This issue came to be decided by Hon'ble Supreme Court by holding that the AO was the competent authority. There is no adjudication on the point as to whether interest u/s.28 of the Land Acquisition Act is chargeable to tax separately or part of enhanced compensation. There is a simple direction to the AO to consider this aspect of the matter. 10. In view of the foregoing discussion, it is manifest that the judgment of the Hon'ble jurisdictional High Court holding that interest u/s.28 under the LAA is chargeable to tax, is intact and has not been disturbed in any manner by the Hon'ble Supreme Court in the case of Hari Singh and others (supra). On a specific query, the ld. AR could not point out as to whether the judgment of the Hon'ble jurisdictional High Court in Shivajirao (supra) has been reversed or modified in any manner by the Hon'ble Supreme Court. Respectfully following the judgment of the Hon'ble jurisdictional High Court in Shivajirao (supra) and the judgment of Hon'ble Punjab & Haryana High Court in Manjeet Singh (supra) along with the statutory amendment carried out to section 56(2) inserting clause (viii) w.e.f. 0104-2010, it is overt that the ld. CIT(A) has taken an unexceptionable view in the matter pertaining to the A.Y. 2013-14. We, therefore, uphold the same. This ground is not allowed.\" 19 ITA No. 1268/JP/2024 Krishan Pal Singh vs. ITO 5. We have heard the foregoing vehement rival contentions. It transpires that the instant issue of taxability of the assessee's interest income received under section 28 of the Act is covered in assessee's favour as per the hon'ble high court's Bombay bench holding that the same is not taxable under section 56(2)(viii) of the Act as against the Revenue's contentions that the Aurangabad bench of the very hon'ble jurisdictional high court has taken a divergent view against the taxpayer in Shivajirao and Others v. State Writ Petition No.5042/2013 dated 27.08.2013 (supra). 6. Faced with the situation, we are of the opinion that it is the Bombay and not Aurangabad bench of the hon'ble jurisdictional high court whose decision would prevail in the given facts and circumstances as the assessee, his land/capital asset forming subject matter of compulsory acquisition as well as \"situs\" of the Assessing Officer who has framed assessment before us dated 28.11.2017, are covered within its territorial jurisdiction notified from time to time. We thus quote PCIT v. ABC Paper Limited [2022] 141 taxmann.com 332/447 ITR 1/289 Taxman 150 (SC) and decide the instant sole substantive ground as well as the main appeal is assessee's favour. Ordered accordingly. 5. We adopt the detailed discussion mutatis mutandis \"for Panvel\" to accept the assessee's instant sole substantive grievance on merits. No other ground/argument raised or pressed before us during the course of hearing. 6. This assessee's appeal is allowed in above terms. On being consistent with the finding so recorded we consider the assessee’s appeal on the solitary ground in their favour. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 19/02/2025. Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 19/02/2025 20 ITA No. 1268/JP/2024 Krishan Pal Singh vs. ITO *Ganesh Kumar, Sr. PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Krishan Pal Singh HUF, Jaipur 2. izR;FkhZ@ The Respondent- ITO, Ward 1(4), Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA No. 1268/JP/2024) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar "