NIRMAL SINGH THROUGH LEGAL HEIR RAVINDER SINGH,MOHALI, PUNJAB V. INCOME TAX OFFICER, WARD-5, PANCHKULA

ITA 848/CHANDI/2025

AI Insights

The case involves an appeal by Nirmal Singh against the order of the CIT(A), which confirmed the addition of Rs. 92,03,791 to his income for the Assessment Year 2018-19. This amount represented interest received on enhanced compensation for land acquisition, which was treated as 'Income from Other Sources' under Section 56(2)(viii) of the Income Tax Act, 1961. The Assessee argued that the CIT(A) erred in law and fact by treating this interest as income and not considering it under the head of capital gains. The Tribunal dismissed the appeal, referencing a similar case and statutory provisions that support the treatment of such interest as income.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 848796 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2026
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Chandigarh
• Assessment Year: 2018-2019
• Appeal Filed On: 24-06-2025
• Other Referred Cases: Mahender Pal Narang vs. CBDT, CIT vs Ghanshyam
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RANJIT KAUR
• Assessee Lawyers: PARIKSHIT AGGARWAL
• Keywords: Opportunity of being heard; Capital Gains
• Section: 147; 148; 56; 56(2); 145; 28

Judgement Text

" आयकर अपीलȣय अͬधकरण, चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, ‘B’, CHANDIGARH BEFORE SHRI LALIET KUMAR, JUDICIAL MEMBER & SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 848/CHD/2025 Ǔनधा[रण वष[ / Assessment Year : 2018-19 Nirmal Singh Through L/H Ravinder Singh, House No. 19, PIR Muchala Dhakauli, SAS Nagar, Mohali Punjab 160104 बनाम Vs. ITO, Ward 5, Panchkula èथायी लेखा सं./ PAN NO: GQPPS7139B अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent ( PHYSICAL HEARING ) Ǔनधा[ǐरती कȧ ओर से/Assessee by : Sh. Parikshit Aggarwal, CA राजèव कȧ ओर से/ Revenue by : Dr. Ranjit Kaur, Addl. CIT, Sr. DR सुनवाई कȧ तारȣख/Date of Hearing : 06.01.2026 उदघोषणा कȧ तारȣख/Date of Pronouncement : 24.03.2026 आदेश/Order Per Krinwant Sahay, AM : Appeal in this case has been filed by the assessee against the order dated 24.03.2025 passed by the Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi 2. Grounds of appeal, as raised by the Assessee are reproduced as under: Printed from counselvise.com 848-Chd-2025 2 1. That on the facts, circumstances and legal position of the case, the Worthy CIT(A), NFAC in Appeal No. CIT (A), Chandigarh-NFAC/2017-18/10246250 has erred in passing order dtd. 24.03.2025 in contravention of provisions of 8.250 of the Income Tax Act, 1961 (hereinafter referred to as \"Act\"). 2. That on facts, circumstances and legal position of the case, Worthy CITIA) has erred in confirming the impugned addition of Rs. 92,03,791/ made by erroneously treating the interest received from acquisition of land as income u/s.56(2) under the head \"Income from Other Sources\". 3. That on facts, circumstances and legal position of the case, the order passed by Ld. AO and then by Worthy CIT(A) deserves to be quashed since the same have been passed without affording reasonable opportunity of being heard to the appellant. 4. That the appellant craves leave for any addition, deletion, or amendment in the grounds of appeal on or before the disposal of the same. 3. The Registry has pointed out that there is a delay of 24 days in filing of the appeal before the Tribunal. The Counsel of the Assessee has filed an application along with Affidavit on behalf of Printed from counselvise.com 848-Chd-2025 3 the Assessee, making prayer for condonation of delay. The affidavit of the Assessee is as under: Printed from counselvise.com 848-Chd-2025 4 Printed from counselvise.com 848-Chd-2025 5 Printed from counselvise.com 848-Chd-2025 6 4. We have considered the reasons given in the Application / Affidavit and keeping in view the issue brought on record in the form of Affidavit for condonation of delay, we are inclined to condone the delay. 5. The ld. DR did not have any objection for condonation of delay. Accordingly, the delay in filing of the appeal is hereby condoned and we proceed to decide the appeal on merit. 6. Brief facts of the case as per the order of the Ld. CIT(A) are as under: - The appellant is an individual and had not filed his return of income for the AY 2018-19. As per the information available with the AO the appellant during the year under consideration had received interest on enhanced compensation of Rs. 92,03,791/-. Accordingly, the case was reopened as per the new provision u/s 147 of the Act and the order u/s 148A(d) was passed on 31.03.2022 and a fresh notice u/s 148 was issued on the same day. In response to notice u/s 148 the appellant had filed its return of Income admitting total income of Rs.4,580/- . Thereafter, notice u/s 143(2) dated 08.03.2023 was issued to the appellant. During the assessment proceedings, the AO made addition of Rs. 92,03,791/- (50% of interest income of Rs. 1,84,07,583/-) u/s 56(2) of the Act under the head 'Income from other sources. The total income was assessed at Rs. 92,08,391/-. Printed from counselvise.com 848-Chd-2025 7 7. Aggrieved with the order of the Assessing Officer, the Assessee preferred appeal before the Ld. CIT(A). The Ld. CIT(A) dismissed the appeal of the Assessee by giving his findings on this issue as under: - “Hon'ble Supreme Court had also dismissed the SLP arising out of High Court in the case of Mahender Pal Narang vs. CBDT [2020], 120 taxmann.com 400 (Punj. & Har.)/[2020] 275 Taxman 222 (Punj.& Har.)/[2020] 423 ITR 13 (Punj. & Har.)vide 126 taxmann.com 105 (SC)/[2021] 279 Taxman 74 (SC)/[2024] 462 ITR 498 (SC) [04-03-2021]where in it was held that interest received on compensation or enhanced compensation under Land Acquisition Act, 1894 is to be treated as 'income from other sources' and not under head 'capital gains'. In view of judicial pronouncements and the concerned amendment discussed above, it is held that appellant has erred in relying upon the decision in the case of Commissioner of Faridabad versus Ghanshyam, ignoring the changes brought about by Finance (No.2) Act, 2009, which came into effect in the year 2010. The AO had rightly enunciated the provision of Section 56 (2)(viii), section 145 in considering Rs. 1,84,07,583/-, interest on enhanced compensation as income under the head 'Income from other sources' and added Rs. 92,03,791/- after allowing statutory deduction of 50% of the interest income u/s 57(iv) of the Act. Accordingly, I find no merit in the Printed from counselvise.com 848-Chd-2025 8 contention of the appellant. The grounds of appeal no, i to v are hereby dismissed.” 8. Against the said order of the CIT(A), the Assessee preferred this appeal before the Tribunal. During proceedings before us, the Counsel of the Assessee argued the case on the basis of findings given by the Hon'ble Supreme Court in the case of ‘CIT vs Ghanshyam 9. Per contra, the ld. DR relied on the orders of the Ld. CIT(A). 10. We have considered the findings given by AO and the Ld. CIT(A) in their respective orders and have also considered the arguments given by the ld. Counsel for the Assessee as well as that of the ld. DR during the proceedings before us. We have already given our findings on the similar issue in favour of the Revenue in group of cases namely ‘Shri Ajay Kumar and Others vs ITO’ ITA No. 463/Chd/2023 and for A.Y. 2018-19 alongwith other appeals vide order dated 11.11.2025 on this issue wherein citing the introduction of Section 56(2)(viii) read with Section 145B(1), the Legislature has provided an explicit Printed from counselvise.com 848-Chd-2025 9 statutory mandate governing the tax treatment of interest on enhanced compensation for assessment years from 01.04.2010 onwards. Accordingly, for post-amendment years, interest on enhanced compensation is taxable under Section 56(2)(viii) irrespective of its characterisation under the Land Acquisition Act, and the deeming fiction under Section 28 of the Land Acquisition Act cannot displace the statutory scheme enacted in the Income-tax Act. 11. Following our own decision in the case cited above, we are of this considered view that there is nothing wrong in the findings given by the Ld. CIT(A). Accordingly, in our view, the order of the Ld. CIT(A) does not require any interference. As a result, the appeal of the Assessee is dismissed. In the result, appeal of the Assessee is dismissed. Order pronounced on 24.03.2026. Sd/- Sd/- ( LALIET KUMAR ) ( KRINWANT SAHAY) Judicial Member Accountant Member “आर.क े.” Printed from counselvise.com 848-Chd-2025 10 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the order forwarded to : 1. अपीलाथȸ/ The Appellant 2. Ĥ×यथȸ/ The Respondent 3. आयकर आयुÈत/ CIT 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय आͬधकरण, चÖडीगढ़/ DR, ITAT, CHANDIGARH 5. गाड[ फाईल/ Guard File सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "