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Interest income on enhanced compensation of rural agricultural land

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Rahul Verma

Accountant

96 Points Posted on 12 August 2020

Hi Experts,

Hope everyone are safe and well !

Rural Agricultural Land

One of my friend received Interest income on enhanced compensation awarded against rural agricultural land compulsory accquired by govt. and interest amount is 10 lakh.

In govt. order it is mentioned that petitioner shall also be entitiled to all satutory benefits as prescribed under Section 23 (1-A), 23(2) and 28 of Land Acquistion Act.

Please advice the above interest will be taxable or not.

With supporting case law because govt has dedcuted tds on it @ 10% flat

Thanks and Regards
Rahul Verma

Replies (2)

Quick Summary

This discussion explores the taxability of interest income received on enhanced compensation for rural agricultural land compulsorily acquired by the government. While the compensation itself may be exempt under Section 10(37) of the Land Acquisition Act, the interest component is generally considered taxable as 'Income from other sources' under Section 56(2)(viii).

manu

Accountant

26 Points Posted on 12 August 2020

Interest received on enhanced compensation is taxable as Income from other sources as per section 57(iv) read with 56(2)(viii). However, compensation amount received by any assessee, in case of rural agricultural land, which is acquired by way of compulsory acquisition, is exempt under section 10(37).

Ravi SADhiyan

Practice

3087 Points Posted on 12 August 2020

Originally posted by : manu
	Interest received on enhanced compensation is taxable as Income from other sources as per section 57(iv) read with 56(2)(viii). However, compensation amount received by any assessee, in case of rural agricultural land, which is acquired by way of compulsory acquisition, is exempt under section 10(37).