Assessee has received interest on enhanced compensation of agri land. It includes int u/s 28 and u/s 34 of land acquisition act. Some judgement shown int received u/s 28 is not taxable but some judgement shown irrespective of Rural Agri Land it is taxable and eligible for 50% deduction u/s 57. Plz provide guidance on it .
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Interest On Enhanced Compensation u/s 28 of Land acquisition act .
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Interest received under Section 28 of the Land Acquisition Act is part of compensation and takes the same tax character as the land acquired. Therefore, where the land is rural agricultural land, such interest is not taxable at all, as conclusively settled by the Supreme Court in Ghanshyam (HUF). In contrast, interest under Section 34 is always taxable as “Income from Other Sources”, with a 50% standard deduction u/s 57.
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