Law:

Section:

Section 45, read with section 155, of the Income-tax Act, 1961 and sections 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)(b) and, therefore are taxable under section 45(5) in year of receipt - Held, yes Circulars & Notifications : Circular No. 621, dated 19-12-1991 FACTS During the previous year relevant to the assessment year 1999-2000, the assessee received enhanced compensation on his lands being acquired by the Haryana Urban Development Authority as also interest thereon. In the return of income for the assessment year 1999-2000, the assessee did not offer the amount of enhanced compensation and the interest received thereon for taxation, on the pleas that the amount of enhanced compensation received had not accrued to him during the year of receipt, as the entire amount was in dispute in appeal before the High Court which appeal stood filed by the State against the order of the reference Court granting enhanced compensation; and that the amount of enhanced compensation and the interest thereon were received by him in terms of the interim order of the High Court against his furnishing of security to the satisfaction of the executing Court. The Assessing Officer did not accept the contentions of the assessee on the ground that in terms of section 45(5) enacted with effect from 1-4-1988, the amount by which compensation or consideration stood enhanced or further enhanced by the Court, would be deemed to be income chargeable under the head 'Capital gains' of the previous year in which the said amount came to be received. He, accordingly, brought to tax the amount of enhanced compensation and the…

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