Judgment settles debate on enhanced compensation

By Vivek Vashi, Bharucha & Partners
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The Supreme Court in Commissioner of Income Tax v Ghanshyam considered whether enhanced compensation and interest received in a compulsory land acquisition could be deducted from the total income of an assessee on the basis that the amounts were in dispute before the High Court of Punjab & Haryana.

Vivek Vashi Bharucha & Partners
Vivek Vashi
Bharucha & Partners

Ghanshyam’s lands were acquired by the Haryana Urban Development Authority. Ghanshyam received an enhanced compensation of Rs8,713,517 (US$190,000) and interest of Rs147,575 in 1998-1999. This was relevant to the 1999-2000 assessment year.

Ghanshyam did not offer to tax the enhanced compensation and interest in his 1999-2000 income tax return, contending that the compensation had not accrued in the year of receipt since it was pending appeal before the high court. Ghanshyam also stated that the enhanced compensation and interest was received pursuant to an interim order of the high court on his furnishing adequate (tangible) security to withdraw the same.

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Vivek Vashi is the mainstay of the litigation department at Bharucha & Partners.

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