Question 1

What are the key legal issues in Shri Om Prakash Vs. The P.C.I.T?

Accepted Answer

1. Whether the interest received under section 28 of the Land Acquisition Act on enhanced compensation for acquisition of land is exempt under section 10(37) or will be exigible to tax under the 'income from other sources' in view of the amendment w.e.f 01.04.2010 in the provisions of section 56(2)(viii) and 57(iv) of the Act. 2. Whether the PCIT has assumed the jurisdiction under section 263 validly.

Question 2

What are the facts of Shri Om Prakash Vs. The P.C.I.T?

Accepted Answer

The assessee, Shri Om Prakash, did not file his return of income for AY 2017-18. His case was reopened under section 147 based on information that he had received Rs 1,08,51,111/- as interest on enhancement of compensation on compulsory acquisition during the year, which he claimed as exempt income under section 10(37) of the Income Tax Act. The Assessing Officer accepted the assessee’s claim based on the judgment of the Hon'ble Supreme Court in the case of Ghanshyam Das HUF. However, the Principal Commissioner of Income Tax (PCIT) set aside the assessment order and initiated proceedings under section 263 of the Act, stating that the Assessing Officer did not conduct a proper enquiry into whether the assessee fulfilled the various conditions and legal ingredients of these provisions and whether the interest received on enhanced compensation also fell under section 10(37) or was taxable as income under the head ‘income from other sources’. The PCIT found that the AO had simply accepted the return without any inquiry, legal discussion, examination, verification, and investigation on the issue of receipt of land compensation and interest thereon. Aggrieved, the assessee filed an appeal against the action of the PCIT.

Shri Om Prakash Vs. The P.C.I.T

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