Section 57(iv)

Section 57(iv) — the law in short

What the courts have decided on section 57(iv), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• PCIT v Inderjit Singh Sodhi (HUF) — interest on compensation and enhanced compensation is income from other sources after the 2010 amendment High CourtHelps departmentHigh Courts differ
  My client received interest on enhanced compensation for compulsorily acquired land. Ghanshyam says it is part of compensation. Does that still hold?
  Not in the Delhi High Court. It held that on a conjoint reading of s.56(2)(viii) and s.145B, interest received on compensation or on enhanced compensation is chargeable under the head 'income from other sources', and that the conclusions drawn from CIT v Ghanshyam (HUF), decided in 2009, are unsustainable because the position as it exists today came into being only in 2010. The Tribunal was held to have erred in following Ghanshyam and ignoring the changes made by the Finance (No.2) Act 2009 with effect from 1 April 2010.
• Mahender Pal Narang v Central Board of Direct Taxes High CourtHelps departmentHigh Courts differ
  For a year after 2010, is the interest I received under s.28 of the Land Acquisition Act still capital gains following Ghanshyam, or has s.56(2)(viii) changed that?
  The Punjab and Haryana High Court held that the insertion of s.56(2)(viii) and s.57(iv) has changed the position, and that interest received on compensation or enhanced compensation is to be treated as income from other sources and not under the head capital gains. It said in terms that Ghanshyam does not come to the rescue of a claimant seeking to have s.28 interest treated as compensation, and it expressly recorded its disagreement with the Gujarat High Court in Movaliya Bhikhubhai Balabhai.
• Statutory position — s.194LA: TDS on compensation for compulsory acquisition of immovable property, and the RFCTLARR s.96 carve-out CBDT Circulars & InstructionsCuts both ways
  The land acquisition officer has deducted ten per cent from my compensation cheque. When is s.194LA actually attracted, what is the threshold now, and does the RFCTLARR exemption stop the deduction?
  Section 194LA obliges any person paying a resident compensation, enhanced compensation, consideration or enhanced consideration on account of compulsory acquisition of immovable property, under any law for the time being in force, to deduct ten per cent at the time of payment. Three things cut it down: the section does not touch agricultural land at all, because 'immovable property' is defined to exclude it; the first proviso stops deduction where the payment or the aggregate of payments to that resident in the financial year does not exceed five lakh rupees, that figure having replaced 'two lakh and fifty thousand' by Act No. 7 of 2025 with effect from 1 April 2025; and the second proviso stops deduction altogether where the payment is made in respect of any award or agreement exempted from levy of income-tax under s.96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.