New Delhi, Sept. 14 -- The Income Tax Appellate Tribunal (ITAT), Rajkot Bench, has ruled in favour of a taxpayer in a dispute over the tax treatment of interest received on enhanced compensation for compulsory acquisition of agricultural land. The tribunal held that interest awarded under Section 28 of the Land Acquisition Act forms part of the compensation and is eligible for exemption under Section 10(37) of the Income Tax Act.

The ruling came in the case of Kishorbhai Nathabhai Makani for assessment year 2016-17. The assessee had challenged an order of the National Faceless Appeal Centre (NFAC), which had upheld the tax treatment of the interest component as taxable income.

The dispute centred on whether the interest received on enha...