No income tax on compensation for compulsory land acquisition by the government
Facts and Issue of the case
The revenue in this appeal has taken the following grounds of appeal:
i. The Order of the CIT (A] dt. 6.06.2018 is perverse and bad in law & facts in as much as he did not consider the basic fact of the Addition made under the Head, Long Term Capital Gain for Rs. 3,63,50,267/ as the Assessee failed discharge, the onus of evidence substantiating his claim of Exemption from Capital Gain on account of Agriculture Land, during the Assessment Proceedings.
ii. The Order of the CIT [A] is further perverse and bad in law & facts in as much as he has erred in admitting additional evidence in violation of Rule 46A.
iii. The Order of the CIT [A] is further perverse and bad in law & frets in as much as he failed to understand that TDS was deducted v/s 194LA treating it to be other than Agriculture Land, hence, it comes within the meaning of Capital Assets u/s 2(14)(iii).
v. The Order of CIT [A] is further perverse and bad-in-law & frets in as much as he failed to consider the issue, reason and main frets behind the Addition, as to why the Assessing Officer has considered and treated it fit to be Capital Gain/Assets in the Assessment Order keeping in view of the provisions u/s 2(14)(iii) and u/s 10(37) of the I.T. Act, 1961.
vi. The Order of CIT [A] is further perverse and bad-in-law & facts in as much merely considered in his Order that- “it is undisputed and evidentially prove that the Compulsorily Acquired Land fulfills the Condition of provision of Section10 and Section 2(14)(iii) of the I.T. Act, 1961” merely on the ground that “part of the land is still under agricultural cultivation.
vii. The Order of CIT [A] is further perverse and bad-in-law & facts in as much opined on his own that- “TDS has been deducted by the Land Acquisition ( only due to not understanding the technical feet of Section 10(37] and 2(14)(iii).
viii. The Order of CIT [A] is further perverse and bad-in-law & facts in as much as 1 not consider the distance of the Acquired Land keeping in view of Municipal A Section 2(14)(iii).
The facts of the case are that the assessee receipt of compensation for Rs. 3,68,19,767/- against acquisition of his land by the District Land Acquisition Officer, Patna and it was found that the assessee was liable to pay tax on capital gain on compensation amount. Accordingly, the case was opened u/s 148 of the Income-tax Act and notice was issued upon the assessee and in response to such notice, the assessee filed its return of income for A.Y. in question. While doing so, the assessee showing his works contract business income for Rs. 1,20,960/- and agricultural income for Rs. 3,55,500/-. Further, the assessee has shown exempted income for Rs. 3,55,500/- under the head, agricultural income and Rs. 3,68,19,767/- under the head, compensation receipt amount totaling to Rs. 3,71,75,267/-.
Further, the AO issued notice u/s 142(1) to assessee to submit documentary evidence in relation to the compensation receipt and exempted income and in response to the same, the assessee had submitted his detailed reply. Dissatisfied with the above order, assessee preferred an appeal before the ld. CIT(A) wherein the ld. CIT(A) allowed the appeal of the assessee .Now, dissatisfied with the above order passed by the ld. CIT(A), the revenue is in appeal before the Tribunal.The main grievance of the revenue relates to the exemption allowed to the assessee by the ld. CIT(A) from compensation received on acquisition of land and the remaining ground no. (ii) to (ix) are consequential or general in nature, therefore, need not to be adjudicated. At the time of hearing, the ld. DR submitted that order passed by ld. CIT(A) dated 06.06.2018 is perverse and bad in law. Since assessee completely failed to discharge the onus of evidence sustaining his claim of exemption from capital gain during assessment proceeding further ld. CIT(A) has erred in admitting additional evidence in violation of Rule 46A of the Income-tax Act and as such it required to be quashed. On the other hand, ld. AR supported the order passed by the ld. CIT(A) and submitted that the order passed by the ld. CIT(A) was a reasoned order need not required any further inference by the Hon’ble Tribunal.
Observation by the Court
On consideration of rival submission and material available on record, the court are of the view that the order passed by the ld. CIT(A) is a reasoned order and as such there is no need to inference by this Tribunal in the order passed by the ld. CIT(A). Besides that in the present case also the CBDT clarified that the compensation received in respect of award or agreement which has been exempt from levy of Income Tax vide section 96 of the Act shall also not be taxable under the provisions of Income Tax Act, 1961 even if there is no specific provisions of exemption for such compensation in the Income Tax Act, 1961. In the said Circular it is also clarified that no distinction had been made towards compensation received for compulsory acquisition of agricultural land and non agricultural land in the matter of providing exemption from income Tax under the RFCTLARR Act. In the instant case the assessee received compensation for compulsory acquisition of commercial land during the F.Y. 2014-15 which was exempted under section 96 of the Act, as clarified by the CBDT. The court therefore considering the totality of the fact as discussed hereinabove are of the view that the Id. CIT(A) was justified by not confirming the action of the A.O.
The appeal of the revenue is dismissed by the court.ITO-Vs-Suresh-Prasad-ITAT-Patna