Compulsory acquisition exemption under section 10(37) applies where agricultural use is proved despite negotiated compensation settlement.

Land acquired for the Vizhinjam International Seaport was treated as compulsory acquisition under the Land Acquisition Act because the statutory acquisition process had been followed, even though the final compensation was fixed by negotiated settlement. The article states that exemption under section 10(37) remained available because the land was supported by agricultural records, certificate evidence, returns showing agricultural income, and material indicating standing trees and cultivation before transfer. It further notes that a later inspection report could not displace contemporaneous evidence of agricultural use at the time of acquisition, so the land was rightly characterised as agricultural land for exemption purposes.

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Issues: Whether the assessee was entitled to exemption under section 10(37) on transfer of the land, and whether the land was an agricultural land acquired compulsorily notwithstanding that the compensation was fixed by negotiated settlement.

Analysis: The land was notified for acquisition for the Vizhinjam International Seaport and the acquisition proceedings were taken under the Land Acquisition Act. The fact that the final compensation was arrived at by negotiated settlement did not change the character of the acquisition, because the entire statutory acquisition process had been followed. The land was supported by agricultural records, certificate evidence, return of agricultural income, and material showing standing trees and cultivation prior to transfer. The later inspection report could not displace the contemporaneous evidence of agricultural use at the time of acquisition.

Conclusion: The assessee was entitled to exemption under section 10(37), and the land was rightly treated as an agricultural land under compulsory acquisition.

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