Assessee entitled to tax benefit for land acquisition under section 10(37) despite sale negotiation

The Asst. Commissioner of Income-tax, Circle 2 (1) Thiruvananthapuram. Versus Smt. Jayasree Sreedharan

The Asst. Commissioner of Income-tax, Circle 2 (1) Thiruvananthapuram. Versus Smt. Jayasree Sreedharan - TMI Issues:
Whether the assessee is entitled to benefit of section 10(37) of the I.T.Act in respect of the land acquiredRs.

Analysis:
The case involved a dispute regarding the entitlement of the assessee to the benefit of section 10(37) of the Income Tax Act for land acquired. The assessee was in possession of land in Vizhinjam village, which was later sold to Vizhinjam International Seaport Limited after being notified for acquisition by the Government of Kerala. The Assessing Officer denied the benefit of section 10(37) on the grounds that the land was not compulsorily acquired but was transferred through a sale deed. The CIT(A), however, ruled in favor of the assessee citing the judgment of the Hon'ble Apex Court in a similar case. The Revenue appealed to the Tribunal challenging this decision.

The Tribunal considered the arguments of both parties. The Revenue contended that since the land was not compulsorily acquired but sold through a negotiated settlement, the benefit of section 10(37) should not apply. On the other hand, the assessee argued that the character of acquisition remained compulsory as the entire procedure under the Land Acquisition Act was followed, and only the price was determined through negotiation. The Tribunal referred to the judgment of the Hon'ble Apex Court in a similar case, where it was held that even if the sale price is fixed through negotiation, the character of acquisition remains compulsory if the procedures under the Land Acquisition Act are followed.

Based on the above interpretation of the law and the precedent set by the Hon'ble Apex Court, the Tribunal held that the acquisition of the urban agricultural land in this case was indeed a compulsory acquisition. Consequently, the assessee was deemed entitled to the benefit under section 10(37) of the Income Tax Act. Therefore, the appeal filed by the assessee was allowed, overturning the decision of the Assessing Officer and upholding the ruling of the CIT(A).

In conclusion, the Tribunal's decision was based on the interpretation of the Land Acquisition Act procedures and the application of relevant legal principles as established by the Hon'ble Apex Court in similar cases. The judgment clarified that the mode of fixing the sale price through negotiation does not alter the compulsory nature of the acquisition if the statutory procedures are duly followed.