Land acquisition compensation exemption and unsold flats addition deleted where prior year precedent and statutory bar applied.

Compensation received for compulsory acquisition of land was treated as exempt where the acquisition proceedings fell within the 2013 land acquisition regime, section 96 barred income-tax on such awards except those covered by section 46, and CBDT Circular No. 36 of 2016 clarified that the exemption applies under the Income-tax Act even without a separate exempting provision. On unsold flats, the addition for deemed income from house property was deleted because the same issue had already been decided in the assessee's own case for an earlier year and no distinguishing feature was shown.

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Issues: (i) Whether compensation received for compulsory acquisition of land was taxable under the Income-tax Act, 1961, or exempt in view of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 and the CBDT circular; (ii) Whether the addition on account of deemed income from house property in respect of unsold flats could be sustained.

Issue (i): Whether compensation received for compulsory acquisition of land was taxable under the Income-tax Act, 1961, or exempt in view of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 and the CBDT circular.

Analysis: The compensation arose from an award passed after the repeal of the Land Acquisition Act, 1894, and the acquisition proceedings were held to fall within the regime of the 2013 Act. On the facts, the proceedings were covered by the saving structure of section 24 of the 2013 Act, and the award was treated as one made under the new enactment despite the reference to the old Act in the award title. The Court further held that section 96 of the 2013 Act bars levy of income-tax on such awards, except those covered by section 46, and that CBDT Circular No. 36 of 2016 binds the revenue authorities and clarifies that compensation exempted under section 96 is not taxable under the Income-tax Act, 1961 even without a specific exemption provision therein.

Conclusion: The compensation was not taxable and the issue was decided in favour of the assessee.

Issue (ii): Whether the addition on account of deemed income from house property in respect of unsold flats could be sustained.

Analysis: The identical issue had already been decided in the assessee's own case for the earlier assessment year, where the co-ordinate bench had deleted the addition. No distinguishing feature was shown to warrant departure from that view.

Conclusion: The addition was rightly deleted and the issue was decided in favour of the assessee.

Final Conclusion: The revenue's appeal failed in full, and the order granting relief to the assessee was sustained.

Ratio Decidendi: Where land acquisition proceedings culminate in an award under the 2013 acquisition regime, section 96 of that Act exempts the compensation from income-tax and the binding CBDT circular extends that exemption under the Income-tax Act, 1961; a repetitive addition on unsold stock cannot survive where the issue is already covered in the assessee's own case.

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