Land acquisition compensation exemption upheld where payment followed the cut-off date under the 2013 acquisition regime.

Compensation received for land acquired under the National Highways Act, 1956 was held eligible for exemption under section 96 of the 2013 land acquisition regime where the award was made before 31.12.2014 but payment was made only on 19.05.2015. The Tribunal distinguished earlier Revenue-supported decisions on their facts, noting that those cases involved both award and payment before the relevant cut-off. Applying the later judicial position and the CBDT circular, it accepted that the exemption could extend to acquisitions initiated under the National Highways Act when compensation remained unpaid beyond the cut-off. The addition as long-term capital gains was therefore deleted.

---

---

Issues: Whether compensation received for land acquired under the National Highways Act, 1956 was exempt from tax under section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, and whether the addition as long-term capital gains was sustainable.

Analysis: The land was acquired under the National Highways Act, 1956, the award was made before 31.12.2014, but the compensation was actually paid only on 19.05.2015. The Tribunal distinguished the contrary view taken in earlier cases relied upon by the Revenue on the facts, noting that those matters involved award and payment before the relevant cut-off. It also relied on the later judicial position that, where compensation had not been paid by 31.12.2014, the benefit of the 2013 acquisition regime could extend to such cases even if acquisition proceedings had been initiated under the National Highways Act, 1956. On that factual matrix, the assessee was treated as eligible for exemption under section 96 read with the CBDT circular.

Conclusion: The addition towards long-term capital gains was not sustainable and the exemption claim was accepted.

Final Conclusion: The assessee succeeded on the sole substantive issue and the assessed capital gain was deleted.

Ratio Decidendi: Where land is acquired under the National Highways Act, 1956 but the compensation remains unpaid beyond the relevant cut-off and is received after the 2013 acquisition regime became operative for such cases, exemption under section 96 of the 2013 Act cannot be denied merely because the acquisition originated under the National Highways Act.

---