Land acquisition compensation exemption under the 2013 law is limited; Fourth Schedule acquisitions and section 10(37) relief failed.

Compensation received on compulsory acquisition under the NHAI Act, 1956 was analysed against section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. The Tribunal noted that section 105, read with the CBDT clarification and the Removal of Difficulties Order, limits the beneficial scheme for Fourth Schedule enactments and does not create a blanket income-tax exemption for such acquisitions; the section 96 claim was therefore rejected. The alternative exemption under section 10(37) of the Income-tax Act also failed because its conditions are confined to an individual or HUF and require qualifying agricultural land, which was not established.

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Issues: Whether compensation received on compulsory acquisition of land under an enactment covered by the Fourth Schedule to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 was exempt from income-tax under section 96 of that Act, and whether exemption under section 10(37) of the Income-tax Act, 1961 was available.

Analysis: The compensation arose from acquisition under the NHAI Act, 1956, an enactment falling within the Fourth Schedule of the 2013 Act. Section 96 of the 2013 Act grants exemption from income-tax on awards or agreements made under that Act, but the statutory scheme of section 105, read with the CBDT clarification and the Removal of Difficulties Order, limits the application of the beneficial provisions to compensation and rehabilitation matters and does not extend a blanket income-tax exemption to acquisitions under Fourth Schedule enactments. The Tribunal treated the earlier decision relied upon by the assessee as distinguishable and followed the view that section 96 exemption is unavailable for such acquisitions. The alternative claim under section 10(37) also failed because that exemption is confined to an individual or Hindu undivided family and requires satisfaction of the statutory conditions relating to agricultural land, which were not established on record.

Conclusion: The assessee was not entitled to exemption from tax on the compensation received, and the addition treating the receipt as taxable capital gain was sustained.

Final Conclusion: The compensation from acquisition of the land was held taxable, and the assessee's appeal was dismissed.

Ratio Decidendi: Exemption under section 96 of the 2013 land acquisition law does not extend to compensation received for acquisitions made under Fourth Schedule enactments, and section 10(37) applies only where its statutory conditions are strictly satisfied.

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