Land acquisition compensation exemption extends to National Highways Act awards when RFCTLARR compensation rules apply.

Compensation for compulsory acquisition of land under the National Highways Act, 1956 is treated as exempt from income-tax where the compensation is determined under the RFCTLARR Act framework. The text explains that sections 96, 103, 105 and 113, read with the 28.08.2015 removal of difficulties order under section 113(1), extend the Act's beneficial compensation provisions to Fourth Schedule enactments. It also notes that the exclusion in section 105 does not defeat the exemption when the compensation itself is regulated through that framework. The result stated is that section 96 applies to such compensation, and it is not liable to income-tax.

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Issues: Whether compensation received for compulsory acquisition of land under the National Highways Act, 1956 is exempt from income-tax under section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

Analysis: The compensation was paid for acquisition of land by the National Highways Authority of India under the National Highways Act, 1956, which is listed in the Fourth Schedule to the RFCTLARR Act. The judgment read sections 96, 103, 105 and 113 together with the 28.08.2015 removal of difficulties order issued under section 113(1), and treated that order as extending the beneficial provisions of the RFCTLARR Act relating to determination of compensation to acquisitions under enactments in the Fourth Schedule. Relying on the constitutional concern against discriminatory treatment of similarly placed landowners and the Supreme Court decisions recognising parity in compensation under the National Highways regime, the Court held that once compensation is determined under the RFCTLARR framework, the exemption from income-tax in section 96 also follows. The exclusion in section 105 was held not to defeat the exemption where the compensation itself is regulated by the RFCTLARR Act through the 2015 order.

Conclusion: Section 96 of the RFCTLARR Act applies to compensation received for acquisition under the National Highways Act, 1956, and the compensation is not exigible to income-tax.

Ratio Decidendi: Where compensation for acquisition under a Fourth Schedule enactment is made payable by applying the RFCTLARR Act's compensation framework through the removal of difficulties order, the statutory exemption from income-tax attached to awards or agreements under that Act extends to such compensation as well.

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