10(37) of the Income Tax Act

[Bayyareddy DK]

Sir,

My client urban agricultural land compulsorily acquired by the Government of Karnataka on 24/1/1996 and approved cash compensation and concessional price site allotment of one site for every one acre of land acquired. Cash award compensation received on 2/4/1998 & 28/8/2008. Site allotted on 5/6/2014. Assessee deposited to Bangalore development authority sum of Rs. 30 lakhs on 5/6/2014 to get the two sites at concessional value. Government registered two sites on 25/04/2017 in assessee name. Assessee sold the two sites at guidance value of rs. 1.53 crore on June 2017.

My query is

01. Compulsory acquisition of urban agricultural land in exempted under Income tax Act?

02. What will be the cost of acquisition for sites sold on June 2017?.

03. Can I adapt guidance value of Rs. 1.53 cr as cost of acquisition (treating it has enhanced compensation) as this is the value in April 2017?.

Kindly advice.

AI Summary

Government Land Acquisition Taxable, Not Exempt Under Section 10(37); Actual Cost, Not Guidance Value, Applies. A user inquired about the tax implications of urban agricultural land acquired by the government, receiving cash compensation and sites at a concessional price. The user sought advice on whether the acquisition is exempt under the Income Tax Act, the cost of acquisition for sites sold in 2017, and whether the guidance value can be used as the cost of acquisition. A respondent clarified that compulsory acquisition is taxable and not covered under section 10(37) of the Income Tax Act. The cost of acquisition should be the actual amount paid, Rs. 30 lakhs, and not the guidance value. The case of B.C. Srinivasa Shetty does not apply here.