TaxTMI 
TaxTMI 
2021 (8) TMI 904
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....ithout appreciating that a number of opportunities were given to the assessee by the A.Oto furnish evidencesin support of his claim. 3. That on the facts and in the circumstances of the case Ld. CIT(A) has erred in law and on fact of the case in not appreciating that the SDM has mentioned in his report that at the time of the award there were no crops were standing on the Land in question but building structures and tree come in the area under acquisition. 4. That on the facts and in the circumstances of the case Ld. CIT(A) has erred inlaw and on fact of the case in allowing total exemption of Rs. 7,48,60,293/- u/s 10(37) whereas the assesse has claimed only Rs. 6,32,89,013/- exempt u/s 10(37) in the computation filed by him during the assessment proceedings and he had claimed Rs. 1,10,00,000/- as exempt u/s 54B of the Income Tax Act, 1961. 5. It is prayed that the order of the Ld. Commissioner of Income Tax (Appeals) be set aside and that of the Assessing Officer be restored. 6. The appellant requests for leave to add or amend or alter the grounds of appeal before the appeal is heard and disposed off." 2.0 The brief facts of the case are that the assessee is an individual....
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....ssing Officer further inquired from the assessee as to why compensation received by the assessee on the acquisition of Capital assets be not taxed as a capital gain. 2.3 In response to the query of AO,the Authorized Representative has submitted that as per Section 2(14)(iii) of the Income Tax Act, 1961, compensation received for acquisition of Land received by the assessee is exempt from taxation. He hadalso drawn the attention of the Assessing Officer to Section 10(37) of the Income Tax Act, on the strength of section 10(37) it waspleaded Land before the acquisition was used for agriculture purposes, as it clear from the certificate issued by the Revenue Authority. The Assessing Officer was not convinced with the submissions of the assessee, and as such he had made the addition of Rs. 7,78,48,60,293/- towards the long term capital gain and had also added the amount of Rs. 9,47,663/- towards income earned by the assessee on the FDR deposited with the financial institution namely Jalandhar Central Co-operative Bank Ltd., Mansurpur. 3.0 Feeling aggrieved, the assessee filed an appeal before the Ld. CIT(A), and the Ld,.CIT(A) had granted the relief to the assessee and had deleted th....
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....Land acquired Agriculture or Commercial, 3. Whether compensation given on commercial or Agricultural rate 4. How much compensation given to Suchasingh 5. Furnish Copy of Compensation 7) SDM Phillaur sent reply ta A.O. on 17/11/2016 (Copy of letter enclosed as per annexure-3) which was seen by A.O. on 18/11/2016 as under; 1. 22 kanal 15 nutrias 2 sarsahi of village Kutbewal acquired for six laning project of Such a Singh. 2. Acquired Land was Agriculture at the time of acquisition. 3. Compensation was paid on agriculture rate. 4. Total compensation Rs. 7,57,91,413 was paid. 5. No copy of compensation issued to Such a Singh. So, on 18/11/2016 she already knew that Land acquired was agriculture and compensation was paid on agriculture rate but A.O. totally ignored this relevant evidence justifying claim of exemption u/s 10(37) of I.T. Act 1961. 8.Also on 01/12/2016 using powers u/s 133(6) to verify claim of exemption of capital gain by assessee A.O. asked Tehsildar Goraya to furnish. 1. Whether acquired Land of Such a Singh in Municipal limit if not how far away. 2. Furnish Khasra Girdawari of acquired Land for the year 2008-2009 to 2012-2013 (Copy of letter en....
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.... of LAO that no crop was standing at the time of award. Award was passed in year 2013 and Land was acquired in year 2010 By virtue of sub sec (2) Section 3D of NHAI Act it vested in central govt on 04/08/2010.So what was required to see was cultivation by appellant during year 2008 to year 2010. Moreover it is matter of common knowledge once Land is acquired owners are allowed to harvest the crop standing on it. 16) Land of appellant was compulsorily acquired by National Highway Authority, It was agriculture land under cultivation of appellant himself for more than two years, So, provision of sec 10(37) of Income Tax Act were applicable. 17) Appellant was also under bonaftde belief that Land is outside municipal commitle boundary so exempt from capital gain tax. So, there was nothing illegal in mentioning eligibility of both deductions under income tax act. 18) It is totally wrong on part of A.O. to observe that by claiming deduction u/s 54 (b) f exemption u/s 10(37) becomes redundant. Both deductions act in separate field and require independent specific conditions to be satisfied for claiming them, 10(37) is available when Land is compulsorily acquired by Govt .sectio....
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....the Revenue is required to be allowed. 5.0 Per contra, the Ld. Authorized Representative (AR) has drawn our attention to the Gazette of India dated 19.02.2010 wherein it is mentioned that the Notification under section 3(a)(iii) of the National Highway Authority Act was issued on 10.03.2010 and after the issuance of the Notification on 10.03.2010 the competent authority called the objection, however, the objection raised by the assessee were dismissed and accordingly a declaration u/s 3D(i) was issued whereby the Land stood vested in the NHAI. Accordingly, the assessee was granted the compensation after passing the award, accordingly the Land was acquired by the NHAI on 19.07.2010 and, therefore, the compensation was granted to the assessee has mentioned in the assessment order 2.40 crore per acre for the total sum of Rs. 7,57,51,413/- was paid to the assessee. It was submitted that the action on the part of the CIT(A) is correct. A.R. had also filled written statement in support of order passed by the CIT(A) , we are reproducing herein for the sake of record : 1. Copy of the Gazette of India dtd. 19-07-2010 running into 67 pages is enclosed. At page 1 of the Gazette date of pub....
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....ing from F.Y. 2008-09 to 2012-13 which shows Land was producing agricultural products from F.Y. 2008-09 to F.Y. 2012-13. 6.0 We have heard the rival submissions and perused the material on record. The undisputed facts are that the Land was acquired pursuant to the award passed by the NHAI u/s 3D of the Income Tax Act, 1961. It is also not disputed declaration was issued by authority u/s 3A(iii) of the NHAI Act on 10.03.2010 and thereafter, Land stood vested in terms of NHAI. It is also not disputed that the compensation was granted to the assessee for an amount of Rs. 7,57,91,413/- @ 2.5 Crore per acre. 6.1 CIT(A), had passed the impugned order in a cryptic stereotype manner without discussing how the acquired Land falls within the purview of section 10(37) of the Income Tax Act. We may reproduce the finding recorded by the CIT(A), in paragraph 4.10 onwards to the following effect: "4.10 Having considered the material available on record, I find that first issue to be taken up is with regard to claim of exemption u/s 10(37), for which it is necessary to reproduce the relevant provisions - 10(37) in the case of an assessee, being an individual or a Hindu undivided family, any ....
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....on. Therefore, the fact that appellant has also claimed deduction u/s 54B of the I.T. Act does not mean that exemption of income, if it is available under other section can be denied. Accordingly, I hold that appellant is entitled to the claim of exemption of income u/s 10(37) of the I.T. Act. Thus, the issue of claim of deduction u/s 54B of the I.T. Act becomes academic and hence is not taken up for consideration." 6.2 There was no discussion in the order of the CIT(A), as to how the conditions provided under section 10(37) were fulfilled in the assessee's case. The moot question before us is whether the acquired Land fallswithin the purview of 10(37) of the Income Tax Act or not. The CIT(A), in paragraph 4.11 of his order at rightly captured conditions required to fulfilled for bring Land within the purview of section 10(37) of the Act. 6.3 The Ld. CIT(A) has rightly held that the Land was the land reference under section 2(14) (iii) of the Act as it is situated within 650 m of the Municipality limit. Further the CIT appeal had rightly held that the Land was acquired by way of compulsory acquisition under National Highway Authority of India act. 6.4 However, the CIT(A) h....
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....ible to tax. The capital gain tax would be leviable on the said compensation received as the land would continue to be the capital asset within the meaning of section 45 of the Income Tax Act. In our opinion, the assessee is liable to pay the capital gain tax on the compensation amount received by the assessee on the land that was not under cultivation. Undoubtedly, the Land other than 8 kanal 30 marlas was the capital asset within the meaning of section 2 (14)(iii) read with section 10(37) r/w section 45 of the Income Tax Act and therefore, any capital gain arising to the assessee on the sale of the land land would be the subject matter of the capital gain. 6.8 In view of the above, the ground raised by the Revenue is required to be partly allowed, and the matter is remanded back to the file of AO with the above said observation and following directions: (i) To reduce the 8 kanal 30 marla from the total Land of 22 kanal 15 marla which are acquired by the NHAI (ii) To compute the compensation at Rs. 2.4 Crore per acre on cultivated land of 8 Kanal 30 marlas. AO is directed to give Section 10(37) benefit on the said compensation by not treating it as a capital gain. (iii) To....