TaxTMI 
TaxTMI 
2025 (6) TMI 1449
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....preciating the facts of the case properly and is not justified. 2. The appellant reserves the right to amend, modify or add any of the ground/s of appeal." 2. At the threshold, we may herein observe that the present appeal involves a delay of 166 days. After considering the application filed by the Ld. Authorized Representative (for short 'AR') seeking condonation of delay of 166 days involved in filing of the present appeal a/w. her "affidavit" dated 19.06.2024, we are of the view that as there are bonafide reasons leading to the impugned delay involved in filing of the present appeal, therefore, the same merits to be condoned. 3. Succinctly stated, the assesse had e-filed her return of income for A.Y.2017-18 on 27.02.2018 declaring an income of Rs .4,02,050/-. Subsequently, the case of the assesse was selected for scrutiny assessment u/s. 143(2) of the Act for verifying two issues viz. (i) claim of large exempt income; and (ii) capital gains/loss on sale of property. 4. During the course of assessment proceedings, the A.O observed that the assessee had received compensation of Rs. 72,79,552/- on acquisition of two pieces of lands at Village: Bhatagaon, Tehsil : ....
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....peals) was constrained to proceed with and dispose off the appeal after considering the merits of the case vide an ex-parte order, observing as under: "6. Even on merits, a decision based on material available on record, would go against appellant. 6.1 Ld. JAO has opined on the issues as follows in assessment order, relevant extract of the assessment order is reproduced hereunder for ease of reference: "6. As per sub-section 42A of section 2 of the Income tax Act, 1961 "short-term capital asset means a capital asset held by an assessee for not more than thirty-six months immediately preceding the date of its transfer". In the present case of the assessee the land bearing khasra no. 1088/3 was purchased on date 10-09-2014 and transferred on 12-07-2016 i.e after a period of 22 months 2 days, similarly the other land bearing khasra no. 1088/2 was purchased on date 24-07-2014 and transferred on 12-07-2016 Le after a period of 23 months 18 days. Thus, from the above it is clear that none of the two pieces of land had been held by the assessee, prior to its transfer, beyond the period of 36 months hence the gain arising out of the above transfer(acquisition by ....
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.... income-tax, stamp duty and fees.-No income tax or stamp duty shall be levied on any award or agreement made under this Act, except under section 46 and no person claiming under any such award or agreement shall be liable to pay any fee for a copy of the same. SECTION 46 of RFCTLAAR, 2013 46. Provisions relating to rehabilitation and resettlement to apply in case of certain persons other than specified persons.-(1) Where any person other than a specified person is purchasing land through private negotiations for an area equal to or more than such limits, as may be notified by the appropriate Government, considering the relevant State specific factors and circumstances, for which the payment of Rehabilitation and Resettlement Costs under this Act is required, he shall file an application with the District Collector notifying him of- (a) intent to purchase; (b) purpose for which such purchase is being made; (c) particulars of lands to be purchased. (2) It shall be the duty of the Collector to refer the matter to the Commissioner for the satisfaction of all relevant provisions under this Act related to rehabilitation and resettleme....
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....ompulsory acquisition) of such agricultural land is not taxable. Finance (No. 2) Act, 2004 inserted section 10(37) in the Act from 1-4-2005 to provide specific exemption to the capital gains arising to an Individual or a HUF from compulsory acquisition of an agricultural land situated in specified urban limit, subject to fulfilment of certain conditions. Therefore, compensation received from compulsory acquisition of an agricultural land is not taxable under the Act (subject to fulfilment of certain conditions for specified urban land). 2. The RFCTLARR Act which came into effect from 1st January, 2014, in section 96, inter alia provides that income-tax shall not be levied on any award or agreement made (except those made under section 46) under the RFCTLARR Act. Therefore, compensation received for compulsory acquisition of land under the RFCTLARR Act (except those made under section 46 of RFCTLARR Act), is exempted from the levy of income-tax. 3. As no distinction has been made between compensation received for compulsory acquisition of agricultural land and non-agricultural land in the matter of providing exemption from income-tax under the RFCTLARR Act, the exe....
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....r any law, or a transfer the consideration for which is determined or approved by the Central Government or the Reserve Bank of India; (iv) such income has arisen from the compensation or consideration for such transfer received by such assessee on or after the 1st day of April, 2004. Explanation.- For the purposes of this clause, the expression "compensation or consideration includes the compensation or consideration enhanced or further enhanced by any court, Tribunal or other authority; ......................... 55. Clauses (37) and (38) inserted by the Finance (No. 2) Act, 2004, w.e.f. 1-4-2005. For relevant case laws and Circular No. 36/2016, dated 25-10-2016 [Taxability of compensation received by land owners for land acquired under Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (RFCTLARR ACT)J, see Taxmann's Master Guide to Income- tax Act. It is averred that the transaction is exempt under section 10(37) of IT Act, 1961 i.e., land is agricultural in nature. Against the same a definitive conclusion has been reached by Ld.JAO in para 5 of the assessment order regarding ....
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.... (b) are considered to have been met i.e. the land in question is situated beyond 8 kilometers from the local limits of any municipality or cantonment board and also the area in which the said land is situated does not have population of more than 10,000. The only question which remains to be adjudicated in the present case is whether the land sold by the assessee was an agricultural land and whether it falls outside the definition of capital asset. 15. The Supreme Court in CIT v. Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466 had held that 'agriculture' in its root sense mean 'agar', a field and 'culture', i.e. cultivation of a field. 'Agriculture' implies expenditure of human skills and labour upon land. After exhaustively discussing the various cases dealing with the subject, the Apex Court held that agriculture Involved "basic operations", such as tilling of land, sowing of seeds, planting etc. and "subsequent operations", such as weeding. tending, pruning, cutting, harvesting and rendering the produce fit for market. 16. Further, the Hon'ble Gujarat High Court in Siddharth J. Desai (supra) had laid down 13 tests to determine ....
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....hich the land was sold and whether the owner would have ever sold the land valuing it as a property yielding agricultural produce on the basis of its yield?" 17. The Hon'ble Gujarat High Court further held that at the risk of repetition, we may mention that not all of these factors would be present or absent in any case and that in each case one or more of those factors may make appearance and that the ultimate decision will have to be reached on a balanced consideration of the totality of circumstances. 18. The Supreme Court in Smt. Sarifabibi Mohmed Ibrahim (supra) had laid down as under:- "Whether a piece of land is agricultural land or not is essentially a question of fact. Several tests have been evolved in decisions of the Supreme Court and the High Courts, but all of them are more in the nature of guidelines. The question has to be answered in each case, having regard to the facts and circumstances of that case. There may be factors both for or against a particular point of view. The court has to answer the question on a consideration of all of them a process of evaluation. The inference has to be drawn on a cumulative consideration of all the ....
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.... the land had been put to use for agricultural purposes for a reasonable span of time prior to the relevant date and further as to whether on the date of the transfer the land in question was intended to be put to use by the purchaser for agricultural purposes for a reasonable span of time in future' 22. The judicial precedents have laid down that the expression 'agricultural land" though not defined under the Income-tax Act, but would be applicable to such land where the actual user of the land was for agricultural purposes in recent times. Just because the land was used for agricultural purposes in the remote past or it continues to be assessed in the land revenue records as agricultural land is not decisive to determine the nature of land being agricultural land. Where the land has not been put to use for agricultural purposes for reasonable span of time prior to the date of its transfer, the land in question cannot be held to be agricultural land. The onus was upon the assessee to establish its case of having cultivated the land in recent past and in the absence of assessee having discharged its onus and merely because the land is recorded as agricultural land ....
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....r: "13. We have thoughtfully considered the issue in the present appeal. Before proceeding any further, we deem it fit to cull out the provisions of the RFCTLARR Act, 2013, which would have a strong bearing on the adjudication of the issue. Section 96, Section 105, and Section 113 of the RFCTLARR Act, 2013 reads as under: "Section 96: Exemption from income tax, stamp duty, and fees No income tax or stamp duty shall be levied on any award or agreement made under this Act, except under section 46 and no person claiming under any such award or agreement shall be liable to pay any fee for a copy of the same. Section 105 : (1) Subject to sub-section (3), the provisions of this Act shall not apply to the enactments relating to land acquisition specified in the Fourth Schedule. (2) Subject to sub-section (2) of section 106, the Central Government may, by notification, omit or add to any of the enactments specified in the Fourth Schedule. (3) The Central Government shall, by notification, within one year from the date of commencement of this Act, direct that any of the provisions of this Act relating to the determination of compensation....
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....es that subject to sub-section (3) of Section 105, the provisions of this Act shall not apply to the enactments relating to land acquisition specified in the "Fourth Schedule." Ostensibly, the exception carved out in sub-section (3) of Section 105 of the Act is in the context that the provisions of RFCTLARR Act, 2013, relating to the determination of compensation in accordance with the First Schedule, rehabilitation and resettlement specified in the Second and Third Schedule, to the extent the same are beneficial to the affected families whose lands had been acquired, would apply to the cases of land acquisition under the enactments specified in the "Fourth Schedule"; or shall apply with such exceptions or modifications that do not reduce the compensation or dilute the provisions of this Act relating to compensation or rehabilitation and resettlement as may be specified in the notification, as the case may be. In sum and substance, the only exception to the applicability of the enactments relating to the land acquisitions under the enactments specified in the "Fourth Schedule" can be traced in sub-section (3) to Section 105 of the RFCTLARR Act, 2013), which too had been made depend....
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....and Infrastructure amenities in accordance with the Third Schedule. Accordingly, the benefit of Section 96 of the RFCTLARR Act, 2013 exempting income tax on the award would not be applicable for cases in which land acquisition is undertaken as per the enactments specified in the Fourth Schedule to the said Act. However, the provisions of Section 10(37) of the Income Tax Act, 1961 would continue to exempt any compensation or consideration received on transfer of agricultural land by way of compulsory acquisition subject to conditions specified therein. 5. The issue regarding taxability of compensation received on compulsory acquisition of agricultural and non agricultural land as per the provisions of the RFCTLARR Act, 2013 has already been clarified vide circular No.36/2016 dated 25.10.2016 of CBDT." (emphasis supplied by us) 16. Based on our observations above, it is clear beyond doubt and supported by the OM dated 06.06.2019 of the CBDT, New Delhi, that no provisions of the RFTCLARR Act, 2013, except for provisions relating- to determination of the compensation in accordance with the First Schedule, rehabilitation and resettlement in accordance with the....
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....ceived under RFCTLARR Act, 2013 in light of the overriding effect of Section 105(1)(5) r.w. OM dated 06.06.2019 issued by the CBDT would not be available to the assesse company. 21. Apropos reliance placed by the Ld. AR on order passed by the Ministry of Rural Development, i.e., S.O No.2368(E) dated 28.05.2015, wherein in the exercise of powers conferred by sub-section (1) of Section 113 of the RFCTLARR Act, 2013 (30 of 2013), the Central Government to extend the benefits to the land owners under the RFCLARR Act, 2013 to similarly placed owners whose lands were acquired under the 13 enactments specified in "Fourth Schedule," had passed an order i.e., the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Removal of Difficulties), order 2015 w.e.f. 01.09.2015. As per the order mentioned above, the provisions of the RFCTLARR Act, 2013 relating to the determination of compensation in accordance with the First Schedule, rehabilitation and resettlement in accordance with the Second Schedule, and infrastructure amenities in accordance with the Third Schedule applied to all the cases of land acquisition specified in "Fourth Schedule"....
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....rs under the said Ordinance; And whereas, the Central Government considers it necessary to extend the benefits available to the land owners under the KHU'ILAKK Act to similarly placed land owners whose lands are acquired under the 13 enactments specified in the Fourth Schedule; and accordingly the Central Government keeping in view the aforesaid difficulties has decided to extend the beneficial advantage to the land owners and uniformly apply the beneficial provisions of the RFCTLARR Act, relating to the determination of compensation and rehabilitation and resettlement as were made applicable to cases of land acquisition under the said enactments in the interest of the land owners; Now, therefore, in exercise of the powers conferred by sub-section (1) of Section 113 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (30 of 2013), the Central Government hereby makes the following Order to remove the aforesaid difficulties, namely :- 1. (1) This Order may be called the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Removal of Difficulties) O....
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.... 22. Apropos the reliance placed by the Ld. AR on the CBDT Circular No. 36/2016 dated 25th October 2016, it would be relevant to cull out the same, as under: Circular No. 36/2016 Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes ITA.II division, North Block, New Delhi, the 25th of October, 2016 Subject: Taxability of the compensation received by the land owners for the land acquired under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 ('RFCTLAAR Act')-reg .- Under the existing provisions of the Income-tax Act, 1961 ('the Act'), an agricultural land which is not situated in specified urban area, is not regarded as a capital asset. Hence, capital gains arising from the transfer (including compulsory acquisition) of such agricultural land is not taxable. Finance (No. 2) Act, 2004 inserted section 10(37) in the Act from 01.04.2005 to provide specific exemption to the capital gains arising to an Individual or a HUF from compulsory acquisition of an agricultural land situated in specified urban limit, subject to fulfilment ....
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....sation in the Income Tax Act, 1961. 23. Once again, the Ld. AR, without appreciating the context and issue which the CBDT had clarified in its Circular No.36/2016, had wrongly pressed the same into service. As observed by us hereinabove, the CBDT Circular No.36/2016 (supra) had clarified that exemption from income tax provided in Section 96 of the RFCTLARR Act, 2013 would be equally applicable on the compensation received on compulsory acquisition of agricultural land and non-agricultural land. Also, it was further clarified that if the compensation received in respect of award or agreement which has been exempted from levy of income tax vide section 96 of the RFCTLARR Act, 2013 would also not be taxable under the provision of Income Tax Act, 1961, even if there is no specific provision of exemption for such compensation in the Income Tax Act, 1961. Nothing is discernible from the CBDT Circular No.36/2016 (supra) from where it would be gathered that compensation received by the assessee company on the acquisition of its lands under enactments relating to land acquisition specified in the "Fourth Schedule" would be eligible for tax exemption u/s. 96 of the RFCTLARR Act, 201....
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....ts and issues in the case mentioned above are distinguishable as against those before us in the present appeal, the same, thus, would not carry the claim of the assesse company any further. (B) ITO, Ward-4(5), Patna Vs. Shri Suresh Prasad, ITA No.210/PAT/2018 dated 04.08.2022, ITAT-Patna 27. Once again, we find that the order of the Tribunal mentioned above being distinguishable on facts and issues involved would not assist the case of the assessee before us. Ostensibly, the Tribunal had observed that compensation received in respect of award or agreement which has been exempted from levy of income tax vide section 96 .of the RFCTLARR Act, 2013 shall not be taxable under the provisions of the Income Tax Act, 1961, even if there is no specific provision of exemption for such compensation in the Income Tax Act, 1961. Also, it was clarified that no distinction had been carved out for claiming tax exemption in Section 96 of the RFCLARR Act, 2013, in the backdrop of the nature of the land, i.e., agricultural land or non-agricultural land. 28. As the facts and issues involved in the present appeal are distinguishable compared to those involved in the case menti....
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....erson a right to claim u/s 96 of the RFCTLARR Act, 2013 exemption from income tax of the compensation so received, had not been looked into in the case mentioned above by the Tribunal. 32. As the issue involved in the present appeal before us had not been looked into by the Tribunal as observed hereinabove, the same, thus, would not support the assessee's claim. (E) Mattapalli Ram Kumar Vs. ACIT, Circle-1(1), Rajamundry, ITA No.131/Viz/2021 dated 16.03.2022 33. Relying on the CBDT Circular No.36/2016 dated 25.10.2016, it was observed by the Tribunal that income tax should not be levied on any award or agreement made (except those made under section 46) of the RFCTLARR Act, 2013. It was further observed that compensation received on compulsory land acquisition under the RFCTLARR Act, 2013, was exempted from the income tax levy. 34. Once again, as the issue involved in the present appeal before us, i.e., whether or not, as per Section 96 r.w Sec. 105(1) of the RFCTLARR Act, 2013, exemption from levy of income tax would also be available w.r.t compensation received by an assessee on compulsory acquisition of its lands under the 13 enactments spe....
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....able on facts/issues involved, thus would not assist the case of the assessee company. 39. Apropos the reliance placed by the Pr. CIT on the order of the ITAT, Agra, in the case of Shri Jagdish Arora Vs. ITO, Ward-1(2), Agra, ITA No.58 & 59/Agr/2019 dated 14.06.2021, we are of the considered view that the absence of notification issued by the Central Government in terms of sub-section (3) to Section 105 of the RFCTLARR Act, 2013, would though have a bearing on the application of the provisions of the Act relating to the determination of compensation in accordance with First Schedule, rehabilitation and resettlement in accordance with Second and Third Schedule, in the case of a person whose lands are acquired under the 13 enactments specified in the "Fourth Schedule"; but the same cannot be so construed that it confers any right of exemption under Section 96 of the RFCTLARR Act, 2013 to an assessee from levy of income tax on the compensation received by him on acquisition of his land under the 13 enactments specified in the "fourth schedule". 40. We, thus, in terms of our observations above, are of the considered view that, as observed by the Pr. CIT, and rightly s....