AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 1381
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....as admitted for hearing on 6-8-2025 by formulating the following substantial question of law:- "Whether, on the facts and circumstances of the case and in law, the learned Income Tax Appellate Tribunal (ITAT) was justified in dismissing the appeal of the appellant by upholding an addition of Rs. 73,58,113/- received as compensation against the acquisition of land by National Highway Authority of India under the National Highways Act, 1956 as exigible to tax which is contrary to Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013?" 3. The aforesaid question of law arises in following factual backdrop:- 4. The assessee/appellant herein had received compensation of Rs. 73,58,113/- on account of compulsory acquisition of his land from National Highways Authority of India (NHAI) under the National Highways Act, 1956 (for short, 'the Act of 1956'). Thereafter, the assessee has filed his return of income for the assessment year 2017-18 on 7-11-2017 declaring his income as Rs. 87,94,860/- and shown the income of Rs. 73,58,113/- to be taxable income under the head of Short-Term Capital Gains of Rs. 53,08....
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....and acquisitions under the Act of 1956 being enactments specified in the Fourth Schedule to the RFCTLARR Act are precluded from the operation of the RFCTLARR Act by virtue of the provisions contained in Section 105(1) of the RFCTLARR Act and accordingly, the exemption prescribed under the provisions of Section 96 of the RFCTLARR Act would not apply, is squarely covered against the assessee in light of its earlier decision in Heritage Buildcon Pvt. Ltd. (supra). 6. Feeling aggrieved and dissatisfied against the order of the ITAT affirming the order of the CIT(A), the assessee has preferred this appeal in which substantial question of law has been formulated which has been catalogued in the opening paragraph of this judgment. 7. Mr. Nikhilesh Begani, learned counsel appearing on behalf of the appellant herein/assessee, would submit that the ITAT is absolutely unjustified in dismissing the appeal relying upon its own decision in Heritage Buildcon Pvt. Ltd. (supra) holding that the provision contained in Section 105(1) of the RFCTLARR Act makes all the provisions of the Act inapplicable to the land acquisitions made under the enactments specified in the Fourth Schedule of the sai....
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....TLARR Act and the Act of 1956 is included in the Fourth Schedule. He would further submit that as per Section 105(3) of the RFCTLARR Act, only the provisions relating to determination of compensation (First Schedule), rehabilitation and resettlement (Second & Third Schedules) apply to acquisitions under such Acts and exemption under Section 96 does not extend to them. He would also submit that the Central Board of Direct Taxes (CBDT) issued Office Memorandum dated 6-6-2019 clarifying the position that for land acquisition under enactments in the Fourth Schedule (including the Act of 1956), only the First, Second & Third Schedules of the RFCTLARR Act apply and exemption under Section 96 does not apply, as such, the CBDT has categorically clarified that compensation received for land acquisition under the Act of 1956 is taxable. He would lastly submit that the assessee's land was acquired under the Act of 1956, which is a special enactment specifically excluded from the general exemption under Section 96 of the RFCTLARR Act and as such, Section 96 would not apply to such acquisitions and if the assessee's claim is accepted, it would render the express exclusion under Section 105 otio....
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....e liable to pay any fee for a copy of the same." Section 103 "103. Provisions to be in addition to existing laws.- The provisions of this Act shall be in addition to and not in derogation of, any other law for the time being in force." Section 105 "105. Provisions of this Act not to apply in certain cases or to apply with certain modifications.-(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 in accordance with the First Schedule and rehabilitation and resettlement specified in the Second and Third Schedules, being beneficial to the affected families, shall apply to the cases of land acquisition under the enactments specified in the Fourth Schedule or shall apply wit....
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....chedule, rehabilitation and resettlement in accordance with the Second Schedule and infrastructure amenities in accordance with the Third Schedule shall apply to all cases of land acquisition under the enactments specified in the Fourth Schedule to the said Act. The order issued by the Ministry of Rural Development on 28-8-2015 states as under: "MINISTRY OF RURAL DEVELOPMENT ORDER New Delhi, the 28th August, 2015 S.O. 2368(E).-Whereas, the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (30 of 2013) (hereinafter referred to as the RFCTLARR Act) came into effect from 1st January, 2014; And whereas, sub-section (3) of Section 105 of the RFCTLARR Act provided for issuing of notification to make the provisions of the Act relating to the determination of the compensation, rehabilitation and resettlement applicable to cases of land acquisition under the enactments specified in the Fourth Schedule to the RFCTLARR Act; And whereas, the notification envisaged under subsection (3) of Section 105 of the RFCTLARR Act was not issued, and the RFCTLARR (Amendment) Ordinance, 2014 (9 of 2014) was promulg....
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....ing 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) Order, 2015. (2) It shall come into force with effect from the 1st day of September. 2015. 2. The provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement 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 shall apply to all cases of land acquisition under the enactments specified in the Fourth Schedule to the said Act. [F. No. 13011/01/2014-LRD] K.P. KRISHNAN, Addl. Secy." 13.A careful perusal of the order issued by the Ministry of Rural Development on 28-8-2015 would show that the Central Government has intended to ensure that the land owners who lost the lands not only under the RFCTLARR Act, but also under the enactments specified in the Fourth Schedule should have a uniform determi....
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.... of National Highways and landowners whose lands are acquired for other public purposes has no rational relation to the object sought to be achieved by the Amendment Act i.e. speedy acquisition of lands for the purpose of National Highways. On this ground alone, the Amendment Act falls foul of Article 14. 30. Even otherwise, in P. Vajravelu Mudaliar (supra), despite the fact that the object of the Amendment Act was to acquire lands for housing schemes at a low price, yet the Amendment Act was struck down when it provided for solatium @ 5% instead of 15%, that was provided in the Land Acquisition Act, the Court holding that whether adjacent lands of the same quality and value are acquired for a housing scheme or some other public purpose such as a hospital is a differentiation between two sets of landowners having no reasonable relation to the object sought to be achieved. More pertinently, another example is given - out of two adjacent plots belonging to the same individual one may be acquired under the principal Act for a particular public purpose and one acquired under the amending Act for a housing scheme, which, when looked at from the point of view of the landowner, w....
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....y continued disparity strikes at the core of Article 14 and must be rectified, particularly when such disparity affects only a select group. To illustrate, rendering the decision in Tarsem Singh (supra) as prospective would create a situation where a landowner whose land was acquired on 31.12.2014 would be denied the benefit of 'solatium' and 'interest', whereas a landowner whose land was acquired the very next day, 01.01.2015-the date on which the Ordinance was promulgated, to read the 2013 Act into the NHAI Act, would be entitled to these statutory benefits. 20. Be that as it may, even if we were to assume that the decision in Tarsem Singh (supra) suffers from the vice of vagueness, the absence of a judicial directive or an explicit legislative mandate should not result in the creation of an artificial classification among a homogeneous group by the same State exercising powers under the same Statute. In this specific instance, the landowners have no discretion or choice regarding the date of land acquisition or the surrender of possession. Thus, both equity and equality demand that no such discrimination be permitted, as allowing it would be unjust. 21. That be....
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....oponent. Fourth, even the Project Proponent would not have to bear the compensation costs out of pocket, as it is the commuters who will bear the actual brunt of this cost. Ultimately, the burden is likely to be saddled onto the middle or upper-middle-class segment of society, particularly those who can afford private vehicles or operate commercial ventures. We are thus not inclined to entertain the plea for prospectivity on this limited tenet." 16.Furthermore, their Lordships of the Supreme Court in P. Nagaraju alias Cheluvaiah's case (supra) have clearly held that the benefits available to the landowners under the RFCTLARR Act are to be also available to similarly placed landowners whose lands are acquired under the 13 enactments specified in the Fourth Schedule including the Act of 1956 and further held that all aspects contained in Sections 26 to 28 of the RFCTLARR Act for determination of compensation will also be applicable notwithstanding Sections 3-J and 3-G(7)(a) of the Act of 1956, and observed as under:- "27. In that view of the matter, though Section 3-G(7)(a) of the NH Act provides the parameters to be taken into consideration, it only provides the basic pa....