TaxTMI 
TaxTMI 
2025 (3) TMI 1654
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....before Income Tax Officer, Ward 1, Dhule in the case of M/s Balaji Developers, Dhule for Α.Υ. 2016 17. I wish to state that the partners of the assessee firm are not well versed with the income tax provisions and procedures and hence, my email id namely [email protected] was mentioned in the Form 35 filed on 11.01.2019. I would like to state that subsequently, I had left the assignment and the partners of the above mentioned firm had appointed a different CA for looking after the appeal work. I wish to state that the notices during the appellate proceedings, as well as the appellate order passed u/s 250 dated 16.10.2023 was received on my email address: [email protected]. I would also like to state that due to pre-occupied work schedule I was not able to check and verify my e-mail account on regular basis. Therefore, the email containing the appellate order u/s 250 was passed in case of M/s Balaji Developers for A.Y. 2016-17 went unnoticed from my side and as a result I could not inform the assessee about the same. In view of the above facts, I would like to state that there was a delay of 60 days in filing the appeal before Hon'ble ITAT, Pune. What....
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....However, ld.AO was not satisfied with the submissions and was of the view that section 10(37) of the Act is applicable for the individuals and Hindu Undivided Families (HUFs) and since the assessee is a partnership firm it is not eligible for the exemption as the alleged sum was received from sale of stock in trade and is purely a business income. Apart from that, no other addition was made and income assessed at Rs. 2,74,48,080/-. 6. Aggrieved assessee preferred an appeal before the ld. CIT(A) where again the assessee reiterated the submissions filed before the ld. AO claiming that the exemption has been rightly claimed in view of CBDT Circular No. 36/2016 dated 25.10.2016 which states for giving due recognition to the provisions of section 96 enacted under the RFCTLAAR Act, 2013. Ld. CIT(A) however was not satisfied and confirmed the finding of the ld.AO observing as follows : "6.4 I have carefully considered the issue under dispute and examined the same in the light of the facts and circumstances of the case as emanating from the impugned assessment order u/s. 143(3) of the Act and relevant provisions of the statute. 6.5 Ground No.1, 2 & 3 are raised against....
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....th the relevant Circulars issued by the Board/CBDT. 6.10 The assessee firm has relied upon CBDT circular No. 36/2016 and section 96 of RFCTLARR Act. Any deduction/exemption of income can be claimed only under the applicable provisions of the Income Tax Act. Therefore, the argument of the assessee that it had not claimed exemption under any of the sections/provisions of the Income Tax Act cannot be accepted. The CBDT circular 36/2016 dated 25-10-2016 is clarification to section 10(37) of the I.T. Act. The same is reproduced as under:" Under the existing provisions of the Income Tax Act, 1961, an agriculture land which is not situated in specified urban area, is not regarded as capital asset. Hence capital gain 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 Agriculture land situated in specified urban limits, subject to fulfillment of certain conditions. 6.11 As there was no distinction made between compensati....
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....ut compensation received from compulsory acquisition of Agricultural and non Agricultural land. The CBDT circular no. 36 does not talk about change in the status of the assessee. Hence the circular no. 36/2016 quoted by the assessee firm is not applicable to the assessee as it is a firm. Section 10(37) is applicable only to Individuals and HUF and therefore the AO rightly held that it is not applicable to the assessee firm. 6.14 Further, in the case of assessee, the gain has arisen not out of transfer of capital asset. It is out of transfer of stock in trade. Here the assessee firm has come in to existence with the motive of trading of plots This is the business of the assessee. The profit earned is also taxed as business income. Hence, exemption claimed on profit arisen on account transfer of stock in trade is not acceptable. The assessee relies on section 96 of RFCTLARR Act, but this Act should be applied as per the provisions of the Income Tax Act. In view of the above, the grounds raised by the assessee on this issue are dismissed. 7.0 In the result, the appeal filed against the order u/s.143(3) of the Act for the AY 2016-17 is dismissed." 7. Aggrieved asse....
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....aji Corporate Services, PCIT and Ors in Writ Petition No.890/2022, dated 27.09.2023 in support of the contention that exemption from levy of income-tax provided u/s.96 of the RFCTLAAR Act, 2013 is also allowable in respect of acquisitions made under Karnataka Industrial Areas Development Act, 1966. 11. We have heard the rival contentions and perused the record placed before us. The sole grievance of the assessee is that the ld. CIT(A) erred in confirming the action of the AO by denying the exemption for the amount at Rs. 2,74,48,078/- received by the assessee from NHAI for acquisition of the land held by the assessee firm as stock in trade. We note that during the course of assessment proceedings when the assessee referred to the provisions of section 96 of the RFCTLAAR Act, 2013 along with referring to the CBDT Circular No. 36/2016 dated 25.10.2016 for claiming exemption, ld. AO denied the claim solely on the ground that the assessee is not eligible for exemption because the same is available only to individuals and HUFs. 12. Before us, ld. DR has referred to the decision of Coordinate Bench of the Tribunal in the case of Jagdish Arora vs. ITO (supra) contending that compens....
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....tion of Rs. 42,62,880/- was awarded by the central government towards acquisition of assessee's land and after deduction of tax at source net amount of Rs. 38,40,192/- was received by the assessee which was duly deposited in the State Bank of India on 12/11/2016. Though the compensation received is Rs. 42,66,880/- but the ld. Assessing Officer has mentioned the amount at Rs. 41,16,069/-. We are here to deal with the issue that whether the alleged sum is exempt from tax. The ld. Counsel for the assessee has referred to the following CBDT Circular issued on 25/10/2016:- "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 ('RFCTLAAR Act')- reg.-Resettlement Act, 2013 1. 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. Henc....
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....adjudication of the issue we will go through these two sections also:- "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. 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 ....
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....he assessee has been given under the RFCTLAAR Act. Now going through Section 96 of the RFCTLAAR Act, the same provides exemption from income tax, stamp duty and fees on any award or agreement, made except those covered u/s 46 of the RFCTLAAR Act (which we have already held to be not applicable on the assessee). 10. Now after dealing with Section 96 of the RFCTLAAR Act, and going to the CBDT circular referred supra, we notice that no distinction has been made between the compensation received for compulsory acquisition of agricultural land and non-agricultural land in the matter of providing exemption from income tax under the RFCTLAAR Act, the exemption provided u/s 96 of the Act is wider in scope than the tax exemption provided in the existing provisions of the Income Tax Act. This clearly indicates that since the assessee company has received compensation under the RFCTLAAR Act and the case of the assessee does not fall under section 46 of the RFCTLAAR Act, no income tax is leviable on the award received on the compulsory acquisition of agricultural land. Our view is further supported by the decision of the Mumbai bench of the ITAT in the case of M/s. Ganga Developers (s....
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....dgement as well as the provision of new law and the old law of acquisition of land and therefore held that sum received by the assessee is not taxable, cannot be found fault with. Accordingly we confirm the order of the learned CIT appeal of the AO." A and dismiss ground number 1 of the AO. 11. As the facts the case on hand are identical to the facts of the case law discussed above, we thus respectfully following the decision of the Co-ordinate Bench Mumbai in case of M/s. Ganga Developers (supra), and under the given facts and circumstances of the case are inclined to hold that the alleged sum of compensation received by the assessee is exempt from Income tax. Thus, the finding of the Id. CIT(A) is set aside and the effective Ground Nos. 1 to 6 raised by the assessee are allowed." 14. We also note take note of the judgment of Hon'ble Calcutta High Court in the case of PCIT Vs. Durgapur Projects Ltd. in ITA No.282/2022 dated 24.02.2023 (assessee being Limited Company) wherein also the issue of compensation by a nonindividual/non HUF came up for adjudication before the Hon'ble Court and again the same was decided in favour of the assessee and the relevant observation of ....
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....2013 Acquisition Act shall also not be taxable under 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. The said Circular No. 36 of 2016 would come to the aid and assistance of the assessee and the compensation received by the assessee on account of the compulsory acquisition of land under the 2013 Acquisition Act is exempt from the tax. 12. For all the above reasons, we find no grounds to interfere with the order passed by the learned tribunal and consequently the appeal filed by the revenue fails and the substantial questions of law are answered against the revenue. No costs." 15. Now considering the ratios laid down by the Hon'ble Calcutta High Court in the case of PCIT Vs. Durgapur Projects Ltd.(supra) as well as the decision of Kolkata Bench of the Tribunal in the case of Parasnath Vinimay Pvt. Ltd. Vs. CPC (supra), we find that the assessee is a partnership firm and the land owned by it as stock in trade was acquired by the Government which in this case is NHAI for the consideration finalised by NHAI. It is an admitted fact that when the lands of various land owners are acqu....