TMI Blog2017 (7) TMI 690X X X X Extracts X X X X X X X X Extracts X X X X ..... had parted with the membership of society. As rightly held by ld. CIT(A), however, the indexation is to be allowed with reference to the dates of payments made by assessee towards deposit of ₹ 40,000/-. Appeal of the assessee is partly allowed. - ITA No.4607/Del/2016 - - - Dated:- 3-2-2017 - SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER For The Appellant : Shri G. S. Kohli, CA For The Respondent : Shri S. K. Jain, Sr.DR ORDER PER S.V. MEHROTRA, A.M : This is an appeal filed by the assessee against the order dated 12.07.2016 passed by the Commissioner of Income Tax (Appeals)-34, Delhi, u/s 143(3) of the Income Tax Act, 1961 (in short the Act ) relating to assessment year 2011-12. 2. Brief facts of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dexation on ₹ 40,000/- from Financial Year 1983-84. 3. Subsequently, vide his letter dated 11.03.2014 the assessee submitted that sale of land was agricultural land and, therefore, the compensation received was exempt from taxation, relevant part of reply has been quoted at page 2 of assessment order, which is reproduced hereunder :- ...Further, as informed to me and the copy of award (the copy enclosed herewith) for the compensation given to me by the society, the society was having agricultural land in village Amnabad Tehsil Dadri Distt Gotam Budh Nagar which is beyond 8 kilometer from the Nagar Palika Dadri limit against which compensation was received. To justify the same a copy duly certified by 'Lekhpal Tehsil Dadri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d) That in fact the ownership of land was not transferred fully to the Society. If at all the compensation towards agricultural land was to be claimed to be exempt from Income Tax, it may be at the hands of villagers or real land owners subject to fulfillment of other conditions as envisaged in the Act who are holding the agricultural land and not on the Society or to its members. The real land owners are agriculturalist whose land has been acquired by the Greater Noida Authority. .......... 13. To prove that the land acquired by the Greater Noida Authority from the Society are agricultural land and compensation received are exempt to tax, the assessee has to prove basic ingredient regarding agricultural activities undertaken i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lish that the assessee has received compensation out of sale of agricultural land. . 16. Notwithstanding all above, as per provisions of Section 10(37) of the Act, the Exemption of Capital Gains on compensation received on compulsory acquisition of agricultural land situated within specified urban limits is only available to individual or a Hindu Undivided Family and not to SOCIETY (Green Field Farms Society). With a view to mitigate the hardship faced by the farmers whose agricultural land situated in specified urban limits has been compulsorily acquired, the Finance (No.2) Act, 2004 has inserted a new clause (37) in Section 10 so as to exempt the capital gains (whether short-terms or long-term) arising to an individual or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant in the case of the assessment of the cooperative society. As far as appellant is concerned it has received profit in respect of the shares of the said cooperative society and not the agricultural land. The issue of exemption from capital gains tax in respect of sale of land is not relevant in the case of the appellant. This can be explained with an illustration. A private limited company may earn taxable income or exempt income. But the profit from the sale of shares of the said company or the distribution of profits by way of dividends or the payment made for buy back of shares is taxable in the hands of the shareholders. By the same reasoning the amount of ₹ 4,00,000/- received by the appellant is taxable in his hands. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... society and not as an agriculturist, therefore, assessee cannot get the benefit of section 10(37) which exempts capital gains arising from the transfer of agricultural lands in the hands of individual or HUF. The amount received by assessee has to be taxed as capital gains and not under the head income from other sources because assessee had parted with the membership of society. As rightly held by ld. CIT(A), however, the indexation is to be allowed with reference to the dates of payments made by assessee towards deposit of ₹ 40,000/-. In the result, ground nos.1 to 4 are dismissed and ground no.5 is allowed. 8. Resultantly, the appeal of the assessee is partly allowed. Order pronounced in the open court on this 03rd day of F ..... X X X X Extracts X X X X X X X X Extracts X X X X
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