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2021 (12) TMI 161 - AT - Income TaxExemption from the Income Tax of the compensation received on acquisition of land - whether the impugned transaction is exempt being covered under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013 - (RFCTALARR Act, 2013) ? - whether the provisions of RFCTLARR Act, 2013 are applicable to the NH Act 1956 or not? - HELD THAT:- In the present case it is not in dispute that the assessee received compensation on account of land acquired by NHAI. As per the provisions of section 96 of the RFCTLARR Act, the exemption from Income Tax and Stamp Duty would apply to an award or agreement made under the new Act which came into force on 01/01/2014. In the instant case the assessee filed its return of income on 30/11/2015 as he was waiting for the clarification from the Income Tax Department wherein the subject of exemption from Income Tax on the compensation received on commercial land might get clear and the clarification from the CBDT came vide Circular No. 36/2016 dt. 25/10/2016. From para 3 of the aforesaid Circular it would be clear that 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, 2013. Applicability of the Acquisition Act 2013 has been given effect to the NH Act 1956 w.e.f 01/01/2015 and the assessee received the compensation on 05/11/2014 & 23/11/2015. In the present case also the land was compulsorily acquired by NHAI therefore the compensation received by the assessee was exempted under the Income Tax Act. Since the clarificatory Circular was issued by the CBDT on 25/10/2016 i.e; after the date of filing the return by the assessee on 30/11/2015 that is why an application under section 154 of the Act was moved by the assessee. CBDT vide Circular No. 36/2016 dt. 25/10/2016 clarified that the compensation received in respect of award or agreement which has been exempt from levy of Income Tax vide section 96 of the RFCTLARR Act shall also not be taxable under the provisions of Income Tax Act, 1961 even if there is no specific provisions of exemption for such compensation in the Income Tax Act, 1961. In the said Circular it is also clarified that no distinction had been made towards 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. In the instant case the assessee received compensation for compulsory acquisition of commercial land during the F.Y. 2014-15 which was exempted under section 96 of the RFCTLARR Act, as clarified by the CBDT Circular No. 36/2016 dt. 25/10/2016. We therefore considering the totality of the fact as discussed hereinabove are of the view that the Ld. CIT(A) was not justified in confirming the action of the A.O. in not accepting the claim of the assessee for exemption of the compensation received on compulsory acquisition of land acquired by the Land Acquisition Officer from Income Tax. Accordingly the appeal of the assessee is allowed.
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