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2022 (12) TMI 114 - AT - Income TaxDenying exemption u/s. 54B - compensation derived from the Government of Maharashtra of compulsory acquisition as non-taxable, offered the capital gains - AO opined that land belong to the assessee is barren land as per 7/12 extract and the finding of CIT(A) that the said land is within 8 K.M. from the Municipal area of Jalna falling u/s. 2(14)(iii)(b) of the Act - HELD THAT:- In the present case, the assessee shown capital gain and claimed deduction u/s. 54B of the Act, in my opinion, is a wrong claim, denial of the same for violation of provisions u/s. 54B of the Act is misconceived. As noted earlier, the assessee fulfilled all the conditions contemplated in clause (i) to (iv) of sub-section (37) of section 10 of the Act, but however, ignorant of the same as entitled to claim compensation derived from the Government of Maharashtra of compulsory acquisition as non-taxable, offered the capital gains to tax by claiming deduction u/s. 54B of the Act. As held by the Hon’ble High Court of Bombay [2008 (12) TMI 88 - BOMBAY HIGH COURT]that the authorities under the Act are required to assist the assessee in the assessment proceedings by giving effect on the correct position of law, even if the assessee makes wrong claim. Therefore, the compensation derived from the Government of Maharashtra on the compulsory acquisition of assessee’s land, the assessee is entitled to claim the same as exempted u/s. 10(37) of the Act. Thus, the order of CIT(A) in confirming the view of AO in denying the deduction u/s. 54B of the Act is not justified and the addition made thereon is deleted. Thus, the grounds raised by the assessee are allowed.
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