9911796707🚨 Important Update for Our Users
We are transitioning to our new and improved portal - www.taxtmi.com - for a better experience.
Follow us:
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (6) TMI 1482 - AT - Income TaxRectification u/s 154 - compensation receipt from NHAI on account of acquisition of land - assessee filed a rectification application wherein it has been stated that the said compensation received under RCTLAAR Act 2013 is exempted from income as per Section 96 of the RCTLAAR Act 2013 as well as in view of Circular No.36/2016 dated 25.10.2016 issued by CBDT - HELD THAT - On perusal of the order of the Ld. CIT(Appeals)/NFAC it is noted that the Ld. CIT(Appeals) while rejecting the rectification application filed by the assessee u/s. 154 of the Act had relied on the order of Heritage Buildcon (P) Ltd. 2023 (8) TMI 1018 - ITAT RAIPUR wherein it has been held that Section 105(1) makes all provisions of the Act inapplicable to the land acquisitions made under the enactments specified in the Fourth Schedule of the Act while Section 105(3) only makes the First Schedule Second Schedule and Third Schedule applicable to the land acquisitions made under the enactments specified in the Fourth Schedule to the Act. CIT(Appeals)/NFAC observed that the ITAT Raipur in the aforesaid case (supra) had relied on OM dated 06.06.2019 issued by the CBDT wherein it is held that the provisions of Section 96 of the RCTLAAR Act 2013 are not applicable to the land acquisitions made under the enactments specified in the Fourth Schedule of the RCTLAAR Act 2013. Accordingly since the issue involved in the present appeal is squarely covered by the decision supra in favour of the revenue on which the Ld. CIT(Appeals)/NFAC had relied upon therefore we find no infirmity in the view taken by the Ld. CIT(Appeals)/NFAC which is hereby upheld. Appeal raised by the assessee are dismissed.
1. ISSUES PRESENTED and CONSIDERED
- Whether the compensation received by the assessee from the National Highways Authority of India (NHAI) on account of land acquisition is taxable or exempt under the provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (RFCTLARR Act, 2013), specifically under Section 96 of the Act. - Whether the rectification application filed under Section 154 of the Income Tax Act, 1961, seeking correction of income by excluding the compensation amount on the ground of exemption under the RFCTLARR Act, 2013, can be entertained and allowed as a mistake apparent from record. - Whether the provisions of Section 96 of the RFCTLARR Act, 2013 apply to compensation received for land acquisition carried out under the National Highways Act, 1956, which is listed in the Fourth Schedule of the RFCTLARR Act, 2013. - Whether the order of the Assessing Officer (A.O.) and the first appellate authority (CIT(A)) upholding the taxability of the compensation and rejecting the rectification petition is legally sustainable. - Whether the principles laid down in the precedent case of Heritage Buildcon (P) Ltd. Vs. CIT, as decided by the ITAT Raipur, are applicable to the present case. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Taxability or Exemption of Compensation Received under RFCTLARR Act, 2013 Relevant legal framework and precedents: Section 96 of the RFCTLARR Act, 2013 states that no income tax or stamp duty shall be levied on any award or agreement made under the Act, except under Section 46, and no fee shall be payable for copies of such awards or agreements. Additionally, the CBDT Circular No. 36/2016 dated 25.10.2016 clarifies the exemption of compensation received under the RFCTLARR Act from income tax. Court's interpretation and reasoning: The Court examined whether the compensation received by the assessee from NHAI qualifies for exemption under Section 96. It was noted that the compensation was declared as income under short-term capital gains by the assessee in the original return of income, filed in bonafide belief of its taxability. Key evidence and findings: The compensation was paid by NHAI under the National Highways Act, 1956, which is included in the Fourth Schedule of the RFCTLARR Act, 2013. Section 105(1) of the RFCTLARR Act excludes the application of the Act's provisions to land acquisitions under enactments specified in the Fourth Schedule. Application of law to facts: Since the NHAI Act is in the Fourth Schedule, the exemption under Section 96 of the RFCTLARR Act does not apply to compensation received under this enactment. The CBDT's Office Memorandum dated 06.06.2019 further clarifies that for land acquisitions under enactments in the Fourth Schedule, only certain schedules of the RFCTLARR Act apply, and the exemption under Section 96 is not applicable. Treatment of competing arguments: The assessee argued that the compensation should be exempt under Section 96 and the CBDT Circular. However, the Court relied on the statutory exclusion under Section 105(1) and the CBDT OM to reject this claim. Conclusions: The compensation received from NHAI is taxable and not exempt under Section 96 of the RFCTLARR Act, 2013. Issue 2: Rectification Application under Section 154 of the Income Tax Act Relevant legal framework and precedents: Section 154 permits rectification of mistakes apparent from the record. The Supreme Court in T.S. Balaram, ITO v Volkart Bros (1971) held that a mistake apparent on the record must be obvious and patent, not requiring a long-drawn process of reasoning or involving debatable points of law. Court's interpretation and reasoning: The Court observed that the question of taxability of the compensation involves complex legal reasoning and is not a mistake apparent on the record. It requires detailed investigation and interpretation of statutory provisions, which cannot be corrected by a rectification petition. Key evidence and findings: The A.O. and CIT(A) both rejected the rectification petition on the ground that the issue involves debatable points of law and factual verification, which are outside the scope of Section 154. Application of law to facts: The Court upheld the rejection of the rectification petition, noting that the assessee's claim was based on a misunderstanding of the applicability of Section 96, which is not a patent mistake but a legal question requiring detailed examination. Treatment of competing arguments: The assessee contended that the inclusion of exempt income was due to lack of knowledge and thus a mistake apparent from record. The Court rejected this, emphasizing the need for a thorough legal analysis and supporting evidence. Conclusions: The rectification petition under Section 154 was rightly rejected as the issue did not constitute a mistake apparent from record. Issue 3: Applicability of Precedent from Heritage Buildcon (P) Ltd. Case Relevant legal framework and precedents: The ITAT Raipur in Heritage Buildcon (P) Ltd. Vs. CIT held that Section 105(1) of the RFCTLARR Act makes all provisions of the Act inapplicable to land acquisitions under enactments specified in the Fourth Schedule, except for certain schedules. It further held that Section 96 exemption is not applicable to such acquisitions. Court's interpretation and reasoning: The Court relied on this precedent to hold that compensation received under the NHAI Act (a Fourth Schedule enactment) is taxable and not exempt under Section 96 of the RFCTLARR Act. Key evidence and findings: The facts of the present case were found to be identical to those in Heritage Buildcon, and the Court emphasized the binding nature of this jurisdictional ITAT decision. Application of law to facts: The Court applied the principles from Heritage Buildcon to the present facts, reinforcing the taxability of the compensation and rejecting the exemption claim. Treatment of competing arguments: The assessee failed to produce any evidence that the acquisition was governed by Section 96 or that the compensation was exempt. The Court noted absence of certification from authorities such as the Sub-Divisional Officer (SDO) or NHAI to support the exemption claim. Conclusions: The precedent decisively supports the revenue's position, and the exemption under Section 96 does not apply to compensation under the NHAI Act. Issue 4: Procedural Aspects and Delay in Litigation Relevant legal framework and precedents: The Supreme Court's ruling in Ishwarlal Mali Rathod Vs. Gopal and Ors. emphasized the need to avoid routine and mechanical adjournments to prevent undue delay in the justice delivery system. Court's interpretation and reasoning: The Court refused to grant further adjournments requested by the assessee's counsel, noting the prolonged litigation since February 2025 and the absence of medical evidence for the adjournment request. The Court underscored the importance of timely disposal of cases to maintain litigants' faith in the judicial system. Key evidence and findings: Multiple hearing dates were communicated and opportunities provided to the assessee. The Court highlighted the adverse impact of delay on justice delivery. Application of law to facts: The Court proceeded to decide the matter on merits, rejecting the adjournment petition. Treatment of competing arguments: The assessee's request for adjournment was not supported by medical evidence and was considered an attempt to delay proceedings. Conclusions: The Court rightly denied adjournment to ensure expeditious disposal of the appeal. 3. SIGNIFICANT HOLDINGS - "A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long-drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record." (T.S. Balaram, ITO v Volkart Bros) - "Section 105(1) makes all provisions of the Act inapplicable to the land acquisitions made under the enactments specified in the Fourth Schedule to the Act, while Section 105(3) only makes the First Schedule, Second Schedule and Third Schedule applicable to the land acquisitions made under the enactments specified in the Fourth Schedule to the Act." (Heritage Buildcon (P) Ltd. ITAT Raipur) - "The provisions of Section 96 of the RFCTLARR Act, 2013 are not applicable to the land acquisitions made under the enactments specified in the Fourth Schedule of the RFCTLARR Act, 2013." (CBDT OM dated 06.06.2019) - "Adjournments should not be granted in a routine manner and mechanically and such grant of adjournment by the Courts should not be a cause for delay in dispensing justice." (Supreme Court in Ishwarlal Mali Rathod Vs. Gopal and Ors.) - The rectification petition filed under Section 154 of the Income Tax Act cannot be entertained where the issue involves debatable points of law and requires detailed investigation and reasoning. - Compensation received from NHAI under the National Highways Act, 1956, which is covered under the Fourth Schedule of the RFCTLARR Act, 2013, is taxable and not exempt under Section 96 of the RFCTLARR Act. - The appeal of the assessee is dismissed, and the order of the CIT(Appeals)/NFAC upholding the A.O.'s order is affirmed.
|
