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TMI Blog2010 (9) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Ac,1961 (in short 'the Act') pertaining to the assessment year 2007-08. The appellant has preferred the following main Grounds of appeal :- 1. That the Learned Assessing Officer has wrongly made an addition of Rs. 18,40,764 (9,20,382 + 9,20,382) on account of capital gain on compensation received on compulsorily acquired agricultural land. 2. That the Learned Assessing Officer has wrongly made an addition of Rs. 13,01,252 on account of capital gain on compensation received on compulsorily acquired agricultural land. 3. Since the dispute relates to the provisions of section 10(37) of the Act, it is reproduced as under : "10(37) in the case of an assessee, being an individual or a Hindu undivided family, any income chargeable under the head "Capital gains" arising from the transfer of agricultural land, where- (i) such land is situate in any area referred to in item (a) or item (b) of sub-clause (iii) of clause (14) of section 2; (ii) such land, during the period of two years immediately preceding the date of transfer, was being used for agricultural purposes by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en received in this year on the basis of the order of the Additional District Judge, Panchkula on 14-9-2006. Secondly, the State Government acquired another land on 23-7-2001 and in relation to such acquisition also, the assessee received during the year enhanced compensation of Rs. 13,01,252 in pursuance to the order of the ADJ, Panchkula. The claim of exemption under section 10(37) has been denied by the Assessing Officer for the reason that the agricultural land claimed by the assessee is indeed a 'capital asset' within the meaning section 2(14) of the Act. The Assessing Officer has rendered this finding in the context of a plea raised by the assessee before him that the compensation was exempt from tax as the land acquired was outside municipal limits and accordingly was not a 'capital asset' within the meaning of section 2(14) of the Act. In any case, this aspect is not disputed before us and the CIT(A) has also upheld the premise that the land acquired qualifies to be a 'capital asset' within the meaning of section 2(14) of the Act. Nevertheless, on the aspect it would suffice to observe that the impugned lands being a 'capital asset' under section 2(14) is not a disqualifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collector, Panchkula in the Awards, has not been challenged by the assessee at any stage. Thus, on this basis it is contended that the condition prescribed in clause (ii) of section 10(37) is not fulfilled in this case. 7. On the other hand, appellant has heavily relied upon Khasra Girdawri of the lands to prove that the lands were used for agricultural purposes during the period of two years immediately preceding the date of transfer. Apart from the copies of Girdawri furnished before the lower authorities, the appellant has also furnished a certificate issued by the Sub-Registrar, Panchkula identifying the Kharsa Nos. of the land of the assessee covered by the two Awards dated 1-10-1999 and 10-12-2002, in terms of which the lands of the assessee have been acquired and enhanced compensation received during the year. Further, the copies of the Khasra Girdawri has also been placed on record including its English version duly certified by the revenue Official. The ld. Counsel has pointed out that the Khasra Girdawri clearly shows growing of crops in the immediately two preceding years from the date of transfer and accordingly the condition prescribed as per clause (ii) of section 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Khasra Girdawri cannot be construed as fatal to the contents of Kharsa Girdawri, which reveal the growing of crops, thus proving the agricultural use of the land. On this aspect the ld. Counsel explained that the land was self-irrigated. 9. On this aspect, a reference to the judgment of the Hon'ble jurisdictional High Court in the case of CIT v. Smt. Savita Rani [2004] 270 ITR 402 (Punj. & Har.) is note worthy. The Hon'ble High Court, in the context of section 54B of the Act was examining whether the land can be said to have been used for agricultural purposes. The Department had sought to hold that the land was not being used for agricultural purposes because the land was said to be situated within the municipal limits; that only fodder grass and vegetables were grown in the kharif season while the land remained fallow in the rabi season; and, that assessee had acquired huge chunks of land and constructed certain godowns also. All these objections were not held as conclusive in the face of the khasra girdawri of the land produced by the assessee. As per the Hon'ble High Court, khasra girdawri produced by the assessee showed that agricultural operations were being carried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfied by the assessee because the provisions of section 10(37) are applicable to cases where the agricultural land has been compulsorily acquired after 1-4-2004 and in the case of the assessee, the land has been acquired on an earlier date. In our considered opinion, the reasoning put forth by the CIT (Appeals) is not consistent with the provisions of section 10(37)(iv). The said clause merely provides that the income ought to have been received by the assessee on or after 1-4-2004, which is not in dispute in the present case. Therefore, the condition prescribed in clause (iv) of section 10(37) is satisfied in this case. 12. In the result, we set aside the order of the CIT (Appeals) and direct the Assessing Officer to recompute the exemption eligible under section 10(37) of the Act, keeping in mind the non-agricultural use of the lands as conceded by the appellant. Needless to mention, the Assessing Officer shall re-compute the amount of exemption under section 10(37) of the Act after allowing the assessee a reasonable opportunity of being heard. Thus, on this aspect, assessee partly succeeds. 13. In the result, appeal of the assessee is partly allowed. 14. Insofar as the other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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