TMI Blog2022 (10) TMI 599X X X X Extracts X X X X X X X X Extracts X X X X ..... en no award u/s 11 of the said land acquisition act has been made, then all the provisions of the new act relating to the determination of compensation shall apply. It also excludes where the award is already been made u/s 11 of that act and for that particular purpose only the old act continue to apply. In this case the award has been made on 5/8/2016. Therefore the new act shall apply. According to Section 96 of that act income tax shall not be levied on any award agreement made Under that act except as provided u/s 46 of that act. This award/agreement is not u/s 46 - Therefore the income arising in the form of compensation shall be governed by the provisions of Section 96 of the act. Accordingly the income is not chargeable to income tax. The issue is squarely covered in favour of the assessee by the decision in Vishwanatha M V Chief Commissioner [ 2020 (5) TMI 465 - KERALA HIGH COURT] , in case of C nand Kumar [ 2017 (4) TMI 662 - ANDHRA PRADESH HIGH COURT] as well as circular number 36/2016 dated 25/10/2016 which clarified in paragraph number 3 of the act that compensation received in respect of award agreement which is been exempted from levy of income tax as per provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1894 and not an award under RFCTLAAR Act 2013 and hence the provisions of the section 96 of the RFCTLAAR Act 2013 is not applicable in the case of the assessee and the compensation was rightly treated as business income of the assessee. 2) Whether on the facts and circumstances of the case and in law the Ld. CIT(A) has erred in failing to appreciate that the provisions section 10(37) of the I.T. Act is applicable only to individuals and HUF and not to the assessee being the partnership firm and also as the land is non-agricultural land. 3) Whether on the facts and circumstances of the case and in law the Ld.CIT (A) has erred in holding that the CBDT circular number 36 of 2016 is applicable to the case of the assessee. 4) Whether on the facts and circumstances of the case and in law the Ld.CIT(A) was right in deleting the addition on account of deemed income from house property in respect of the unsold flats. 5) The appellant craves leave to amend, modify and alter any grounds of appeal during the course of hearing of this case. 03. The fact of the case shows that assessee is a company engaged in the business of real estate development and construction. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Departmental Representative vehemently supported the order of the learned Assessing Officer and submitted that the Award is under the Land AcquisitionAct and same is not exempt under Section 10(37) of the Act. He further referred to the provision of Section 10(37) of the Act and stated that the claim of the assessee has rightly being denied. He further stated that, the learned CIT (A) is not correct in holding that the Award given to the assessee is under the new Act and further, circular of CBDT does not apply. He submitted that the assessee is not entitled to the above exemption. 08. The learned Authorized Representative vehemently supported the order of the learned CIT (A). He referred to Paper Book containing 282 pages which is the submission before the learned CIT (A). He further submitted that there is no infirmity in the order of the learned CIT (A) in holding that the award given to the assessee is under the new Act. He referred to the old legislation, new legislation and saving clause under Section 24 of the Act. He also stated that the decision cited by the learned CIT (A) covers the issue in favour of the assessee. He further submitted that now the issue is squarely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20/06/2012. 2. The date of Publication of the Notification in the Maharashtra Government Gazette part-1, Konkan Division Supplement. Date: 21.06.2012 3. Date of Publication of the RevisedNotification in the Maharashtra Government Gazette part-1. Konkan Division Supplement. 1) DainikPrahar, dt.23.06.2012 2) Business Standard, dt. 27/06/2012 4. The date of Publication of the Revised Notification in the Maharashtra Government Gazette part-1, Konkan Division Supplement. Date 27th March/02 April, 2014. 5. The date of Publication of the Notification under section 6. 1. Notice of Boards of the District Collector Offices 2. Talathi- Chavdi 3. Acquisition Site Date: 21/05/2014 Date 19/05/2014 Date 19/05/2014 6. Award under section 11 of the Land Acquisition Act, 1894, 05/08/2016 7. Date of receipt of Compensation 24.08.2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he notification under section 6 of the old Act. all the subsequent proceedings have been carried out in accordance with the RFCTLARR Act 2013 and the associated RFCTLARR Rules 2014. 5.12 There is no dispute or doubt that the case of the assessee does not fall within the ambit of Section 10(37) of the Act as that provision does not apply to firms. It is also not in dispute that under the Income Tax Act, there are no other provisions which allow exemption of such compensation money from income tax. Under these circumstances, it is essential to examine whether the case of the appellant is indeed covered by the RFCTLARR Act as well as guided by the Board's Circular No. 96-of 2016 on the subject. It is the AO's claim that both, the Act as well as the Circular are not applicable to the case of the assessee. 5.13 The various enabling provisions of RFCTLARR Act 2013 are examined in this regard. It is noted that: -The RFCTLARR Act received the assent of the President of India on 26th September, 2013. Vide notification published on 19.12.2013 in the Gazette of India, the Central Government appointed the 1st January, 2014 as the date on which the said Act shall come into forc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tification for acquisition under section 4 of the said Land Acquisition Act, shall be entitled to compensation in accordance with the provisions of this Act. 5.15 The provisions of section 24 of the Act make it clear that only in respect of cases falling under clause (b) of section 24(1), the proceedings under the Act of 1894 are to continue as if the old Act has not been repealed. In all other cases where the process was initiated but no award was made, the saving clause merely saves the procedural actions which have already been taken towards acquisition and mandate that subsequent proceedings need to be conducted under the new Act. This inference is inescapable as in all other cases, the old Act does not survive and is to be treated as if it stands repealed as on 1.1.2014. Once the Act itself does not survive, further proceedings under the old Act also do not survive or cannot continue in absence of a saving clause. 5.16 In fact the intent of the legislature is made clear from subsection 2 of section 24 which mandates that even in cases where the award has been made five years before the new Act coming into force but either the physical possession of the land has not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings leading to the final Award have been in taken in accordance with the RFCTLARR Act 2013 and not in accordance with the old Act. Accordingly, it cannot be held that only Section 26 to section 30 of the RFCTLARR Act are applicable to this Award and the other provisions of the new Act are not applicable to this award. 5.20 While dealing with the issue of validity of an assessment made under the Sikkim State Income-tax Manual subsequent to extension of the Indian Income Tax Act to the said territory, in the case of Sikkim Manipal University [2015] 55 taxmann.com 270 (SIKKIM), the High Court held that in absence of the Act itself which stood repealed, the assessment under the said Act could not survive. The observations of the High Court are: 22. In the instant case, we have already held that the Sikkim State Income-tax Manual, 1948, stood repealed after extension of the Income-tax Act, 1961, in the State of Sikkim with effect from April 1, 1990. The petitioner has come claiming its rights as an assessee under the Income-tax Act, 1961. Therefore, any adverse plea like it was not an assessee under this Act or that the Income-tax Act, 1961, was not applicable to the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure is that the pending proceeding shall not continue but a fresh proceeding for the same purpose may be initiated under the new provision. In the Amendment Act of 1987, no saving clause was provided in favour of pending proceedings. That being so, as held by the Apex Court, the pending proceedings against the applicants could not continue under the repealed provisions but a fresh proceeding for imposition of penalty may be initiated under the new provision, i.e., section 271E. 5.22 Hence, after repeal of an Act and its replacement with a new Act, the proceedings under the old Act can continue only to the extent permitted by the saving clauses of the new Act. Any other action can only be taken under the new Act. 5.23 In fact, section 24 of the General Clause Act which deals with similar issues, holds that: 24. Continuation of orders, etc., issued under enactments repealed and re enacted. Where any Central Act or Regulation, is, after the commencement of this Act. repealed and re-enacted with or without modification, then, unless it is otherwise expressly provided any appointment notification, order, scheme, rule, form or bye-law, made or issued under the repealed Act or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reassessment is initiated under section 148 to give effect to an order passed under the Act. Equally, where assessments had been reopened under section 34 before 1-4-1962 to give effect to orders passed under the 1922 Act and are continued after that date by virtue of section 297(2)(d)(i), the provisions of the second proviso to section 34(3) would preclude the operation of the normal rule of limitation for reassessments. In this situation, it will be a great anomaly to reach the conclusion that the time limit will operate in cases where proceedings under section 148 are initiated to give effect to an order on appeal, revision and reference merely because such order is one passed under the 1922 Act. Neither reason nor rhyme can explain how the statute could have intended such anomaly or why it should be so interpreted as to result in a discriminatory treatment only to this class of cases. An interpretation which will result in such anomaly or absurdity should be avoided. It is also necessary to remember that section 297(2) is a provision enacted with a view to provide for continuity of proceedings in the context of a repeal of one Act by a fresh one broadly containing analogous p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anomaly between two classes of similar beneficiaries. 5.26 The above discussion and facts of the present case lead to inescapable inference that in light of limited saving clause, the provisions of General Clauses Act and the various judicial precedents on the issue, it is to be concluded that any order passed for acquisition of land in cases falling within the ambit of section 24(1)(a) of the RFCTLARR Act could only be passed under the new Act and not under the repealed old Act of 1894. 5.27 Based on the above discussion, in spite of the mention of the old Act in the citation of the Award, it is to be held that the Award has been issued in terms of RFCTLARR Act 2013 as the old Act stood repealed as on 1.1.2014. 5.28 The AO has held that section 10(37) of the IT Act does not apply to the case of the appellant. It is also held that the provisions of section 96 of the RFCTLARR Act do not start with an over-riding clause and hence they do not override the provisions of IT Act. According to AO, both these Acts have the same force of Authority and hence, in absence of any authority of law, the provisions of section 96 of the RFCTLARR Act cannot be imported to IT Act to allow ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made under section 46) under the RFCTLARR Act. Therefore, compensation received for compulsory acquisition of land under the RFCTLARR Act (except those made under section 46 of RFCTLARR Act), is exempted from the levy of income-tax. (emphasis provided) 3. As 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, the exemption provided under section 96 of the RFCTLARR Act is wider in scope than the tax exemption provided under the existing provisions of Income-tax Act, 1961. This has created uncertainty in the matter of taxability of compensation received on compulsory acquisition of land, especially those relating to acquisition of non agricultural land. The matter has been examined by the Board and it is hereby clarified that compensation received in respect of award or agreement which has been exempted 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 provision of exemption for such compensation in the Income-tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a legislation. What the circular does is to acknowledge the fact that irrespective of class of land holder or type of land holding, acquisition made under RFCTLARR Act 2013 will not be subject to tax in spite of the fact that there is no such express provision in the IT Act. The implication of such acknowledgement is that the Circular admits that section 96 of the RFCTLARR Act overrides the IT Act as far as the taxability of receipts of compensation made under this Act is concerned. Board's circulars and instructions are issued under section 119 of the Income Tax Act. It is judicially accepted that under section 119 of the IT Act, the instructions and circulars issued by the Board are binding on the subordinate authorities. Hence, there is no doubt that the above circular is binding on all authorities under CBDT. The assessing officer, while dealing with the case, is bound to follow the circular issued by CBDT. Once it is held that the Award issued in the case of the appellant is covered by the RFCTLARR Act, the circular no. 36 of 2016 comes into play with respect to applicability of section 96 of the RFCTLARR Act. 5.32 In this regard, it is found relevant to discuss various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption is liable to be granted. It is in this background of the matter and owing to certain confusions, the Central Board of Direct Tax vide the Circular No.36/2016 dated 25.08.2016 came out with a clarification. For the sake of brevity, only relevant portion of the circular is reproduced herein:- 3. As no distinction has been made between the 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, the exemption provided under Section 96 of the RFCTLARR Act is wider in scope than the tax-exemption provided under the existing provisions of Income-tax Act, 1961. This has created uncertainty in the matter of taxability of compensation received on compulsory acquisition of land, especially those relating to acquisition of non-agricultural land. The matter has been examined by the Board and it is hereby clarified that compensation received in respect of award or agreement which has been exempted 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 provision of exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt made under this Act. except under section 46 and no person claiming under any such award or agreement shall be liable to pay any fee for a copy of the same. 33. Section 96 mandates that no Income-tax shall be levied on any award made under the Act except under section 46. Section 46 deals with the purchase of land by a person other than a specified person through private negotiations. The benefit of section 96 is not available when a land is purchased through private negotiations by a person other than a specified person under section 46(1). 34. Therefore, in cases other than those covered by section 46 of the 2013 Land Acquisition Act, the levy of Income-tax is barred by section 96 and as a consequence, the deduction or collection under section 194LA of the Income tax Act, 1961, is impermissible. 5.36 While dealing with the issue, the Hon'ble Court further observed that; 39. We cannot lose sight of the fact that the Central Act 30 of 2013 is a welfare legislation, which made a quantum leap from the provisions of the 1894 Land Acquisition Act. The object of the 2013 Act is not merely to provide just and fair compensation but also to make provisions for the rehab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d no. 4 and 5 do not require adjudication in light of the decision in ground no. 1 to 3. 010. On careful perusal of the award dated 5/8/2016, it is clear that according to rule 18 (3) of the rights to fair compensation and transparency in land acquisition, rehabilitation and resettlement rules 2014 the Commissioner has granted approval to this award. The award was also passed after the land acquisition act 1984 stood repealed from 1/1/2014 which has been replaced by the right to fair compensation and transparency in land acquisition, rehabilitation and resettlement act of 2013. 011. The provisions of Section 24 of the act clearly provides that that when no award u/s 11 of the said land acquisition act has been made, then all the provisions of the new act relating to the determination of compensation shall apply. It also excludes where the award is already been made u/s 11 of that act and for that particular purpose only the old act continue to apply. In this case the award has been made on 5/8/2016. Therefore the new act shall apply. 012. According to Section 96 of that act income tax shall not be levied on any award agreement made Under that act except as provided u/s 46 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee s own case for assessment year 2016 17 the coordinate bench vide order dated 24/9/2020 following the decision of the honourable Gujarat High Court in case of CIT versus Neha builders private limited deleted the addition. Therefore, he relying on the decision of the coordinate bench deleted the addition. Learned assessing officer is aggrieved with the same and is in appeal before us. 019. The learned departmental representative supported the orders of the learned assessing officer whereas the learned authorised representative relied upon the order of the coordinate bench in assessee s own case for assessment year 2016 17 wherein on identical basis the addition was deleted. 020. We have carefully considered the rival contention and perused the orders of the lower authorities. The identical issue arose in the case of the assessee for assessment year 2016 17 which travelled up to the level of the coordinate bench where the above addition was deleted. Learned CIT A following that decision of the coordinate bench in assessee s own case for assessment year 2016 17 in ITA number 3436/M/2019 dated 24/9/2020 has deleted the addition. The learned departmental represent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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