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TMI Blog2023 (1) TMI 523X X X X Extracts X X X X X X X X Extracts X X X X ..... facts in both the cases being identical, he would be dealing with the facts in the case of Shri Saurabhai Rohit Bhai Modi in ITA No.180/Ahd/2021 and make his pleadings accordingly. We shall therefore deal with the appeal in ITA No.180/Ahd/2021 and our decision rendered therein will apply pari pasu to the other appeal also. ITA No.180/Ahd/2021 Sh. Saurabhbhai Rohit Bhai Modi A.Y 2016-17 4. Ld.counsel for the assessee first drew our attention to the facts of the case pointing out that for the impugned year the assessee had filed return of income declaring total income of Rs.5,02,310/- .The assesses case was thereafter selected under CASS for compulsory scrutiny and assessment framed under section143(3) of the Act vide order dated 17.12.2018 accepting income returned by the assessee. The ld.counsel of the assessee stated that thereafter the ld.PCIT, on perusal of the assessment record, noted that the assessee had claimed long term capital gain on sale of agricultural land as exempt u/s 10(37) of the Act on account of compulsory acquisition of the land by the Government, amounting toRs.2,74,83,073/-. The ld.PCIT noted from the record that it was not a case of compulsory acquisition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g scrutiny assessment order without appreciating that subject land was acquired vide 'Government of Gujarat Gazette' for public purpose by Gujarat Industrial Development Corporation (GIDC) that is held to be compulsorily acquired by judicial pronouncements. 4. Ld. Pr. CIT erred in law and on facts holding assessment order as erroneous and prejudicial to the interest of revenue since AO granted exemption u/s 10(37) of the Act as claimed by the appellant without verifying fulfillment of the conditions. 5. Ld. Pr. CIT erred in law and on facts invoking revisional jurisdiction in absence of AO noting in assessment order response to the query raised that was properly responded by the appellant during the assessment proceedings. 6. Ld. Pr. CIT erred in law and on facts revising scrutiny assessment order merely because he held a different opinion than AO in the matter. 7. Ld. Pr. CIT erred in law and on facts holding that assessment completed without any inquiry on the points for which case was selected for scrutiny as erroneous and prejudicial to the interest of revenue failed to appreciate clear difference between "Lack of inquiry" and "Inadequate inquiry." 5. The conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally acquiring the impugned land, went ahead and acquired the land from the transferees by mutual consent as per the power entrusted to GIDC under section 14(b) of the Gujarat Industrial Development Act, 1962 (GIDC Act); that an agreement to sell accordingly was entered into by the four co-owners and GIDC for three pieces of land i.e.survey nos.766, 777, and 786 for a consideration of Rs.21,73,47,900/- and cheque for 75% of the same amounting to Rs.16,30,10,925/- dated 16.12.2015 was issued by the GIDC along with agreement to sell being entered on 16.12.2015; the balance 25% was agreed to be paid on execution of the sale deed. That subsequently on 30.6.2017 the sale deed was registered between the four co-owners and the GIDC. Chronology in this regard was placed before us as under: Date Event Ref.Pg. 05.09.2012 Publication of preliminary notification u/s 4 of Land Acquisition act S.N. 766, 777, 786 and 788 are seen 68 30.08.2013 Sammatiqarar for the relinquishment of land S.N. 766, 777, 786 and 788 70-77 07.10.2013 Declaration of intended acquisition u/s 6 of Land Acquisition act S.N. 766, 777, 786 and 788 are seen 40-67 48-49 30.12.2013 Award by Collector u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me claimed as exempt under the head "capital gains and other sources". In this regard, he drew our attention to this fact, as noted in the assessment order for the impugned year passed under section 143(3) of the Act placed before us at page no.31 & 32. Thereafter, he pointed out that during the assessment proceedings, the AO had issued notice under section 142(1) of the Act asking the assessee to furnish details of exempt income earned during the year along with expenditure incurred to earn the same, as also at point no.2 and point no.(xvi) and (xviii) of the notice issued under section 142(1) dated 11.10.2018 placed before us at PB Pg. No.83 to 88. He thereafter pointed out the detailed reply filed by the assessee to the same, pointing out the land was compulsorily acquired by the Government, and then claimed as exempt under as per CBDT Circular cited (supra), which exempted land compulsorily acquired, whether agricultural or not. He further pointed out that a statement of capital gain arising from the land acquired by the Government was filed along with agreement to sell entered into by the assessee and the GIDC dated 16.12.2015 and the letter of sale. Our attention was drawn to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidering the entire facts and circumstances of the case. The ld.counsel contended that it is not disputed that initially it was the State Government which had initiated compulsory acquisition proceedings under the LAA, as it then existed, for the purpose of acquiring the land to be given to GIDC, but due to the Act being repealed and new law, "RFCTLRR Act" coming into force, the Rules of which were not notified, after very long lapse of time the GIDC proceeded with acquisition of the land by exercising its powers under section 14(b) of the GIDC Act. Therefore, though strictly speaking the land may not have been acquired by the State Government under the relevant law, the LAA, but it was merely for the reason that the new Act for acquiring the land by the State Government though had been brought on the statute but the machinery provisions by way of Rules were not notified , and the acquisition had therefore to be done by GIDC by exercising its powers and not through the route of land being acquired by the Government and then handing over to GIDC. He pointed out that the acquisition initiated by the State Government had to be compulsorily concluded by a Corporation of the State i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e acquired by the State and instead GIDC entered into an agreement to buy it from the assessee, it could not be stated that original colour of the transaction being a compulsory acquisition by the State was lost. In this regard, the ld.counsel for the assessee pointed that one piece of land i.e. Survey No.788 which was acquired during the existence of LAA only, was acquired at the same rate as that acquired by the GIDC and terms also were the same. 10. The alternative contention of the Ld.Counsel for the assessee was that no capital gains accrued during the year since no transfer took place in the impugned year as the agreement to sell entered into by the assessee with GIDC was not a registered agreement, but notarised agreement, and therefore, it was not an agreement in the eyes of law even for the purpose of section 53A of the Transfer of Property Act. In this regard, he drew our attention to the decision of Hon'ble Apex Court in the case of CIT Vs. Balbir Singh Maini, 398 ITR 531 (SC). 11. As for the issue of quantum of compensation, the ld.counsel for the assessee contended that the compensation agreed included the part which was to be paid by the seller of the land for conve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... includes the compensation or consideration enhanced or further enhanced by any court, Tribunal or other authority;" 14. The computation of capital gains having been called to question by the Ld.PCIT noting that the assessee had computed capital gains only in relation to the component of agreed consideration actually received during the year i.e 75%. 15. The fact which is not disputed is that the assessee alongwith three other co-owners being Sh.Rohit Chinubhai Modi Ponnam Rohit bhai Modi & Anila Rohit Bhai Modi (all co-owners having equal share) had signed a banakhat bearing number 257/06/2015 on 16- 12-2015 with GIDC for sale @ Rs.1100/- per square metres of their land. The banakhat nowhere mentions the land being compulsorily acquired. Even as per the admission of the Ld.Counsel for the assessee the lands were neither acquired under the Land Acquisition Act,1894 nor the RFCTLARR Act,2013, which were the laws under which land could be compulsorily acquired. The land in fact was purchased by GIDC by exercising its power u/s 14(b) of the GIDC Act,1962. The letter of the Vice Chairman & MD,GIDC filed to the AO in response to notice issued u/s 133(6) of the Act clearly states so and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to GIDC. The initial notification of acquisition of these lands under the LAA no longer existed in law once the Act got repealed. The transitory provisions for lands notified under the LAA Act to be covered under the RFCTLAAR Act,2013, are dealt with in section 24 of the RFCTLAAR Act as under: "24. Land acquisition process under Act No. 1 of 1894 shall be deemed to have lapsed in certain cases.-(1) Notwithstanding anything contained in this Act, in any case of land acquisition proceedings initiated under the Land Acquisition Act, 1894,- (a) where no award under section 11 of the said Land Acquisition Act has been made, then, all provisions of this Act relating to the determination of compensation shall apply; or (b) where an award under said section 11 has been made, then such proceedings shall continue under the provisions of the said Land Acquisition Act, as if the said Act has not been repealed. (2) Notwithstanding anything contained in sub-section (1), in case of land acquisition proceedings initiated under the Land Acquisition Act, 1894 (1 of 1894), where an award under the said section 11 has been made five years or more prior to the commencement of this Act but the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts of the present case. In the said case the acquisition of lands was compulsory acquisition and thereafter the additional compensation was agreed to between the private parties involved, to which the Hon'ble court held that acquisition being compulsory mere payment of compensation on agreed terms would not alter its character. In the case before us the transfer of land itself is not by way of compulsory acquisition under law but a voluntary sale and therefore the judgment of the Hon'ble court is of no assistance to the assessee. 20. The findings of the Ld.PCIT therefore that the assessee did not qualify for exemption u/s 10(37) of the Act since the lands were not compulsorily acquired, we find is correct. And therefore his findings that the AO's order was erroneous for having granted exemption without examining eligibility on this count is also we hold correct. 21. Having found the assessee failing to fulfill one of the cumulative conditions required to be fulfilled for claiming exemption u/s 10(37) of the Act, we do not consider it necessary to deal with the other failure noted by the Ld.PCIT of the land having not been used for agricultural purposes.The AO's order allo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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