TMI Blog2023 (11) TMI 276X X X X Extracts X X X X X X X X Extracts X X X X ..... dealing with Section 96 of the RFCTLAAR Act, and going to the CBDT circular referred supra, we notice that 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 RFCTLAAR Act, the exemption provided u/s 96 of the Act is wider in scope than the tax exemption provided in the existing provisions of the Income Tax Act. This clearly indicates that since the assessee company has received compensation under the RFCTLAAR Act and the case of the assessee does not fall under section 46 of the RFCTLAAR Act, no income tax is leviable on the award received on the compulsory acquisition of agricultural land. As respectfully following the decision of M/s. Ganga Developers [ 2022 (10) TMI 599 - ITAT MUMBAI] and under the given facts and circumstances of the case are inclined to hold that the alleged sum of compensation received by the assessee is exempt from Income tax. Decided in favour of assessee. - DR. MANISH BORAD, HON BLE ACCOUNTANT MEMBER For the Appellant : Shri Soumitra Choudhury, Advocate For the Respondent : Shri Abhijit Datt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. CIT(A) was wrong by confirming the charging of interest u/s. 234B and 234C amounting to Rs. 303,672/- and Rs. 63,899/- which are completely arbitrary, unjustified and illegal. 8. For that the appellant reserves the right to adduce any further ground or grounds, if necessary, at or before the hearing of the appeal. 3. Facts in brief is that the assessee is a Private Limited company and return of income was filed on 30/09/2017 declaring Nil income and claiming carry forward of loss at Rs. 35,759/- and claiming refund of Rs. 4,33,200/-. The case was processed u/s 143(1) of the Act on 29/03/2019 making prima facie adjustments of treating the compensation received for acquisition of land at Rs. 41,51,828/- as taxable income thereby not giving the benefit of exemption u/s 10(37) of the Act and assessing the income at Rs. 41,16,070/- 4. Aggrieved the assessee assailed the intimation u/s 143(1) of the Act before the ld. CIT(A) but failed to succeed. Even though the assessee filed the copy of CBDT Income Tax Circular 36/2016 dt. 25/10/2016, claiming that the award of the land compensation was received under the Right to Fair Compensation and Transparency in Land Acquis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 ( RFCTLAARAct )-reg.- 1. Under the existing provisions of the Income-tax Act, 1961 ( the Act ), an agricultural land which is not situated in specified urban area, is not regarded as a capital asset. Hence, capital gains arising from the transfer (including compulsory acquisition) of such agricultural land is not taxable. Finance (No. 2) Act, 2004 inserted section 10(37) in the Act from 01.04.2005 to provide specific exemption to the capital gains arising to an Individual or a HUF from compulsory acquisition of an agricultural land situated in specified urban limit, subject to fulfilment of certain conditions. Therefore, compensation received from compulsory acquisition of an agricultural land is not taxable under the Act (subject to fulfilment of certain conditions for specified urban land). 2. The RFCTLARR Act which came into effect from 1 st January, 2014, in section 96, inter alio provides that income-tax shall not be levied on any award or agreement made (except those made under section 46) under the RFCTLARR Act. Therefore, compensation received for compulsory acquisition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him of (a) intent to purchase; (b) purpose for which such purchase is being made; (c) particulars of lands to be purchased. (2) It shall be the duty of the Collector to refer the matter to the Commissioner for the satisfaction of all relevant provisions under this Act related to rehabilitation and resettlement. (3) Based upon the Rehabilitation and Resettlement Scheme approved by the Commissioner as per the provisions of this Act, the Collector shall pass individual awards covering Rehabilitation and Resettlement entitlements as per the provisions of this Act. (4) No land use change shall be permitted if rehabilitation and resettlement is not complied with in full. (5) Any purchase of land by a person other than specified persons without complying with the provisions of Rehabilitation and Resettlement Scheme shall be void ab initio: Provided that the appropriate Government may provide for rehabilitation and resettlement provisions on sale or purchase of land in its State and shall also fix the limits or ceiling for the said purpose. (6) If any land has been purchased through private negotiations by a person on or after the 5th day of September, 2011, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 46 of the RFCTLAAR Act, no income tax is leviable on the award received on the compulsory acquisition of agricultural land. Our view is further supported by the decision of the Mumbai bench of the ITAT in the case of M/s. Ganga Developers (supra), wherein also the assessee is a partnership firm (not an individual or HUF) and the compensation was received on 24/08/2013 and this Tribunal after referring to the CBDT circular referred supra and section 96 of the RFCTLAAR Act, held that the sum received by the assessee is not taxable under the Income Tax Act. Relevant part of the said order is extracted below:- 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 wh ..... 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