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TMI Blog2025 (2) TMI 826X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly adjudicated by a common order. ITA No.1798/Del/2021 [Assessment Year : 2016-17] 3. Ground No.1 is general in nature, needs no separate adjudication. 4. Ground Nos. 2 to 4 are in relation to the addition of INR 20,01,529/- made u/s 68 of the Act by holding the agricultural income as unexplained income of the assessee. 5. Brief facts leading to this issue are that the assessee is a company and having land on which agricultural income of INR 38,43,270/- was declared and claimed as exempt income. During the course of assessment proceedings, details of agricultural income were not filed therefore, the AO has treated the said income as unexplained and added to the total income of the assessee company u/s 68 of the Act. 6. In first appeal before the Ld.CIT(A), the assessee has filed fresh evidences in support of the agricultural income as additional evidences alongwith prayer under Rule 46A of Income Tax Rules, 1962. After obtaining the Remand Report from the AO, the Ld.CIT(A) was of the opinion that the agricultural income is not substantiated by proper evidences by the assessee. Further, the ld.CIT(A) observed that the cultivator who has carried out agricultural activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and prayed for the confirmation of the additions made. 9. We have heard the rival submissions and perused the material available on record. We find that the assessee is having both types of land i.e. agricultural as well as commercial land and part of the lands were acquired by National Highway Authority of India ("NHAI"). The Ld.CIT(A) while confirming the additions, has observed that the assessee has not been able to clarify as to how the agricultural operations were claimed to have been carried out on commercial land. Before us also, the assessee could not be able to justify whether the agricultural income earned, were from the agricultural land and no commercial land was used for the same. Moreover, Form J submitted contained the name of the Director of the assessee company. All these facts need proper verification. Therefore, in the interest of justice, this issue is set aside to the file of the AO for making proper verification of the fact whether agricultural income is declared from the agricultural purposes carried out by the assessee on agricultural land or any commercial land is involved. The AO is further directed to verify whether Form J issued in the name of Direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He further submits that section 105 stood was amended by Ordinance No.9 of 2014 wherein sub-section (3) of section 105 of RFCTLARR Act, 2013 is superseded by a new section (3) wherein requirement of issuing notification was done away and therefore, enactments appearing in Fourth Schedule which contained NHAI are also covered under the provision of RFCTLARR Act, 2013. This amendment has come into operation from 01.01.2015. 14. Ld.AR submits that though one of the land acquisition order was issued on 04.02.2014 however, the compensation were received by the assessee starting from 09.09.2015 to 17.03.2016 and therefore, the amendment made in section 105(3) of RFCTLARR Act, 2013 w.e.f. 01.01.2015 is applicable to the case of the assessee and there is no requirement to issue notification under the RFCTLARR Act, 2013 where the land is acquired by the NHAI. He therefore, prayed that compensation received by the assessee on compulsory acquisition of the land owned by it is eligible for exemption from Income-tax in terms of section 96 of RFCTLARR Act, 2013. 15. On the other hand, Ld.CIT DR for the Revenue supported the orders of the authorities below and submits that the Ld.CIT(A) has alr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notification, the notification shall not be issued or, as the case may be, shall be issued only in such modified form as may be agreed upon by both the Houses of Parliament. 16.1. Sub-section 3 to Section 105 of the RFCTLARR Act, 2013 is substituted by the Ordinance No. 9 of 2014 w.e.f. 01.01.2015 and the relevant amendment in sub-section (3) to Section 105reads as under: (3) The provisions of this Act relating to the determination of compensation in accord acne with the First Schedule, rehabilitation and resettlement in accordance with the Second Schedule and infrastructure amenities in accordance with the Third Schedule shall apply to the enactments relating to land acquisition specified in the Fourth Schedule with effect from 1st January, 2015." 16.2. It is thus clear that after the amendment in sub-section 3 of the RFCTLARR Act, 2013, precondition of issue of notification is withdrawn w.e.f. 01.01.2015. From the perusal of the order of Ld.CIT(A), we find that though the Ld.CIT(A) was in agreement with the claim of the assessee that the provisions of the RFCTLARR Act, 2013 are applicable to the present case and as per Section 96 of the said Act, the compensation so rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levy of income-tax. 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 RFCTLARR Act shall also not be taxable under provisions of Income-tax Act, 1961 even if there is no specific provision of exemption for such compensation in the Income-tax Act, 1961." 16.5. Thus vide this Circular, CBDT clarified that award granted under the RFCTLARR Act, 2013 both for agricultural and non-agricultural land is tax free. Therefore, the compensation received by the assessee on compulsory acquisiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Taxman 373, 263 ITR 706 (SC) * General Insurance Corpn. of India v. CIT [1999] 106 Taxman 389, 240 ITR139 (SC). The AO's objection regarding section 10(37) does not hold good as exemption has not only been claimed under section 10(37) of the IT Act, 1961 but also under the RFCTLARR Act, 2013. Section 96 of the "RFCTLARR Act, 2013" exempts awards from the levy of Income-tax under the I.T Act, 1961. Section 96 was enacted under the 2013 Act for making tax-free award granted to the land losers but there was no specific provision to treat such award as tax-free under the Income-tax Act, 1961. CBDT vide Circular No: 36 of 2016 Dated 25/10/2016 offers due recognition to the provisions of section 96 enacted under the "RFCTLARR Act, 2013" so as to treat award under the said Act as tax free under the Income -tax Act, 1961. The operative Para 2 and Para 3 of the Circular No.: 30 of 2016, dated 25/10/2016 reads as under: "Para 2. The RFCTLARR Act which came in to effect from 1st January, 2014, in section 96, inter-alia, provides that income-tax shall not be levied on any award or agreement made (except those made under section 46) under the RFCTARR Act. Therefore, compensation r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over the Income-tax Act, 1961. The RFCTLARR Act, 2013 also applies to all land losers, irrespective of their status. Further any award in any form made under this Act as defined under section 96 (except those covered under section 46) is exempt from income-tax both under normal and MAT provisions under the I.T Act, 1961. Thus the addition so made of Rs. 5,10,29,003/- by disallowing the exemption is based on incorrect interpretation of the Act accordingly the same is directed to be deleted." 17. Regarding the judgement of Co-ordinate Bench of ITAT, Agra in the case of Jagdish Arora as relied upon by the Revenue, we find that the said judgement pertained to AY 2010-11 when the RFCTLARR Act, 2013 was not introduced and therefore, the said judgement was not applicable in the facts of the case of the assessee where the compensation is received by the assessee in FY 2015-16 which is fallen after date when the RFCTLARR Act, 2013 come into force. 18. Since the land owned by the assessee were acquired by NHAI as compulsory acquisition u/s 3A of NHAI Act, 1956 and compensation was awarded by the competent authorities. The entire amount compensation so awarded was received by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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