The Cochin bench of the Income Tax Appellate Tribunal (ITAT) has held that the compulsory acquisition of the urban agricultural land is eligible for tax exemption under Section 10(37) of the Income Tax Act, 1961.
The assessee along with her husband, was in possession of 47.54 Ares of land in Vizhinjam village which was subsequently acquired by the Government for the Vizhinjam International Seaport. The same was sold by executing a sale deed in favour of Vizhinjam International Seaport for a total consideration of Rs.3,22,99,490, out of this the share of the assessee is Rs.1,61,49,745.
Before the authorities, the assessee claimed that was agricultural land and was compulsorily acquired by the Government of Kerala and the assessee was entitled to the benefit of section 10(37) of the Income Tax Act. The Assessing Officer, however, held that the land transferred falls within the limit of Trivandrum Municipal Corporation and the assessee’s claim for exemption under section 10(37) of the Income Tax Act was not admissible for the reason that it was not a compulsory acquisition, but a sale through a negotiated settlement.
The appeal filed by the assessee was allowed by the Commissioner of Income Tax (Appeals). Aggrieved by the order, the revenue approached the Tribunal.
Granting relief to the assessee, the Tribunal held that “In the instant case, the entire procedure prescribed under the Land Acquisition Act was followed, the only price was fixed upon a negotiated settlement. The A.O. did not have a case that the impugned land is not agricultural land. Therefore, in view of the above judgment of the Hon’ble Apex Court (supra), we hold that the acquisition of the urban agricultural land was a compulsory acquisition and the same would be entitled to the benefit enumerated in section 10(37) of the I.T.Act. It is ordered accordingly.”
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