The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), ruled that Income from compensation of land acquisition under Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (RFCTLARR)Act, 2013 not taxable under the Income Tax Act, 1961
The assessee, M/s Ganga Developers is a company engaged in the business of real estate development and construction. It is also running a hotel. It filed its return of income declaring nil income. During assessment proceedings, it was found that assessee has claimed exemption under Section 10(37) of the Income Tax Act of Rupees sixty-nine crores.
On questioning to the same, assessee submitted copy of Awarded under Section 11 of the Land Acquisition Act, 1984. Assessee relied on Section 96 of Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 as well as CBDT circular no.36/2016. The assessee submits that as the compensation has been received under that Act, the amount received is exempt under Section 10(37) of the Income Tax Act.
The compensation was received for the reason that assessee was holding non agricultural land which was partially acquired by the Mumbai Municipal Corporation for recreational purposes and widening of existing road.
The assessment order under Section 143(3) of the Income Tax Act was passed determining the total income of the assessee at Rupees sixty-seven crores. The assessee preferred the appeal before the CIT (A). The CIT (A) has held that Award made in the present case is in terms of RFCTLAAR Act and the amount of compensation cannot be charged to tax. Accordingly, the claim of the assessee was allowed. Therefore, the Assessing Officer is aggrieved with the order is in appeal before the Tribunal.
A Bench consisting of Prashant Maharshi, Accountant Member and Shripavan Kumar Gadale, Judicial Member observed that “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.”
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