The Income Tax Appellate Tribunal (ITAT), Patna Bench has held that no Income tax on compensation is received for compulsory acquisition of land by the government as per the provisions of the Income Tax Act, 1961.
The assessee, Shri Suresh Prasad received compensation for Rs. 3,68,19,767/- against the acquisition of his land by the District Land Acquisition Officer. During assessment proceedings the Assessing Officer made an addition under the Head, Long Term Capital Gain for Rs. 3,63,50,267/ as the assessee failed to discharge, the onus of evidence substantiating his claim of Exemption from Capital Gain on account of Agriculture Land.
The aggrieved assessee filed an appeal before the CIT(A). The CIT(A) allowed the appeal, against which the revenue filed an appeal before the ITAT. The Counsel for the appellant revenue submitted that the assessee completely failed to discharge the onus of evidence sustaining his claim of exemption from capital gain during the assessment proceeding.
The counsel for the assessee by relying on the Circular No. 36/2016 dated 25.10.2016 issued by CBDT submitted that the compensation received in respect of award or agreement which has been exempt from levy of Income Tax vide section 96 of the RFCTLARR Act shall also not be taxable under the provisions of Income Tax Act, 1961 even if there are no specific provisions of exemption for such compensation in the Income Tax Act, 1961. It was also clarified that no distinction had been made towards compensation received for compulsory acquisition of agricultural land and non-agricultural land in the matter of providing an exemption from income Tax under the RFCTLARR Act.
A Coram of Mr. Manish Borad, Accountant Member & Shri Sonjay Sarma, Judicial Member has observed that the assessee received compensation for compulsory acquisition of commercial land during the F.Y. 2014-15 which was exempted under section 96 of the RFCTLARR Act, as clarified by the CBDT Circular No. 36/2016 dated 25/10/2016. Therefore, after considering the totality of the fact as the division bench dismissed the revenue appeal and held that the CIT(A) was justified by not confirming the action of the A.O.
Mr. Rupesh Agrawal and Mr. Sunil Kr. Dubey appeared on behalf of the revenue and assessee respectively.
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