Tax Benefit available to Compulsory Acquisition of Urban Agricultural Land: ITAT [Read Order]

Agricultural Land

The Cochin bench of the Income Tax Appellate Tribunal (ITAT) in Income Tax Officer versus Smt.Girijakumari M held that tax benefit under Section 10 (37) of the Income Tax Act are available to compulsory acquisition of urban agricultural land.

The dispute starts with the sale of 70 cents of land which was taken over by Vizhinjam International seaport and the assessee claimed the entire sale consideration exempt from tax. The reason stated by assessee was the said land is an agricultural land, compulsorily acquired by the government of Kerala.

However, the AO held that the said sale is not a compulsory acquisition inspite sale through negotiated settlement, so that AO worked out the long-term capital gain and the assessee’s claim for exemption under section 10(37) of the Income Tax Act was not admissible.

Aggrieved by the action of AO assessee preferred an appeal before CIT (A) and the authority by following the judgment of Supreme Court in the case of Balakrishnan v. Union of India held that Assessee entitled for deduction and not liable for the long-term capital gain.

Being aggrieved revenue carried an appeal before this tribunal, the bench including Chandra Poojari, Accountant Member and George George K, Judicial Member heard the rival submission and perused the documents on record.

In the instant case, the bench observed that the entire procedure done under the Land Acquisition Act, only price was fixed upon a negotiated settlement. The bench also called the decision of supreme court in Balakrishnan v. Union of India & Others, held that sale price was fixed through a negotiated settlement, the character of acquisition would still remain compulsory.

Accordingly, bench proclaimed that acquisition of urban agricultural land was a compulsory acquisition and the same was entitled the exemption under section 10 (37) of the Income Tax Act.

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