MUSHTAQUE AHMED,KOLKATA vs. I.T.O., WARD-40(4), KOLKATA, KOLKATA

The facts in brief are that the assessee filed his return of income on 5th December, 2015 disclosing total income at Rs.88,750/-, which was received from the Bank by way of interest. Thereafter the case of the assessee was reopened under section 147 of the Act on the ground of escaped assessment for non-disclosure of capital gain arising from compensation received from land acquisition by the Collector ,Distt Arwal for construction of Arwal Sahar approach road for acquiring non-agricultural land. The assessee received total compensation of Rs.91,62,720/- on which TDS of Rs.9,18,270/- was deducted. The assessee claimed that the said land was used for agricultural purposes prior to the date of acquisition i.e. 12.04.2012 and therefore the capital gain arising from the said acquisition is exempt from tax u/s 10(37) of the Act. The statutory notices were duly issued and served upon the assessee. According to the ld. Assessing Officer, the said land was non agricultural land but an urban agricultural land which was not used for agricultural purposes prior to the date of acquisition Assessment Year: 2014-2015 Mushtaque Ahmed and accordingly capital gain arising from the said acquisition was treated as long-term capital gain arising from sale of non-agricultural land resulting into an addition of Rs.91,62,720/- to the income of the assessee in the assessment framed under section 143(3) vide order dated 28.12.2017.

Being aggrieved, the assessee went in appeal before the ld. CIT(Appeals). The ld. CIT(Appeals) also affirmed the order of ld. Assessing Officer without giving any reason by holding that the assessee failed to establish and corroborate his claim for exemption under section 10(37) of the Act.

After hearing the rival contentions and perusing the material placed before us, we find that the assessee has received compensation of Rs.91,62,720/- on which TDS of Rs.9,16,272/- was deducted. The assessee filed the return for obtaining the refund of TDS deducted from the said compensation on the ground that capital gain arising from the sale of impugned asset is not taxable within the meaning of section 10(37) of the Act as the land was agricultural land and exclusively used for agricultural purposes during the period of two years prior to the date of acquisition. To corroborate this argument, ld. A.R. placed before the Bench the reply received in consequence to information sought under the Right to Assessment Year: 2014-2015 Mushtaque Ahmed Information Act, 2005, from Public Information Officer & Anchal Adhikari, Arwal, Office of Anchal Adhikari, Arwal bearing No. 553 dated 12th May, 2023, which certifies the impuged land to be agricultural land prior to the date of acquisition. The ld. A.R. drew our attention to page no. 7, which represented the receipt of Malgujari, which was stated to be deposited when the agricultural activities were carried out on the said land, which clearly states that Khata Nos. 143 & 144 were subjected to agricultural operations prior to land acquired in the year 2012. We have also perused the details of land to be ‘Dhanattar, which means that the land was used for growing rice. After appreciating all these facts, we are satisfied that the impugned land was agricultural land and was being used for agricultural operations prior to the date of acquisition during two years prior to acquisition. Accordingly, the conditions as envisaged under section 10(37) of the Act are satisfied and any capital gain arose out of the said agricultural land is exempt under section 10(37) of the Act. We, therefore, set aside the order of ld. CIT(Appeals) by allowing the appeal of the assessee. The is accordingly directed to allow the exemption u/s 10(37) of the Act. Assessment Year: 2014-2015 Mushtaque Ahmed 6. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on June 28th, 2023.