RAMESHBHAI GORDHANBHAI DUDHAGARA,RAJKOT vs. INCOME TAX OFFICER, RAJKOT

ITA 738/RJT/2026Status: DisposedITAT Raipur29 September 2026AY 2017-1812 pages
AI SummaryAllowed

What were the facts?

The assessee, Rameshbhai Gordhanbhai Dudhagara, filed an appeal before the Income Tax Appellate Tribunal (ITAT), Rajkot Bench, for Assessment Year 2017-18. The appeal was against an order dated 28.07.2025 passed by the National Faceless Appeal Centre (NFAC), Delhi (Ld. CIT(A)), which arose from an assessment order dated 22.11.2019 passed by the Assessing Officer (ITO) under section 143(3) of the Income-tax Act, 1961. The assessee's appeal to the Tribunal was filed belatedly by 223 days. The assessee cited reasons for the delay including not being well-versed with legal provisions, lack of information from the tax consultant, and seeking condonation in the interest of justice. The Revenue opposed the condonation of delay. The Tribunal condoned the delay.

What did the Tribunal hold?

The Tribunal decided the issues as follows: 1. Regarding the delay in filing the appeal, the Tribunal, after perusing the affidavit filed by the assessee, found the existence of mitigating circumstances and exercised its discretion to condone the delay of 223 days in the interest of justice. 2. On the merits of the case, the Tribunal followed the binding judgment of the Hon'ble Gujarat High Court in the case of Movaliya Bhikhubhai Balabhai vs. ITO (2016) 70 taxmann.com 45. This judgment held that interest awarded under Section 28 of the Land Acquisition Act, 1894, forms part of the compensation and is not taxable as interest. The Tribunal noted that the Assessing Officer had ignored this precedent. Therefore, the Tribunal held that interest in the nature of compensation for compulsory acquisition of agricultural land is eligible for exemption under section 10(37) of the Act. The addition made by the Assessing Officer was deleted, and the appeal of the assessee was allowed. The ratio decidendi is that interest received on enhanced compensation for compulsory acquisition of agricultural land, as per the jurisdictional High Court's ruling, is a capital receipt and not taxable.

What were the issues?

1. Whether the delay of 223 days in filing the appeal before the Tribunal should be condoned, considering the reasons provided by the assessee? Assessee's contention: The assessee argued that the delay was due to their lack of legal knowledge, not being informed by their tax consultant about the appeal status, and that they should not be penalized for the consultant's mistake. They urged for a benign view and condonation in the interest of justice. Revenue's contention: The Revenue opposed the prayer for condonation of delay. 2. Whether the interest received on enhanced compensation for compulsory acquisition of agricultural land is taxable as a revenue receipt or is a capital receipt not taxable, in light of the judgment of the jurisdictional High Court? Assessee's contention: The assessee relied on the order of a Division Bench of the ITAT in the case of Kishorbhai Nathabhai Makani (ITA No.701/Rjt/2026 for AY 2016-17), which held that interest received on enhanced compensation for compulsory acquisition of agricultural land is part of the compensation (capital receipt) and not taxable. They submitted that the present appeal is squarely covered by this order. Revenue's contention: The Revenue relied on the findings of the Assessing Officer.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 250,Section 10(37),Section 145B,Section 56(2)(viii),Section 263

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Rajkot Bench, Rajkot

Before: Dr. Arjun Lal Saini & Shri Sonjoy Sarma

Hearing: 16/09/2026Pronounced: 29/09/2026

Per, Dr. Arjun Lal Saini, AM : Captioned appeal filed by the assessee, pertaining to assessment year 2017-18, is directed against the order passed under section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 28.07.2025 by the National Faceless Appeal Centre (NFAC), Delhi/Commissioner of Income Tax (Appeals) [in short ‘Ld.CIT(A)’] which in turn arises out of a

The order continues below.

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