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Income Tax Appellate Tribunal, ‘C’ BENCH : BANGALORE
Before: SHRI CHANDRA POOJARI & SMT. BEENA PILLAI
IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER Assessment Year : 2015-16 Shri Somchand Giriraj Gupta, The Income Tax Officer, Mukund Nagar, Ward 1 & TPS, Station Road, Vijayapur. Vijayapura. Vs. PAN: ABTPG6461F APPELLANT RESPONDENT Assessee by : Shri V. Srinivasan, CA Revenue by : Smt. H. Kabila, Addl. CIT (DR) Date of Hearing : 27-08-2021 Date of Pronouncement : 11-10-2021 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal is filed by assessee against order dated 12/11/2018 passed by the Ld.CIT(A), Belagavi for assessment year 2015-16 on following grounds of appeal: “1. The learned CIT(A) erred in law and on facts in confirming addition of Rs2,33,44,822/-on account of capital gains on compulsory acquisition of land at S No. 98/1 Tidagundi Village, Bijapur which was claimed to be exempt in view of the Circular of CBDT vide no. 36 dt 25.10.2016.
2. The learned CIT(A) erred in law and on facts in applying Section 46 of RFCTLARR Act to the impugned acquisition of the appellant's land and failed to appreciate that the said Section 46 of the Page 2 of RFCTLARR Act applies to private negotiations and not applicable to Government Compulsory acquisition 3. The Id CIT(A) ought to have applied Circular of CBDT Vide no. 36 dt 25.10.2016 and granted exemption to the entire consideration received from compulsory acquisition of land.
4. The Id CIT(A) erred in law and on facts in confirming addition of Rs 74,07,400/- as short term capital gains as against claim of being long term capital gains at Rs 24,02,024/-.
5. The Id CIT(A) erred in law and on facts in confirming the addition of Rs 74,07,400/- on gross consideration without allowing the deductions of cost of acquisition and cost of improvement as claimed by the appellant.
The appellant craves leave to add, alter, modify or substitute any ground of appeal
at the time of hearing.” Brief facts of the case are as under:
2. The assessee filed his return of income for year under consideration on 31/03/2016 declaring total income of Rs.3,30,150/-. The case was selected for scrutiny to verify cash deposits, sale of property and mismatch in income/capital gain on sale of land or building. Notice under section 143(2) of the Act was issued, in response to which representative of assessee appeared before the Ld.AO and filed requisite details as called for. The Ld.AO observed that, agricultural land bearing survey No. 98/1 situated at Tidagundi village, Bijapur taluk was purchased measuring 6 acres for sale consideration of rupees for, 50, 000/- on 30/09/2011 by assessee. The said land was acquired by the Assistant Commissioner and competent authority for land acquisition of NH 13 from kilometre 30.340 to kilometre(Solapur- Bijapur section) in the district of Bijapur Karnataka vide NQ. NH13/CALA/BJP/CR-14/2011-12 dated 11/10/2013. The total area of the land was 6 acres, out of which 3900 m² were Page 3 of Rs.2,37,17,100/- was received by assessee on 19/07/2014. The Ld.AO treated entire sale proceeds to be liable for short term capital gain.
The Ld. AO observed that during the year assessee sold another property for sale consideration of Rs.74,07,400/-. The same was also brought to tax as short term capital gain as assessee failed to furnish necessary documents, sales/purchase deeds, cost of acquisition, date of acquisition, and nature of transaction in support of the claim. Aggrieved by the order passed by the Ld. AO, assessee preferred appeal before the Ld. ACIT (A). The Ld.CIT(A) called for remand report in respect of the issues alleged by assessee. For ready reference the remand report is reproduced as hereunder:
In reply to the remand report assessee submitted as under:
The Ld.CIT(A) after perusing the above submissions by both Ld.AO as well as the assessee, observed and held as under:
The Ld.CIT(A) decided the issue in respect of compensation received by assessee on acquisition of the land by competent authority for land acquisition of NH13 against assessee. Aggrieved by the order of Ld.CIT(A) assessee is in appeal before us.
The Ld.Counsel submitted that, the assessee’s land was acquired under The National Highways Act, 1956 (48) and Amendment Act of 1977, by the Ministry of Road Transport and Highway, vide SO No.2757 (E) dated 8/12/2012. It is submitted that TDS was deducted by the competent authority on the compensation paid to assessee, proof of the same is placed at page 13 of paper book. 6. The Ld.Counsel submitted that compensation was received by assessee under Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (hereinafter referred to as ‘RFCTLAAR Act’ or ‘Act 30 of 2013’). It is submitted that this Act, came into force with effect from 1/01/2014. The Ld.Counsel submitted that in the present facts of the case, land owned by assessee was acquired under section 28 of Act 30 of 3013. He referred to the Circular issued by CBDT No.36 dated 25/10/2016, wherein any compensation received by landowners for any land acquired under section 28 of Act 30 of 2013, exempt under the existing provisions of Income tax Act. It is also submitted that such compensation received under section 28 of the Act is considered to be not chargeable to Income Tax as per section 96 of Act 30 of 3013. 7. The Ld.Counsel submitted that, the authorities below proceeded on the footing that assessee received compensation Page 15 of 46(6) of Act 30 of 2013. It is submitted that, compensation was not awarded to assessee as per section 46(6) of RFCTLAAR Act. Referring to the section 46(6) of the Act, the Ld.Counsel submitted that it refers to purchase of land through private negotiation, which is not the case in the present facts. The Ld.Counsel submitted that, it is mandatory to compute compensation in accordance with the Act 30 of 2013, and Land Acquisition Act, 1984 stood repealed as on 1/01/2014. The Ld.AR thus submitted that, the Ld.CIT(A)/Ld.AO in remand report dated 14/09/2018, erred in assuming that instant case is covered under section 46(6) of Act 30 of 2013. The Ld.Sr.DR relied on orders passed by authorities below. We have perused the submission of both sides and perused records placed before us.
Admittedly, the land was acquired as per National Highway Act 1956 (48) and Amendment Act of 1997 (hereinafter referred to as NH Act). We know that section 3(G)1 of the NH Act, authorises the competent authority to determine compensation payable to the land loosers. Sub clause (a) of Section 3 of the NH Act, defines competent authority as: (a) “competent authority” means any person or authority authorised by the Central Government, by notification in the Official Gazette, to perform the functions of the competent authority for such area as may be specified in the notification; In Paper book at page 5, notification dated 11/10/2013 is placed, wherein the Assistant Commissioner Bijapur is authorised to function as the Competent Authority, for land acquisition to acquire lands on either side of NH 13 to construct 4 x 6 laning Page 16 of Dhulikhed village to Bijapur as per Ministry of Road Transport and Highways Notification No.S.O.431(E), New Delhi dated 24/02/ 2011. We note that prior to 2013, all the compensation payable by the Competent Authority towards compulsory acquisition of land was computed in accordance with the Land Acquisition Act, 1894. We note that post 2011, compensation towards compulsory acquisition of land is to be determined as per section 28 of the Act 30 of 2013. Authorities below is not disputing that the nature of payment is compensation towards acquisition of land. The issues is whether the acquisition is under section 28 or section 46(6) of Act 30 of 2013. Compensation computed u/s. 28 falls under Chapter IV of the Act 30 of 2013, that deals with necessary provisions to be fulfilled and followed for acquiring land by the government in the interest of public at large. It is also observed that the land acquired under this chapter vests with the government.
We note that, Section 46 of Act 30 of 2013, deals with provisions that monitor acquisition of land through private negotiations, not exceeding prescribed limits. Further this section is applicable to persons other than specified persons as per Explanation (b) to sub section 6 of section 46 is: (b) specified persons includes any person other than— (i) appropriate Government; (ii) Government company; (iii) association of persons or trust or society as registered under the Societies Registration Act, 1860 (21 of 1860), wholly or partially aided by the appropriate Government or controlled by the appropriate Government. Further section 96 of the act 30 of 2013 reads as under:
Exemption from income-tax, stamp duty and fees.–No income tax or stamp duty shall be levied on any award or agreement made under this Act, except under section 46 and no person claiming under any such award or agreement shall be liable to pay any fee for a copy of the same. It is observed that, section 46 of the newly enacted Act was considered as against section 28 that refers provisions that monitor compulsory acquisition of land by the government for public purposes. 10. It is observed that the authorities below have not considered this basic difference between the provisions of section 28 and section 46 of Act 30 of 2013. Circular No.36 of 2016 by CBDT dated 25/10/2016 we therefore remand this issue back to Ld.CIT(A) to reconsider the issue in light of above observations and to decide the claim in accordance with law. Accordingly ground number one stands allowed for statistical purposes. Ground No.2 is in respect of capital gains computed at the sale of agricultural properties amounting to Rs.74,07,00/- as short- term capital gain. 11. The Ld.Counsel submitted that assessee could not file development extract of the sale of land at the time of assessment proceedings. Before the Ld.CIT(A) the details were filed however, the ground was not considered in the light of the evidence is so filed. The Ld.Sr.DR relied on orders passed by authorities below. We have perused submissions advanced website in light of records placed before us.