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Facts
The assessee received compensation for acquired land, and TDS was made under Section 194LA. The AO held that it was not a compulsory acquisition, thus not eligible for exemption under Section 10(37). The CIT(A) upheld the AO's decision, stating that TDS under Section 194LA is only attracted for non-agricultural land and that inquiries revealed the land was within a municipal area. A statement from the District Land Acquisition Officer confirmed the land was not acquired under compulsory acquisition.
Held
The Tribunal noted that a similar issue in the case of a co-owner, Bhuneshwar Rai, was decided by the CIT(A) in favor of the assessee, relying on CBDT Circular No. 36/2016. However, the Tribunal also acknowledged the findings of fact by the AO in the present case. Given the differing views taken by different CIT(A)s on similar facts, the Tribunal decided to remand the matter back to the CIT(A) for re-examination.
Key Issues
Whether the compensation received for the acquired land is eligible for exemption under Section 10(37) of the Income Tax Act, 1961, when TDS was made under Section 194LA and the acquisition was not considered compulsory.
Sections Cited
194LA, 10(37), 133(6), 131, 143(3), 3A, 96, 3G, 3E
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “PATNA BENCH”, PATNA
Appearances by: Assessee represented by : Sh. Sanjeev Kumar, Adv. Department represented by : Sh. Ashwani Kr. Singal, JCIT Date of concluding the hearing : 15.05.2025 Date of pronouncing the order : 19.05.2025 O R D E R
PER SANJAY AWASTHI, ACCOUNTANT MEMBER
This appeal arises from order u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”), passed by Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, vide order dated 25.08.2023.
1.2 In this case, the assessee is seen to have received an amount of Rs. 1,20,91,266/- as compensation against acquisition of land under NH Act, 1956. It is seen that TDS was made u/s 194LA of the Act and thereby the Ld. AO held that this was not a case of compulsory acquisition and accordingly not eligible for exemption u/s 10(37) of the Act.
1.3 Aggrieved with this action, the assessee approached the Ld. CIT(A) where also he could not succeed mainly on the ground that TDS u/s 194LA Dina Nath Yadav of the Act done by the District Land Acquisition Officer was attracted only when non-agricultural land was involved. The second ground taken by the Ld. CIT(A) was that enquiries made by the Ld. AO u/s 133(6) of the Act revealed that the said land was within the municipal area even though the said land was agricultural in nature. Finally, it has been recorded that the Ld. AO issued summons u/s 131 of the Act to the District Land Acquisition Officer, Patna and his statement under oath was recorded. Through this statement, the said Officer categorically mentioned that the land in question was not acquired under compulsory acquisition. These finding prompted the Ld. CIT(A) to uphold the findings of Ld. AO.
1.4 Further aggrieved with this action, the assessee is in appeal with the following grounds:
“1. For that the grounds of appeal hereto are all without prejudice to each other.
2. For that on the fact and in circumstances of the case the order passed u/s 250 by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, New Delhi (here-in-after known as "the Id. CIT(A)") is arbitrary and bad in law.
3. For that on the fact and in circumstances of the case the order passed under the provision of section 143(3) of the Act dt. 19.11.2018 by the Id. Income Tax Officer, Ward-4 (2), Patna (here-in-after known as "the AO") and confirmation by the Id. CIT (A) has further erred both in law and in disposing off the appeal without considering the fact of the case.
4. For that on the fact and in circumstances of the case the Id. AO has assessed the income under section 143(3) of the Act without considering the facts in the matter of land acquisition under the provision of section 3A of the National Highway Act, 1956 and confirmation of the same by CIT (A) is bad in law, unjustified, surmises and conjectures.
5. For that on the fact and in circumstances of the case the assessment order passed by the Id. AO and confirmation by the CIT (A) is bad in law as the Id. AO completed the assessment on the basis of information supply by the District Land Acquisition Officer, Patna and Circle Officer, Patna.
6. For that on the facts and in circumstances of the case the determination of the total income at Rs. 1,23,26,650/- as against the returned income of Rs. 2,78,740/- by the Id. AO and confirmation by the CIT (A) are wholly arbitrary, unwarranted, wrong, illegal and at any rate are excessive.
7. For that on the fact and in circumstances of the case the Id. AO has erred in converting the entire valued of compensation i.e. Rs. 1,20,47,911/- in full value of consideration on the ground that the acquired agricultural land of the assessee by the Government was not under compulsory acquisition and confirmation by the Id. CIT (A).
Dina Nath Yadav 8. For that on the fact and in circumstances of the case the addition made by the Id. A. O. and confirmation by the CIT (A) to the amount of Rs. 1,20,47,911/-being the full value of consideration as the appellant's income is wholly arbitrary, unwarranted, wrong and illegal.
For that on the fact and in circumstances of the case that whole amount arising on transfer of land by way of acquisition by the State Government under NHAI Act is taxable under LTCG and disallowing the exemption u/s 10(37) of the Act by Id. AO and confirmation by the CIT (A) is wholly arbitrary, unwarranted, wrong and illegal.
For that on the fact and in circumstances of the case the Id. Assessing Officer has not considered the provisions of Section 96 of Right to fair Compensation & transparency in land Acquisition, Rehabilitation and Resettlement Act, 2013 (Act 30 of 2013) effective from 01.01.2014 and CBDT Circular No.30/16 dated 25.10.2016 and also confirmation of the same by the CIT(A) is bad in law, unjustified, surmises and conjectures.
For that on the facts and circumstances of the case the A. O has erred in considering irrelevant materials, which has vitiated the order of Assessment.
For that the impugned order is misconceived and arbitrary in nature.
For that the appellant prays to add, amend, modify, and delete any ground, if necessarily.
For that other grounds, if any, will be urged at the time of hearing.”
Before us, the Ld. AR submitted that the said parcel of land was jointly acquired in the name s of the assessee along with one Bijendra Rai, Bhuneshwar Rai, Ashok Rai and Sukhdevan Rai. The relevant documents deserves to be extracted as under:
The Ld. AR mentioned that in the case of Bhuneshwar Rai for AY 2016-17 the CIT(A) in that case has given a finding as under:
“4.1 The Ld. AO has interpreted the exemption granted by the above section to be restricted to only compulsory acquisition which is incorrect. As per Section 10(37) (iii) any transfer the consideration for which is determined or approved by the Central Government is entitled for exemption. Further, the CBDT vide circular no. 36/2016 dated 25.10.2016 has clarified that compensation received in respect of award or agreement which has been exempted 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 is no specific provision of exemption for such compensation in the Income-tax Act, 1961. In view of the above the Assessing Officer is directed to delete the addition of Rs. 1,20,91,296/- Accordingly, the appeal on these grounds is allowed.” 3.1 Thereafter, the Ld. AR relied on the order of Ld. CIT(A) in the case of Bhuneshwar Rai to plead that on identical set of facts there is a finding in favour of one of co-owners and the same should be used in the present case to grant relief.
3.2 The Ld. DR on the other hand, stated that in the present case considerable investigation and enquiries have been done and thereafter the Ld. AO has arrived at a conclusion which is based on facts and it is only thereafter that action of Ld. AO has been upheld by the Ld. CIT(A) on that basis. The Ld. DR assailed the finding of Ld. CIT(A) in the case of Bhuneshwar Rai by stating that the complete set of facts were not before him as were available before the present CIT(A).
We have carefully considered the rival submissions and have also gone through all the documents before us. We find that indeed in one of co-owner’s case, the Ld. CIT(A) has granted relief on the basis of finding (extracted supra). We are also aware that in the present case there has been considerable finding of fact done by the Ld. AO. We find that even a statement under oath has been recorded of the District Land Acquisition Officer, where he has categorically stated that the land was not acquired on compulsory basis. Thus, the balance of convenience would appear to be in favour of the Ld. AO in the present case. However, since on the same set off facts two different views have been taken by two different CIT(A)s, we Dina Nath Yadav deem it fit to remand the present matter back to the file of Ld. CIT(A) for re-examining the issue in light of CBDT Circular (36/2016) relied upon by the Ld. CIT(A) in the case of Bhuneshwar Rai. The Ld. CIT(A) must also consider the findings of his counterpart CIT(A) in taking a balanced view of the matter.
With these remarks, appeal of the assessee is allowed for statistical purposes.
Order pronounced on 19.05.2025