ACIT, REWARI vs. SH. KANWAR KISHORE BHARGAVA, REWARI

(ASSESSMENT YEAR: 2010-11) ACIT, vs Kanwar Kishore Bhargava, Circle, Rewari. C/o-M/s. Shree Nath Opticians, 27/13, Bhargava Market, New Bawal Chowk, Rewari. PAN-AAXPB5111A (Appellant) (Respondent) Appellant by Sh. Salil Kapoor & Sh. Prashant Bhargava, Adv. Respondent by Sh. Sampurnanand, Sr.DR Date of Hearing 28.09.2017 Date of Pronouncement 20.10.2017 ORDER PER K.N.CHARY, JUDICIAL MEMBER Aggrieved by the order dated 04.04.2014 in appeal No.142/2013-14 passing by the Commissioner of Income Tax (Appeal) [in short “CIT(A)”], Rohtak for 2010-11 Assessment Year, the Revenue is in appeal before us on the following grounds:-

1. “On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and facts in deleting the addition of Rs.1,61,63,407/- made by the AO under the head Long Term Capital Gains by disallowing exemption claimed by the assessee u/s 10(37). The Ld. CIT(A) deleted this addition without appreciating the facts narrated in detail in the assessment order.

2. On the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and in facts in treating the Gair Mumkin land as agricultural land without appreciating the facts of the case.”

2. Relevant facts in brief are that the assessee is an individual deriving income from salary, house property, profit & gains from business and income from other sources. Assessee is entitled for 1/3 share in an extent of 51 Kanal 10 Marla of agricultural land which is a capital asset within the meaning of section 2(14)(iii) of the Act, was acquired by HUDA in the year 1993 and out of this extent of land, 15 Kanal 09 Marla was categorized as “gair mumkin” & 36 Kanal 1 Marla was categorized as “chahi” by the Revenue authorities. Assessee received the compensation but the originally awarded compensation was enhanced twice. For the AY 2010-11, he filed the return of income on 28.07.2010 declaring a total income of Rs.2,00,86,970/- which he revised on 04.03.2011 with the income of Rs.3,62,50,380/-. The assessee further revised the income on 09.01.2013, stating his income as Rs.2,00,86,970/-. During the proceedings u/s 143(3) of the Act, the AO found that during the relevant year, the assessee received the enhanced compensation of Rs.1,61,63,406/- and interest of Rs.3,83,46,020/- and claimed u/s 10(37) of the Act which the AO denied that on two grounds. First one is that according to AO the “gair mumkin” can be used neither for agricultural nor housing purposes as such it is not qualified u/s 10(37) of the Act. The second ground is that since the land in this case was acquired by the HUDA in the year 1993 and the original compensation was received before 01.04.2004, as such, in view of the fact that section 10(37) of the Act was inserted in the Income Tax Act, 1961 w.e.f 01.04.2005, no exemption u/s 10(37) of the Act could be allowed. On this premise, an amount of Rs.1,61,63,406/- was added back to the income of the assessee.

3. In the appeal preferred by the assessee, Ld.CIT(A) basing on the certificate issued by the Patwari, found that the Revenue authorities certified that the “gair mumkin” land has been classified as agricultural land where there are wells, water channels and water storage tank, and since the land of the assessee that was acquired by the HUDA abuts and contagious to the agricultural land where cultivation is being carried out indicating that there are wells, water channels and water storage tank, this particular “gair mumkin” land also falls within the ambit of agricultural land and is, therefore, entitled to the benefit of section 10(37) of the Act. He further held that there is no stipulation under law that the exemption u/s 10(37) of the Act is available only when the agricultural land is compulsorily acquired on or after 01.04.2004 and since the assessee received the enhanced compensation after 01.04.2004, it cannot be said that the benefit u/s 10(37) is not available to the assessee.

Revenue challenges this finding in this appeal.

He also submitted that the transfer of property took place in the year 1993 and the assessee received the awarded compensation long prayer to 01.04.2004 as such even the enhanced compensation as to relate back to the date of original compensation thereby stands out of consideration u/s 10(37) of the Act. Per contra, it is the argument of the Ld.AR that wherever the irrigation facilities like wells, water channels, water storage tank is available or the cultivation is going on even the “gair mumkin” land are classified as agricultural land by the Revenue authorities and that is the reason why basing on the certificate issued by the Revenue Officer, Ld.CIT(A) concluded that the land of the assessee was also an agricultural land inasmuch as cultivation was being carried out in such land which not possible without the presence of the irrigation facilities. Nextly, he submits that in so far as that part of the compensation that was received after 01.04.2004 in respect of capital assets within the meaning of section 2(14)(iii) of the Act, benefit of section 10(37) of the Act is available.

6. “I have considered the issue and the submissions made by the AR. Sub section (37) has been inserted w.e.f 1.4.2005 to provide relief in respect of compulsory acquisition of agricultural land, being capital asset as defined in section 2(14)(iii) wherein the compensation or enhanced compensation has been received on or after 01.04.2004. It does not stipulate that exemption is available only when the agricultural land is compulsorily acquired on or after 01.04.2004. It is not in dispute that the assessee received the enhanced compensation during the year under consideration i.e. after 01.40.2004. It is also a fact that Gair Mumkin land has been certified by the Patwari concerned that the Gair Mumkin land is an agricultural land where there were wells, water channels and water storage tank. This land abuts the land where cultivation is carried out and is contiguous to it. No cultivation can be carried out without having these necessities. Hence, the Gair Mumkin land also falls within the ambit of “”agricultural land” and is therefore, entitled to the benefit of 10(37) of the IT Act.”

7. On a careful consideration of the facts of this case in the light of the observation of the Co-ordinate Bench in the decision referred to above, we are convinced that the reasoning given by the Ld.CIT(A is impeccable to grant relief to the assessee and there are no grounds to interfere with the same. We, therefore, uphold the order of the Ld.CIT(A) and find that the appeal is liable to be dismissed. We accordingly dismiss the same.

The order is pronounced in the open court on 20th October, 2017.