YASH TRAVELS AND TOURS PRIVATE LIMITED,NAGPUR vs THE INCOME TAX OFFICER WARD - 2(2) NAGPUR, NAGPUR

PER PAWAN SINGH, JUDICIAL MEMBER:

This appeal by the assessee is directed against the order of National Faceless

Appeal Centre, Delhi (NFAC)/learned Commissioner of Income Tax (Appeals) [in

short, the ld. CIT(A)] dated 18/06/2025for the Assessment Year (AY) 2023-24. The assessee has raised the following grounds of appeal.

“1. The Ex-parte order passed by the Commissioner of Income Tax Appeal, National Faceless Appeal Centre (CIT(A) NFAC) is illegal, invalid and bad in law; 2. On the facts and circumstances the learned CIT(A) NFAC erred in confirming addition of Rs. 13,08,04,359/- made by the assessing officer is unjustified, unwarranted and excessive.

On the facts and circumstances the learned CIT(A) NFAC erred in not considering the notices issued by the CIT(A) NFAC have not been received by the assessee and assessee is having no knowledge of income tax PORTAL, therefore order passed is illegal, invalid and bad in law; 4. On the facts and circumstances the learned CIT(A) NFAC ought to have considered the amount of Rs. 13,08,04,359/- was received by the assessee from Director of National Highway Authority of India towards acquisition of agriculture

Yash Travels and Tours Pvt. Ltd. ITANo. 481/Nag/2025 (A.Y. 2023–24)

land for National Highway Authority of India were exempt U/s. 10(37) of the Act, therefore addition confirmed is unjustified, unwarranted and excessive; 5. On the facts and circumstances the learned CIT(A) NFAC erred in making addition of Rs. 13,08,04,359/- as the National Highway Authority of India has also not deducted the TDS on full compensation amount as the income is exempt, therefore addition confirmed is unjustified, unwarranted and excessive; 6. On the facts and circumstances the learned CIT(A) NFAC ought to have accepted that the assessee has received compensation towards acquisition of agriculture land and the same is exempt as per provision of section 10(37) of the Income Tax Act, therefore addition made is illegal. invalid and bad in law;

The assessee is denied the liability of interest charges U/s. 234A, 234B and 234C of the Income Tax Act, the same may kindly be deleted. 8. The appellant craves leave to amend, add or take a new ground or grounds at the time of hearing.”

Rival submissions of both the parties have been heard and record perused. The

learned authorised representative (ld AR) of the assessee submits that the

assessee company received compensation of Rs. 26.22 Crore, on compulsory

acquisition of their land for the purpose of making National High Way No.7 from

Nagpur to Hyderabad. Copy of award passed by Additional Commissioner

Nagpur, is placed on record. The total amount of Rs. 26.22 Crore consists of Rs.

13,08,04,359/- on account of compensation and Rs. 13,14,58,381/- as

statutory interest on such compensation. The copy of payment voucher

specifying the amount of interest of Rs. 13.14 Crore and interest component on

such compensation of Rs. 13.08 Crore is filed at page No. 27 of paper Book.

Though, the entire amount of Rs. 26.22 Crore is exempt from tax, still the Land

Acquisition Officer and Project Director of NHAI, while making payment

deducted TDS of Rs.1,35,79,651/- on the interest component only. The lower

authorities have allowed the exemption on interest component of Rs.

Yash Travels and Tours Pvt. Ltd. ITANo. 481/Nag/2025 (A.Y. 2023–24)

13.14Crore and treated the compensation of Rs. 13.08 crore as income from

other sources. The amount of compensation received on compulsory acquisition

is exempt under section 10(37) of Income Tax Act (Act). The assessee by

mistake in the return of income claimed the entire amount as exempt as

agriculture income. However, on realising mistake such facts were brought in

the notice of assessing officer (AO). TDS on interest is duly reflected in Form-

26AS. The AO treated such interest income as income from ‘other sources’. The

ld AR of the assessee submits that CBDT in its Circular no. 36 of 2016 has also

clarified that compensation received on compulsory acquisition of land under

Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation

and Resettlement Act, 2013 (RFCTLAAR Act) is exempt from levy of tax. Section

96 of RFCTLAAR Act is wider in scope than the tax exemption provided under

existing Income Tax Act. Copy of CBDT Circular is already placed on record. The

ld. AR of the assessee further submits that once, the lower authority have

allowed interest component as exempt and thus, committed error in treating

the compensation as income from ‘other sources’. The ld AR of the assessee

submits that entire amount of Rs. 26.22 crore is exempt from tax. To support

his submissions, the ld AR of the assessee relied on the following case laws;  Shivajirao and Ors. Vs. State of Maharashtra in WP No. 5402 of 2013,  CIT vs. Ghanshyam (2009) 8 SCC 412 (SC),  Harry Township Ltd. vs. ACIT (2025) 39 NYPTTJ 504 (Del-Trib),  Kusum Jayram Thakur vs. ITO (2024) 38 NYPTTJ 601 (Pune-Trib),  Sumesh Kumar vs. ITO in ITA No. 5207/Del/2017 dated 05.03.2020. 3. The assessee has filed following documents on record. 3

Yash Travels and Tours Pvt. Ltd. ITANo. 481/Nag/2025 (A.Y. 2023–24)

 Copy of award passed by Additional Commissioner, Nagpur Division, Nagpur dated 09.10.2013 in Arbitration Case No. 59/ARB/2011-12,  Copy of payment voucher of compensation with detail of compensation and working of interest on such compensation paid on 01.06.2011,  Copy of return of income with computation of income, copy of audit report with balance-sheet and all relevant financial statements,  Copy of Form AS26 (details of TDS),  Copy of bank statement of assessee,  Copy of various show cause notices issued by lower authorities and reply thereof by assessee. 4. On the other hand, the ld CIT-DR for the revenue supported the order of lower

authorities. The Ld. CIT-DR for revenue submits that assessee in the return of

income claimed agriculture income. The assessing officer allowed the interest of

Rs. 13.14 Crore on which TDS was made. And remaining amount was treated

as income from other sources. The assessee wrongly claimed agriculture

income. As per contents of order of CIT(A), the assessee failed to furnish

complete details and thus, in absence of detail, the Ld. CIT(A) confirmed the

order of assessing officer.

In short rejoinder submission, the Ld. AR of the assessee submit that before

assessing officer, the assessee furnished complete details and explain the fact

that exact income claimed by the assessee is in fact amount of compensation

received on compulsory acquisition of land along with statutory interest allowed

by land acquisition authorities. The lower authorities failed to appreciate the

fact in proper perspective.

Yash Travels and Tours Pvt. Ltd. ITANo. 481/Nag/2025 (A.Y. 2023–24)

We have considered the rival submissions of both the parties and have gone

through the orders of lower authorities carefully. We have also deliberated

on various case laws and the documents filed by assessee. We find that

while filing return of income the assessee wrongly claimed compensation

and interest thereon as exempted agricultural income. However, during

assessment, the assessee furnished sufficient evidence to substantiate the

fact that in fact the assessee has received compensation on compulsory

acquisition of their land with interest. We find that the land of assessee was

acquired for extension of National Highway No. 7 from Nagpur to Hyderabad.

Copy of award passed by Additional Commissioner, Nagpur is on record. We

find that along with the amount of award, the assessee received statutory

interest. As per operative part of award dated 09.10.2013, the assessee-

company was awarded Rs. 12,78,58,500/- for acquisition of 1.23 Hectare of

their lands. Out of which the assessee was already received Rs. 98,39,991/-.

The assessee was also allowed 10% additional amount of total

compensation i.e. is Rs.1,27,85,850/- as per Section 3-G(2) of National

Highway Act-1956. The assessee was further allowed interest @ 9.00% per

annum on the enhanced compensation w.e.f. from date of notification under

section 3-D of National Highway Act i.e. from 01.06.2011. As per working of

interest up to 31.07.2022, which is available at page No. 27, the interest on

compensation is Rs. 13,14,58,380/-. Thus, the assessee received total

amount of Rs. 26.22 Crore as per payment voucher, copy of which is

Yash Travels and Tours Pvt. Ltd. ITANo. 481/Nag/2025 (A.Y. 2023–24)

available at page No. 27 of paper Book. The lower authorities allowed

interest amount of Rs. 13.14 Crore as exempt, on which TDS was made by

Disbursing Authority. Such amount of interest on which TDS is made, is

clearly discernible at page No. 56 of PB (copy of Form-26 AS). However, the

amount of original compensation of Rs. 13.08 Crore was treated as income

from ‘other sources’. The treatment of such amount of compensation as

income from ‘other sources’ is erroneous. We find that CBDT in its Circular

No.36 of 2016 directed that that compensation received on compulsory

acquisition of land under RFCTLAAR Act is exempt from levy of tax. It was

also directed that section 96 of RFCTLAAR Act is wider in scope than the tax

exemption provided under existing Income Tax Act.

The Hon’ble Chhattisgarh High Court in Sanjay Kumar Baid vs ITO (supra)

held that where assessee received certain amount as compensation on

account of compulsory acquisition of his agricultural land from NHAI under

National Highways Act, 1956, since section 96 of RFCTLARR Act providing for

exemption from income tax, stamp duty and fees would also be applicable to

land acquired under Act of 1956, assessee would not be liable to pay income

tax on amount of compensation paid to him. We also find that Hon’ble High

Court in para -16 of its order referred the decision of Supreme Court in NHAI

Vs P. Nagaraju's alias Cheluvaiah & Others (2022) 15 SCC-1, wherein it has

been clearly held that the benefits available to the landowners under the

RFCTLARR Act are to be also available to similarly placed landowners whose

Yash Travels and Tours Pvt. Ltd. ITANo. 481/Nag/2025 (A.Y. 2023–24)

lands are acquired under the 13 enactments specified in the Fourth Schedule

including the Act of 1956 and further held that all aspects contained in

Sections 26 to 28 of the RFCTLARR Act for determination of compensation

will also be applicable notwithstanding Sections 3-J and 3-G(7)(a) of the Act

of 1956 (NHAI Act).

We further find that recently the coordinate bench of Delhi Tribunal in

Mange Ram Vs PCIT (2026) 183 taxmann.com 424 (Delhi-Trib) also held

that where interest received under section 28 of Land Acquisition Act on

enhanced compensation formed part of enhanced value of land and retained

its capital character, it was not taxable as income from other sources

notwithstanding amendments introduced by Finance (No. 2) Act, 2009.

Thus, in view of the aforesaid factual and legal discussion, we direct the

assessing officer to allow exemption of entire amount of compensation of Rs.

13.08 Crore. In the result, the grounds of appeal raised by the assessee are

allowed.

In the result, this appeal of assessee is allowed.

Order announced in on 26th March, 2026 as per Rule 34 of Income Tax

(Appellate Tribunal) Rules-1963.

sSd/-/– SSd/-/–

KHETTRA MOHAN ROY PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai: Dated: 26/03/2026 Biswajit

Yash Travels and Tours Pvt. Ltd. ITANo. 481/Nag/2025 (A.Y. 2023–24)

Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Nagpur; and (5) Guard file. By order

Assistant Registrar ITAT, Nagpur

YASH TRAVELS AND TOURS PRIVATE LIMITED,NAGPUR vs. THE INCOME TAX OFFICER WARD - 2(2) NAGPUR, NAGPUR