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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
ORDER Per Dr. M. L. Meena, AM:
Both the appeals are filed by the assessee against the separate order of the ld.CIT(A) National Faceless Appeal Centre (NFAC), Delhi and CIT(A)-5, Ludhiana dated 30.01.2023 & 24.12.2018in respect of Assessment Year: 2016-17.
2. The assessee has raised the following grounds of appeal in ITA No. 91/Asr/2023:
“1. The Ld. CIT(A) NFAC has erred on facts & law in confirming the action of the AO of assessing the income of the assessee at Rs.30,02,350/- as against the income at Rs.3,39,360/- declared in the revised return of income filed on 27.05.2017.
2. The Ld. CIT(A) NFAC has erred on facts & law in rejecting the claim of exemption of the assessee from Long Term Capital Gains, arising from Compulsory Acquisition of Land under National Highway Act, 1956, by relying on Section 96 of RFCTLARR Act, 2013, and clarificatory Circular No.36/2016 (F.No.225/88/2016- ITA.II), Dated 25-10-2016.
3. The Ld. CIT(A) NFAC has erred on facts & law in rejecting the claim of exemption of the assessee from Long Term Capital Gains, arising from Compulsory Acquisition of Land by relying on Circular No.36/2016 (F.NO.225/88/2016-ITA.II), Dated 25-10-2016 while recording the finding that the case of the assessee is covered by order of the Agra Bench of the Hon’ble ITAT in the case of Jagdish Arora in which it has been held that the benefit of section 96 of RFCTLARR Act, 2013 cannot be given to the appellant.
3 & 135/Asr/2023 Ranjeet Singhv. ITO & Ors.
4. The Ld.CIT(A)NFAC has erred on facts and law in rejecting the claim of exemption of the assessee from Long Term Capital Gains, arising from Compulsory Acquisition of Land under National Highway Act, 1956, while relying on the order of Agra Bench of the Hon'ble ITAT in the case of Jagdish Arora while denying the opportunity of hearing to the assessee and without confronting the assessee with this case as the case of the assessee is covered by order of the Coordinate Benches of Hon’ble ITAT.
5. The Ld.CIT(A)NFAC has erred on facts and law in rejecting the claim of exemption of the assessee from Long Term Capital Gains, arising from Compulsory Acquisition of Land under National Highway Act, 1956, while ignoring the contention of the assessee that the CIT(A) NFAC has allowed the exemption, on identical facts, in the case of Jaswinder Kaur Sahni, Bathinda.
6. The Ld.CIT(A)NFAC has erred on facts and law in rejecting the claim of exemption of the assessee from Long Term Capital Gains, arising from Compulsory Acquisition of Land under National Highway Act, 1956, while ignoring the contention of the assessee that the exemption has been allowed, on identical facts, by the Cuttack Bench of the Hon’ble ITAT in the case of Smt. Annapurna Mishra Vs. ITO [2019] 106 taxmann.com 170 and Patna Bench of the Hon'ble ITAT in the case of ITO, Patna vs. Shri Suresh Prasad [Patna Bench] and Kerala High Court in the case of Raghavan Nair Vs. ACIT [2018] 89 taxmann.com 212 [Kerala].
7. The Ld.CIT(A)NFAC has erred on facts and law in rejecting the claim of exemption of the assessee from Long Term Capital Gains, arising from Compulsory Acquisition of Land under National Highway Act, 1956, while ignoring the settled principle of law as laid down by Apex Court that where there are two opinions of Court on one issue, the opinion in favor of the assessee should be followed.
The Ld.CIT(A) NFAC has erred on facts and law in rejecting the claim of exemption of the assessee from Long Term Capital Gains, arising from Compulsory Acquisition of Land under National Highway Act, 1956, as the CIT(A) NFAC has failed to follow the principle of juridical consistency as laid down by Apex Court by ignoring the order of CIT(A) NFAC in the case of Jaswinder Kaur Sahni of Bathinda having identical facts.
3. Grounds of appeal in ITA No. 135/Asr/2023:
“1. That the learned CIT(A) is not justified in dismissing appeal of the appellant and confirming the addition of Rs. 87,36,536/- made by the Assessing Officer.
2. That the learned CIT(A) has erred in law and on facts in confirming addition of Rs. 87,36,536/- on account of capital gain by upholding that the provisions of section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (RFCTLARR Act, 2013) are not applicable to the compensation received in respect of land acquired under the National Highway Act, 1956.
3. That the learned CIT(A) has erred in law and on facts by upholding the addition of Rs. 87,36,536/- made under the head capital gain on account of compensation received in respect of land acquired under the National Highway Act, 1956 exempt from tax under the RFCTLARR Act, 2013 as per interpretation of law made by the Hon'ble ITAT, Chandigarh Bench, Chandigarh and the Circular issued by the Board No. 36/2016 dated 25.10.2016.
4. That the appellant craves to add, amend or alter any ground of appeal on or before the hearing.”
The sole issue, in both the appeal pertains to rejection of the claim of exemption of the assessee from Long Term Capital Gains, arising from Compulsory Acquisition of Land under National Highway Act, 1956, by No.36/2016 (F.No.225/88/2016- ITA.II), dated 25-10-20165.
Briefly the facts of the case are discussed from Assessment Year: 2016-17 as a lead case that residential land measuring 120.51 Sq. Yards was acquired under National Highways Act, 1956 vide Notification dated 04.02.2014. The appellant received compensation of Rs.27,96,629/- and interest amounting to Rs.3,40,614/- totaling to Rs.31,37,243/-. The appellant claimed the amount of Rs.26,62,987/- as exempt from Income Tax in view of Section 96 of the RFCTLAAR Act CBDT and Circular No.36/2016 dated 25.10.2016.The AO has held that the land of the appellant was not acquired under the RFCTLAAR Act and award or agreement was not made under the RFCTLAAR Act so as to enable the appellant to be eligible u/s 96 of the RFCTLAAR Act. Accordingly, the benefit of exemption from income-tax is provided u/s 96 of the Act and that land acquisition effected under National Highway Act, 1956 is not eligible for benefit of exemption from income-tax as provided u/s 105 of that Act. The AO treated the amount of Rs.26,62,987/- as ‘Long Term Capital Gains’ u/s 45(5)(a) of the Act and added to the income of the appellant.
Notification dated 31.12.2014 was issued by Ministry of Law & Justice wherein sub section (3) of section 105 of the RFCTLAAR Act was substituted by providing that the provision of the Act relating to the determination of compensation in accordance with First Schedule, rehabilitation and resettlement in accordance with Second schedule and infrastructure amenities in accordance with the Third Schedule shall apply to the enactments relating to land acquisition specified in the Fourth Schedule with effect from 01.01.2015. The Notification is only applicable to extend certain benefits in accordance with the RFCTLAAR Act and such acquisitions made under the enactments relating to land acquisition specified in Fourth Schedule were not brought under the RFCTLAAR Act itself. If the intention of the Central Government were to extend the benefit of exemption u/s 96 of the RFCTLAAR Act to the acquisitions made under the National Highway Act, 1956, it could have omitted the National Highway Act, 1956 specified in the Fourth Schedule as provided u/s 105(2) of the RFCTLAAR Act. In view of the above, the AO concluded that the appellant is not eligible for claiming exemption from income tax on the basis of Circular No.36/2016 of the CBDT and u/s 96 of the RFCTLAAR Act and the amount of compensation received by the appellant on acquisition of her 1961. The AO also observed that notification for acquisition of land was issued in this case on 04.02.2014 and Award was given on 07.11.2014.
The Land Acquisition Collector has clearly held in his order that proprietary rights of the acquired land shall vest in Central Govt, with effect from 07.11.2014. However, Notification regarding amendment in section 105 of the RFTCLAAR Act was issued on 31.12.2014, which was applicable from 01.01.2015. Hence, even otherwise, the notification is not applicable in this case. He further discussed that the facts of the instant appeal are similar to the facts of the Income-Tax Appellate Tribunal in the case of Jagdish Arora, Agra v. ITO (supra). The case laws relied upon by the appellant are distinguishable on facts. It can be seen that the appellant is not eligible for claiming exemption from income tax on the basis of Circular No.36/2016 of the CBDT and u/s 96 of the RFCTLAAR Act. It is further noted that the notification for acquisition of land was issued in this case on 04.02.2014 and Award was given on 07.11.2014. The Land Acquisition Collector has clearly held in his order that proprietary rights of the acquired land shall vest in Central Govt, with effect from 07.11.2014. However, Notification regarding amendment in section 105 of the RFTCLAAR Act was issued on 31.12.2014, which was applicable from 01.01.2015. Hence, I agree with AO reason to interfere with the AO’s order on the issue. Therefore, in view of the above discussion, the amount of compensation received by the appellant on acquisition of the land is taxable under the provisions of the Income Tax Act, 1961.In the case of Jagdish Arora, Agra v. ITO Ward-1(2), Agra in for Assessment Year: 2015-16, the Hon’ble ITAT Agra Bench vide order dated 14.06.2021 held vide para 19 to 21 is as under:
“19. As mentioned by the assessing officer in the assessment order, theacquisition award under the National Highway authority act 1956 was passed on24.2.2014, though cheques were received on 27/1/2015. In our consideredopinion, the chargeability of the income is required to be determined inaccordance with section 4 and 5of the Income Tax Act 1961. In the case of title as Shri Krishna Kumar Sharma, this tribunal in para6 had held as under:
6. From the perusal of aforesaid provision, the award made in Section 3G of the National Highways Act on 05.02.2013 and compensation was given as per Form 16A on 01.01.2014. Hence, we do not find applicability of RFCTLARR Act to the transaction under consideration before us. We are of the opinion that even section 24 is not applicable as in the present case award was passed on 7 .12.2013 which is a date prior to the date when RFCTAAR Act was made applicable.Therefore, its provisions are not applicable. Further as per section 5 income of assessee (compensation received by assessee) is required to be taxed when the said compensation have accrued in favour of the assessee or deemed to have been accrued. Undisputedly, the assessee was entitled to receive the compensation when the award was passed quantifying the amount in favor the assessee for acquisition of land. Therefore, in our opinion, the cut off date for the purpose of determining its taxability is the date when
9 & 135/Asr/2023 Ranjeet Singhv. ITO & Ors. the assessee was entitled to receive the compensation and not the date when it was actually received by the assessee. In the light of the above we do not find any merit in o he assessee. Accordingly, the same deserves to be dismissed"
Respectfully following the decision in the matter of Sh. Krishna Kumar Sharma, we are left with no other option but to dismiss the appeal of the assessee.”
The CIT (A) also relied on the Hon’ble ITAT Agra Bench in the case of Krishna Kumar Sharma v. DCIT, Mathura in dated 10.03.20121 where relevant paras 5 & 6 is as under:
“5. We have heard the rival submissions and have gone through the material available on record. It is clear that the land in question was acquired by National Highway Authority of India on 05.02.2013 under the National Highway Authority Act, 1856. When the award was passed acquiring the land, the Right to Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlement Act, 2013 (RFCTAAR Act] came into force with effect from 1st January, 2014 and the compensation as mentioned in Form 16A was given to the assessee on 01.01.2014. Section 3G of the National Highways Act, 1956 provides as under:
“(3 G) Determination of amount payable as compensation.— (1) Where any land is acquired under this Act, there shall be paid an amount which shall be determined by an order of the competent authority.
(2) Where the right of user or any right in the nature of an easement on, any land is acquired under this Act, there shall be paid an amount to the owner and any other person whose right of enjoyment in that land has been affected in any manner whatsoever by reason of such acquisition an amount calculated at ten per cent; of the amount determined under subsection (l),for that land.
(3) Before proceeding to determine the amount under sub-section (1) or sub- section [2], the competent authority shall give a public notice published in two
(4) Such notice shall state the particulars of the land and shall require all persons interested in such land to appear in person or by an agent or by a legal practitioner referred to in sub-section (2) of section 3C, before the competent authority, at a time and place and to state the nature of their respective interest in such land.
(5) If the amount determined by the competent authority under subsection (1] or sub-section (2) is not acceptable to either of the parties, the amount shall, on an application by either of the parties, be determined by the arbitrator to be appointed by the Central Government.
(6) Subject to the provisions of this Act, the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply to every arbitration under this Act.
(7) The competent authority or the arbitrator while determining the amount under sub-section (1) or sub-section (5), as the case may be, shall take into consideration—
(a) the market value of the land on the date of publication of the notification under section 3 A;
(b) the damage, if any, sustained by the person interested at the time of taking possession of the land, by reason of the severing of such land from other land;
(c) the damage, if any, sustained by the person interested at the time of Taking possession of the land, by reason of the acquisition injuriously affecting his other immovable property in any manner, or his earnings;
(d) if, in consequences of the acquisition of the land, the person interested is compelled to change his residence or place of business, the reasonable expenses, if any, incidental to such change."
From the perusal of aforesaid provision, it is clear that the award was made in Section 3G of the National Highways Act on 05.02.2013 and compensation was given as per Form 16A on 01.01.2014. Hence, we do not find applicability of RFCTAAR Act to the transaction under consideration before us. We are of the opinion that even section 24 is not applicable as in the present case award was 11 & 135/Asr/2023 Ranjeet Singhv. ITO & Ors. passed on 05.02.2013,which is a date prior to the date when RFCTAAR Act was made applicable. Therefore, its provisions are not applicable. Further as per section 5 of the IT Act, income of assessee (compensation received by assessee] is required to be taxed when the said compensation have accrued in favour of the assessee or deemed to have been accrued. Undisputedly, the assessee was entitled to receive the compensation when the award was passed quantifying the amount in favour of the assessee for acquisition of land. Therefore, in our opinion, the cutoff date for the purpose of determining its taxability is the date when the assessee was found to been titled to receive the compensation and not the date when it was actually received by the assessee. In the light of the above we do not find any merits in appeal of the assessee. Accordingly, the same deserved to be dismissed.”
8. The Ld. AR for the appellant submitted that the Ld. CIT(A) NFAC has erred on facts & law in confirming the action of the AO of assessing the income of the assessee at Rs.30,02,350/- as against the income at Rs.3,39,360/- declared in the revised return of income filed on 27.05.2017; that he was not justified in law and on facts in rejecting the claim of exemption of the assessee from Long Term Capital Gains, arising from Compulsory Acquisition of Land under National Highway Act, 1956, by relying on Section 96 of RFCTLARR Act, 2013, and clarificatory Circular No.36/2016 (F.No.225/88/2016- ITA.II), Dated 25-10-2016 and that the Ld. CIT(A) NFAC has erred on facts & law in rejecting the claim of exemption of the assessee from Long Term Capital Gains, arising from Compulsory Acquisition of Land by relying on Circular No.36/2016 (F.NO.225/88/2016- ITA.II), Dated 25-10-2016whilerecording the finding that the case of the case of Jagdish Arora in which it has been held that the benefit of section 96 of RFCTLARR Act, 2013 cannot be given to the appellant from Long Term Capital Gains, arising from Compulsory Acquisition of Land under National Highway Act, 1956, while ignoring the contention of the assessee that the CIT(A) NFAC has allowed the exemption, on identical facts, in the case of Jaswinder Kaur Sahni, Bathinda; that ignored the contention of the assessee that the exemption has been allowed, on identical facts, by the Cuttack Bench of the Hon’ble ITAT in the case of Smt. Annapurna Mishra Vs. ITO [2019] 106 taxmann.com 170 and Patna Bench of the Hon'ble ITAT in the case of ITO, Patna vs. Shri Suresh Prasad [Patna Bench] and Kerala High Court in the case of Raghavan Nair Vs. ACIT [2018] 89 taxmann.com 212 [Kerala]. Thus, the Ld. AR argued that the Ld.CIT(A)
NFAC has erred on facts and law in rejecting the claim of exemption of the assessee from Long Term Capital Gains, arising from Compulsory Acquisition of Land under National Highway Act, 1956, while ignoring the settled principle of law as laid down by Apex Court that where there are two opinions of Court on one issue, the opinion in favour of the assessee should be followed. The AR argued that Ld. CIT(A) NFAC has erred on facts and law in rejecting the claim of exemption of the assessee from Long National Highway Act, 1956, as the CIT(A) NFAC has failed to follow the principle of juridical consistency as laid down by Apex Court by ignoring the order of CIT(A) NFAC in the case of Jaswinder Kaur Sahni of Bathinda on identical facts. In support, he filed a written synopsis which reads as under:
“1. The residential land measuring 120.51 Sq yards of the assessee was acquired under National Highway Act, 1956 vide notification dated 04.02.2014/award has been given on 07.11.2014 [para 5.3.1 of the order of the CIT(A) and para 6 on page 6 of order of the AO] and the assessee received the following compensation through bank on 19.05.2015. Compensation 21,51,253/- 30% solatium 6,45,376/- Addl. Compensation [calculated 3.46.558/- @12% of the basic price
31,43,187/- Less: TDS 35,695/- Total amount received 31.07.491/-
1.1 The assessee filed his ITR for the AY 2016-17 on 21-12-2016 showing total income at Rs. 29,77,350/- including long term capital gains of Rs. 26,62,987/-. Thereafter, the assessee revised the ITR on 27.05.2017 showing total income at Rs.3,39,360/- under the head income from other sources.
1.2 The assessee claimed the above stated amount of Rs.27,96,629/- i.e., Compensation of Rs. 21,51,253/- and Solatium @ 30% of Rs.6,45,376/- in the revised return of income as exempt from Income Tax in view of Section 96 of the RFCTLARR Act, 2013 and Circular no. 36/2016 dated 25.10,2016.
In the case of the Assessee, the award was given on 07.11.2014 (also stated by AO in para 6 page-6), but it is a matter of fact that the 14 & 135/Asr/2023 Ranjeet Singhv. ITO & Ors. award of compensation was not paid to the Assessee and it was paid only pn 19.05.2015 (proof in the form of bank statement is enclosed in the paper book-2-4).
The AO in his order has rejected the claim of the Assessee on two grounds and the same are dealt in as under:
a) The AO has ignored the fact that since the compensation on account of compulsory acquisition of land has been received during the FY 2015-16 [i.e. 19.05.2015] the same is taxable under Section 45(5)(a) of the Act in the previous year in which such compensation has been first received. b) Reliance is placed on the letter of Ministry of Transport and Highways dated 28th December 2017 [PB 74-80] in which it has been stated as under:-
“I am directed to say that the land required for National Highway Projects is acquired under the provisions contained in Section 3 of the National Highways (NH) Act, 1956. Pursuant to the enactment of the RFCTLARR Act of 2013 and its coming into force with effect from 01.01.2014, certain provisions of the 2013 Act became applicable to the other related Acts mentioned in the Fourth Scheduled, including the NH Act, 1956 with effect from 01.01.2015 in terms of Section 105(3) of the RFCTLARR, 2013. ” c) Further in the letter dated 28.12.2017 issued by Ministry of Road Transport & Highways under the subject: Land Acquisition under the National Highways Act, 1956 has been stated in para 4.6 (iii) as under: -
“(a) All cases of Land Acquisition where the Awards had not been announced under section 3G of the NH Act till 31.12.2014 or where such awards had been announced but compensation had not been paid in respect of majority of the land holdings under acquisition as on 31.12.2014, the compensation would be payable in accordance with the First Schedule of the RFCTLARR Act, 2013.” d) The reliance was placed on the order of Chandigarh Bench of the ITAT in the case of Satish Kumar Vs. ITO in [PB 22- 42] in which the compensation received by the assessee on 15 & 135/Asr/2023 Ranjeet Singhv. ITO & Ors. 05.11.2014 and 23.11.2015 under National Highway Act on compulsory acquisition of land by NHAI has been held to be exempt u/s 96 of the RFCTLARR Act vide circular no 36/2016 dt. 25.10.2016. e) The case of the assessee is covered by the orders of Rajasthan High court in the case of Gopa Ram Vs. UOi dt. 22.01.2018 [followed by Chandigarh bench of the ITAT in the case of Satish Kumar] in which it has held that the provisions of the RFCTLARR Act, 2013 are applicable to National Highway Act, 1956 f) Hon’ble Supreme court in the case of UOI vs. Tarsem Singh others dated 19.09.2019 Civil Appeal No. 064 of 2019 it has been held by the Apex Court that the provisions of RFCTLARR Act, 2013 are applicable to land acquired under national highway Act and the compensation has to be calculated and paid in accordance with the provisions of RFCTLARR Act, 2013. g) High Court of Kerla in the case of Raghavan Nair v. ACIT - [2018] 89 taxmann.com 212 (Kerala) [PB 7-16] in which it has been held that the compensation received for compulsory acquisition of agriculture land for Kochi Metro Rail Project is exempt under section 96 of the RFCTLARR Act, 2013. h) Reliance in this regard is also being placed on the judgment of the Hon’ble Punjab & Haryana High Court in the case of NHAI v. Modan Singh and Others and other group cases in FAO 756-2022 order dated 11.04.2023 wherein it has been held that the RECTLAAR Act, 2013 would apply to cases wherein award has been awarded prior to 31.12.2014 but compensation is not paid yet till 31.12.2014, even though the said acquisitions have been done under the NHAI Act, 1956. a) It is a matter of fact that the award of compensation was not paid to the Assessee and it was paid only on 19.05.2015 (proof in the form of bank statement is enclosed in the paper book-2 PB-4).
4. The CIT(A) at the time of dismissing the appeal of the Assessee has relied uponthe order of the Agra Bench of ITAT in the case of Jagdish Arora vs. ITO andthe order has been reproduced in para 5.3 page 15 to 21 of the order of CIT(A)NFAC and the findings of the Hon’ble Bench are Order of the CIT(A) Our arguments The Worthy CIT(A) has relied CIT(A) NFAC has not appraised the upon the order of the AO and of the order of ITAT in the case of has further held that the Arora vs. ITO before relying on the Judgment of the Hon’ble Agra and has ignored the detailed written Bench in the case of Jagdish submissions filed on 16.01.2023 Arora vs ITO is totally a) The CIT(A) NFAC did not confront the applicable in the case of the assessee with the order of the Agra Bench Assessee. the ITAT in the case of the Jagdish Arora The facts in the case of the ITO and also did not take into cognizance Jagdish Arora vs ITO are as detailed written submissions filed before under: CIT(A) NFAC on 16.01.2023 in which the a) The acquisition order was attention of CIT(A) NFAC was drawn to the awarded on 24.02.2014 and order of Jaswinder Kaur Sahni Bathinda the payment was received on on identical facts in favour of the assessee 27.01.2015. CIT(A) NFAC has relied on the letter dt. b) The Hon’ble Bench in para 17 28.12.2017 of Ministry of Road Transport Highways & also on the judgement of at page-13 order has stated that Court in the case of UOI vs. Tarsem Singh the no notification has been dated 19.09.2019 & also on the order of brought to the notice of the High Court in the case of Raghavan Nair v. Bench by the Ld. AR wherein it is ACIT - [2018] 89 taxmann.com 212. clear that benefit Order of Agra Bench in the case of of RFCTLAAR Act 2013 has Arora distinguishable on facts been extended to land a) The perusal of the order of Krishan acquired under the The Sharma proves that the award in the case National Highways Act, 1956 before the Hon’ble Bench was made on c in the absence of notification 05.02.2013 and the compensation was the benefit under section 96 of received on 01.01.2014 and since both the RFCTLAAR Act 2013, dates falls prior to the date of application cannot be extended to the RFCTLAAR Act. i.e. 01.01.2015 the case Assessee. Krishan Kumar Sharma Tdecided on c) Further, it was held that, followed bv the Hon’ble Agra Bench in though cheques were received case of Jagdish Arora cannot be applied on 27.01.2015, the the case of assessee because in the changeability of the income is the assessee award has been given on required to be determined in 07.11.2014& the compensation has been 17 & 135/Asr/2023 Ranjeet Singhv. ITO & Ors. accordance with section 4 and received on 19.05.2015. 5 of the IT Act. b)The counsel for the assessee (Jagdish d) Further, reliance in the case did not refer the following important facts of Krishan Kumar Sharma the Agra Bench of the Hon’ble ITAT. wherein it has been held as (i) Letter of Ministry of transports under reproduced at Pg-21 of Highways dt. 28.12.2017 in which it has been stated CIT(A) order: that all cases of land acquisition where “6. From the perusal of Awards had not been announced under aforesaid provision, the award section 3G of the NH Act till 31.12.2014 made in Section 3G of the where such awards had been announced National Highways Act on compensation had not been paid in 05.02.2013 and compensation maioritv of the land holdings under was given as per Form 16A on acquisition as on 31.12.2014, the 01.01.2014. Hence, we do not compensation would be payable in find applicability of RFCTLARR accordance with the First Schedule of the Act to the transaction under RFCTLARR Act, 2013” although the consideration before us. We the Hon’ble Bench was pronounced on are of the opinion that even 14.03.2021 and above said letter is dt. section 24 is not applicable as 28.12.2017. in the present case award was passed on 7.12.2013 which is a date prior to the date when c) Further regarding the chargeabilitv of RFCTAAR Act was made income as per provisions of sec 4 and 5 applicable. Therefore, its Act, it is stated that compensation on provisions are not applicable. of compulsory acquisition of land has Further as per section 5 received during the FY 2015-16 i.e.
of RFCTLAAR Act 2013 has Arora distinguishable on facts been extended to land a) The perusal of the order of Krishan acquired under the The Sharma proves that the award in the case National Highways Act, 1956 before the Hon’ble Bench was made on c in the absence of notification 05.02.2013 and the compensation was the benefit under section 96 of received on 01.01.2014 and since both the RFCTLAAR Act 2013, dates falls prior to the date of application cannot be extended to the RFCTLAAR Act. i.e. 01.01.2015 the case Assessee. Krishan Kumar Sharma Tdecided on c) Further, it was held that, followed bv the Hon’ble Agra Bench in though cheques were received case of Jagdish Arora cannot be applied on 27.01.2015, the the case of assessee because in the changeability of the income is the assessee award has been given on 18 & 135/Asr/2023 Ranjeet Singhv. ITO & Ors. required to be determined in 07.11.2014& the compensation has been accordance with section 4 and received on 19.05.2015. 5 of the IT Act. b)The counsel for the assessee (Jagdish d) Further, reliance in the case did not refer the following important facts of Krishan Kumar Sharma the Agra Bench of the Hon’ble ITAT. wherein it has been held as (i) Letter of Ministry of transports Highways under reproduced at Pg-21 of dt. 28.12.2017 in which it has been stated CIT(A) order: that all cases of land acquisition where “6. From the perusal of Awards had not been announced under aforesaid provision, the award section 3G of the NH Act till 31.12.2014 made in Section 3G of the where such awards had been announced National Highways Act on compensation had not been paid in 05.02.2013 and compensation maioritv of the land holdings under was given as per Form 16A on acquisition as on 31.12.2014, the 01.01.2014. Hence, we do not compensation would be payable in find applicability of RFCTLARR accordance with the First Schedule of the Act to the transaction under RFCTLARR Act, 2013” although the consideration before us. We the Hon’ble Bench was pronounced on are of the opinion that even 14.03.2021 and above said letter is dt. section 24 is not applicable as 28.12.2017. in the present case award was passed on 7.12.2013 which is a date prior to the date when c) Further regarding the chargeabilitv of RFCTAAR Act was made income as per provisions of sec 4 and 5 applicable. Therefore, its Act, it is stated that compensation on provisions are not applicable. of compulsory acquisition of land has Further as per section 5 received during the FY 2015-16 fi.e. income of assessee (compensation 19.05.20151 the same is taxable under Section45(5)(a) of the Act In the previous received by assessee) is required to year inwhich such compensation has been be taxed when the said compensation firstreceived and the year of chargeabilitv have accrued in favour of the isnever the issue and the same has never assessee or deemed to have been beenpointed out by the AO. accrued. Undisputedly, the assessee d) Detailed submissions has already been was entitled to receive the filedon 16.01.2023 but these have not been compensation when the award was takeninto cognizance by the CIT(A).
19 & 135/Asr/2023 Ranjeet Singhv. ITO & Ors. passed quantifying the amount in favor the assessee for acquisition of land. Therefore, in our opinion, the cut off date for the purpose of determining its taxability is the date when the assessee was entitled to receive the compensation and not the date when it was actually received by the assessee. In the light of the above we do not find any merit in o he assessee. Accordingly, the same deserves to be dismissed"
We have heard both the sides, perused the material on record, impugned order and case laws cited before us.Admittedly, in this case, the notification for compulsory acquisition of land was issued on 04.02.2014 and Award was given on 07.11.2014. The Land Acquisition Collector has clearly held in his order that proprietary rights of the acquired land shall vest in Central Govt. with effect from 07.11.2014. However, the award was paid only on 19.05.2015 (bank statement, APB, Pgs. 2-4).
The Ld. AR argued that the AO has ignored the fact that since the compensation on account of compulsory acquisition of land has been received during the FY 2015-16 (i.e.19.05.2015) which is taxable under Section 45(5)(a) of the Act in the previous year in which such compensation has been first received and that misinterpreted the letter of in which it has been stated as under:-
“I am directed to say that the land required for National Highway Projects is acquired under the provisions contained in Section 3 of the National Highways (NH) Act, 1956. Pursuant to the enactment of the RFCTLARR Act of 2013 and its coming into force with effect from 01.01.2014, certain provisions of the 2013 Act became applicable to the other related Acts mentioned in the Fourth Scheduled, including the NHAI Act, 1956 with effect from 01.01.2015 in terms of Section 105(3) of the RFCTLARR, 2013.”
The Counsel contended that the letter dated 28.12.2017 was issued by Ministry of Road Transport & Highways on the subject ofLand Acquisition under the National Highways Act, 1956 clarifying vide para 4.6 (iii) that-
“(a) All cases of Land Acquisition where the Awards had not been announced under section 3G of the NH Act till 31.12.2014 or where such awards had been announced but compensation had not been paid in respect of majority of the land holdings under acquisition as on 31.12.2014, the compensation would be payable in accordance with the First Schedule of the RFCTLARR Act, 2013.”
From the record, it is evident that the Ld. CIT(A) NFAC has not rebutted to the assessee the of the order of ITAT in the case of Jagdish Arora vs. ITO while relying on the same and ignoring the written submissions filed on 16.01.2023wherein the kind attention of CIT(A) NFAC identical facts in favour of the assessee by the CIT(A) NFAC relying on the letter dt.28.12.2017 of Ministry of Road Transport and Highways and also on the judgment of Hon’ble Supreme Court in the case of UOI vs. Tarsem Singh others dated 19.09.2019 and KeralaHigh Court in the case of Raghavan Nair v. ACIT - [2018] 89 taxmann.com 212.
On perusal of the facts of the instant case, the order of Agra Bench in the case of Jagdish Arora- (Supra)based on Krishan KumarSharma is distinguishable on facts as in that case the claim of exemption of the award was made before the Hon’ble Bench on05.02.2013 and the compensation was received on 01.01.2014 and since both the dates falls prior to the date of application of RFCTLAAR Act. i.e. 01.01.2015 and hence the case of Krishan Kumar Sharma was so decided on different facts was followed bv the Hon’ble Agra Bench in the case of Jagdish Arora cannot be applied to the case of assessee because in the case of the assessee award has been given on07.11.2014 and the compensation has been received on 19.05.2015.Further, in the case of Jagdish Arora (Supra), the important facts were neither brought to the knowledge nor considered by the Agra Bench of the ITAT that Letter of Ministry of transports Highways dt. where the Awards had not been announced under section 3G of the NHAI Act till 31.12.2014 or where such awards had been announced but compensation had not been paid in respect of majority of the land holdings under acquisition as on 31.12.2014, the compensation would be payable in accordance with the First Schedule of the RFCTLARR Act, 2013” although the order of the Hon’ble Bench was pronounced on14.03.2021 and even the above said letter was dt. 28.12.2017.As regards to the chargeability of the income as per provisions of sec 4 and 5 of the Act, we are of the view that the compensation on account of compulsory acquisition of land has been received during the Financial Year 2015-16 which also distinguishable on facts Jagdish Arora (Supra). Alastair ka Kam ho Gaya WhatsApp highlight please locate the score between India
Similarly in the case of Krishan Kumar Sharma (Supra), the award for acquisition was made on05.02.2013 and the compensation was received on 01.01.2014 and since both the dates fall prior to the date of application of RFCTLAAR Act. i.e. 01.01.2015. Thus, the case of Krishan Kumar Sharma (Supra) on the given facts followed by the Hon’ble Agra Bench in the case of Jagdish Arora (Supra) by the Ld. CIT(A) cannot be applied to given on07.11.2014 and the compensation has been received on 19.05.2015.
On identical facts, Chandigarh Bench of the ITAT in the case of Satish Kumar Vs. ITO in [PB 22- 42] on considering that the compensation was received by the assessee on 05.11.2014 and 23.11.2015 under National Highway Act on compulsory acquisition of land by NHAI, held to be exempt u/s 96 of the RFCTLARR Act vide circular no 36/2016 dt. 25.10.2016.
In the case of Gopa Ram Vs. UOI (Supra) the Hon’ble Rajasthan High Court by considering the Chandigarh bench of the ITAT in the case of Satish Kumar (Supra) held that the provisions of the RFCTLARR Act, 2013 are applicable to National Highway Act, 1956.
Hon’ble Supreme court in the case of UOI vs. Tarsem Singh others dated 19.09.2019 Civil Appeal No. 064 of 2019 observed that the provisions of RFCTLARR Act, 2013 are applicable to land acquired under national highway Act and the compensation has to be calculated and paid in accordance with the provisions of RFCTLARR Act, 2013. of NHAI v. Modan Singh and Others and other group cases in FAO 756- 2022 order dated 11.04.2023 wherein it has been held that the RECTLAAR Act, 2013 would apply to cases wherein award has been awarded prior to 31.12.2014 but compensation is not paid yet till 31.12.2014, even though the said acquisitions have been done under the NHAI Act, 1956.
In the instant case, it is a matter of record that the award of compensation was not paid yet till 31.12.2014 and was paid only on 19.05.2015 as evident from bank statement (APB, Pgs. 2 PB-4).
20. In the backdrop of the aforesaid discussion on the factual matrix of the case and judicial pronouncement, we hold that the decision of Ld. CIT(A) is infirm and perverse to the facts on record. Accordingly, we set aside the impugned order, and as such, the addition is deleted.
Since the facts in for Assessment Year 2016-17 are identical to the facts in Assessment Year 2016-17 and hence, our observation and finding given in I.T.A. No. 91/Asr/2023 shall be applicable to the appeal in ITA No.135/Asr/2023, in mutatis mutandis, Ordered accordingly.
Order pronounced in the open court on 30.08.2023