DY. COMMISSIONER OF INCOME TAX, PUNE V. DILIP MOTILALJI CHORDIA, PUNE

ITA 1486/PUN/2024

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) which allowed the exemption of income from the sale of Transferable Development Rights (TDRs) under section 96 of the RFCTLARR Act. The assessee, Dilip Motilalji Chordia, had received TDRs from Pimpri Chinchwad Municipal Corporation (PCMC) in exchange for land surrendered, which was then sold. The Revenue contested the CIT(A)'s decision, arguing that the necessary legal and procedural requirements under the RFCTLARR Act were not met, and the income should be treated as business income. The Tribunal found that the issues required further examination and thus restored them to the Assessing Officer.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 822802 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 11-07-2024
• Other Referred Cases: K. Chellapandian vs. Government of India, Harry Township Ltd v. ACIT, Nandkumar Gajanan Lad Vs. ITO, Mcorp Global (P) Ltd. Vs. CIT, Sanmar Speciality Chemicals Ltd. Vs. ITO, Fidelity Shares & Securities Ltd. vs. DCIT, CIT (TDS) v. Tushira Industries
• Laws Referred To: Income Tax Act, 1961, Right of Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHASHANK OJHA
• Assessee Lawyers: NEELESH KHANDELWAL; PIMPRI CHINCHWAD MUNICIPAL CORPORATION PCMC; STATING
• Keywords: Set aside; Business income; Corroborative evidences; Salary income; Capital Gains; TDS; Earning of tax free income; Competent authority; CHAPTER IV
• Section: 142(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “B”, PUNE BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.1486/PUN/2024 Assessment Year : 2017-18 DCIT, Circle-8, Pune Vs. Dilip Motilalji Chordia 13, Sajjan Plaza, Opp. Hindustan Bakery, Chinchwad, Pune 411 033 Maharashtra PAN : AAMPC1174F Appellant Respondent Cross Objection No.17/PUN/2025 (Arising out of ITA No.1486/PUN/2024 Assessment Year : 2017-18 Dilip Motilalji Chordia 13, Sajjan Plaza, Opp. Hindustan Bakery, Chinchwad, Pune 411 033 Maharashtra PAN : AAMPC1174F Vs. DCIT, Circle-8, Pune Cross Objector Appellant in the appeal आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The captioned appeal at the instance of Revenue and Cross Objection by the assessee pertaining to A.Y. 2017-18 are directed against the order dated 13.05.2024 framed by National Faceless Appeal Centre, Delhi emanating out of Appellant by : Shri Shashank Ojha (Through Virtual) Respondent by : Shri Neelesh Khandelwal Date of hearing : 28.10.2025 Date of pronouncement : 22.12.2025 Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 2 Assessment Order dated 30.12.2019 passed u/s.143(3) of the Income Tax Act, 1961 (in short ‘the Act’). 2. Revenue has raised following grounds of appeal : “1. On the facts and circumstances of the case and in law, the Id. CIT(A) erred in allowing the appeal of the assessee without appreciating that the claim of TDR proceeds being exempt under RFCTLRR Act was never raised by the assessee before the AO during the assessment proceedings and the same was being raised by the assessee for the first time during the appellate proceedings and therefore, the Id. CIT(A) ought to have given an opportunity to the AO to furnish his comments either under the provisions of Rule 46A of the I.T. Rules or by calling for a remand report under the provisions of Sec. 250(4) of the IT. Act. 2. On the facts and circumstances of the case and in law, the Id. CIT(A) has erred in deleting the addition made by the AO of ₹5,30,21,178 by holding that the proceeds received by the assessee against sale of TDRs were exempt under Section 96 of the Right of Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Maharashtra Amendment) Act 2018 (RFCTLRR Act), without verifying whether the lands in lieu of which the TDRs were awarded to the assessee were compulsorily acquired by the competent authority under the said statute and whether the relevant conditions specified in the Act were fulfilled while acquiring the assessee's land. 3. Without prejudice to the above grounds, on the facts and circumstances of the case and in law, the Id. CIT(A) erred in holding that the entire proceeds received by the assessee on sale of TDRs were exempt under RFCTLRR Act, without appreciating that the assessee is engaged in the business of sale and purchase of real- estate and the sale of TDRs also involves profit element whereas what is sought to be exempt under RFCTLRR Act is only the compensation received by the assessee upon compulsory acquisition of his land under the said statute. 4. The appellant craves leave to add to, amend, alter any of the above grounds of appeal.” 3. Assessee has raised following Cross Objections : “1. On facts and circumstances prevailing in the case and as per the provisions of law, it be held that if the proceeds received by the Respondent against sale of Transferable Development Rights (TDRs) is considered to be taxable, the Respondent is eligible to claim appropriate cost of value of lands compulsorily acquired by Pimpri Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 3 Chinchwad Municipal Corporation (PMC). Just and proper relief be allowed to the Respondent in this respect. 2. The Respondent prays to be allowed to add, amend, modify, rectify, delete and raise any grounds of appeal at the time of hearing.” 4. Brief facts of the case are that the assessee is an individual and derives income from house property, profits and gains from business and income from other sources. Income of ₹28,37,460 declared in the return for A.Y. 2017-18 e-filed on 31.10.2017 wherein carry forward of current year losses of ₹30,12,118 has been made. Books of account are audited and audited financial statements u/s.44AB stands filed. Case selected for scrutiny under CASS for the reasons (i) large increase in capital and (2) large investment in property. Valid statutory notices u/s.143(2) and 142(1) of the Act duly served upon the assessee. Certain details were submitted and ld. AO on examining the proprietors capital account observed that there is an increase in capital by ₹6,73,53,668 which is mainly on account of sale of Transferable Development Rights (TDR) received in the form of Development Right Certificate (DRC) amounting to ₹7,41,37,000 issued in favour of the assessee by Pimpri Chinchwad Municipal Corporation (PCMC). Assessee submitted the details of land surrendered to the PCMC amounting to ₹6,71,65,095. It was claimed before the Assessing Officer that the income from receipts of TDR is exempt from tax, however, the assessee sought some time to file the explanation but the same were never filed till the conclusion of assessment proceedings. Ld. AO further observed that out of the land which has been surrendered by the assessee only the land costing ₹1,53,75,670 is appearing in the balance sheet but for the remaining amount, i.e. Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 4 ₹5,17,89,425 were not found under the heading Fixed Asset in the balance sheet. Ld. AO thus concluded that out of the total sum of sale of TDR of ₹6,85,71,501 only the cost of ₹1,53,75,670 is appearing in the Fixed Assets and he treated the remaining amount of ₹5,31,95,834 as a business receipt liable to tax and made the addition thereof. Income assessed at ₹5,30,21,178 in the following manner : S.No. Particulars Amount in ₹ A Income from Salary ₹30,00,000 B Income from House Property ₹37,800 C Income from business/profession as per Sch.BP of ITR (-)₹44,70,811 Add : Disallowances/Additions Income from sale of TDR [Para 5.3] ₹5,31,95,834 D Income from other sources ₹14,20,893 E Gross Total income ₹5,31,83,716 Less : Deduction under Chapter VI- A claimed ₹1,62,538 E Total Assessed Income ₹5,30,21,178 G Rounded off to ₹5,30,21,180 5. Aggrieved assessee preferred appeal before ld.CIT(AA) and filed reply on 06.10.2023 and requested some time to file the remaining submissions. However, there was no response to the subsequent final notice fixing the date of hearing 23.04.2024. Ld.CIT(A) based on the submission made in the statement of facts attached to Form No.35 and the details filed during the course of assessment proceedings finally concluded that the cost of land which ld. AO could not verify from the Fixed asset chart were actually appearing under the head Current Assets and therefore the assessee deserves deduction of cost and accordingly deleted the addition of ₹5,341,95,834. Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 5 6. Aggrieved Revenue is in appeal before this Tribunal challenging the finding of ld.CIT(A). Assessee has filed the Cross Objections stating that if the proceeds from sale of TDR is considered to be taxable then the respondent is eligible to claim appropriate cost of value of land compulsorily acquired by PCMC. 7. Ld. Counsel for the assessee vehemently argued referring to the following written submissions filed on 06.11.2025 : “The above referred appeal has been filed before Your Honors by the Deputy Commissioner of Income-tax, Circle-8, Pune against the order passed by the Hon'ble Commissioner of Income-tax (Appeals) (Hon'ble CIT(A)) dated 13th May, 2025. Further the Respondent has filed Cross Objection (CO) in Form-36A. The hearing with respect to the above-mentioned appeal and Cross-objection was heard before Your Honours on 21 August, 2025 and 28th October, 2025. Pursuant to the hearing held on 21 August, 2025, the Respondent had filed its written submission vide letter dated 22nd August, 2025. In addition to the same, the Respondent humbly submits its additional written submissions as under: 1. Compensation received by the Respondent in the form of TDR in exchange of acquisition of land under the Maharashtra Regional Town Planning Act, 1966 ('MRTP') Act is exempt under section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (\"RFCTLARR\"). In this regard, it is respectfully submitted that the land parcels held by the Respondent were compulsorily acquired by the Pimpri Chinchwad Muncipal Corporation (PCMC) under the provisions of the MRTP Act vide agreement dated 04th April, 2016. In consideration of the same, Transferrable Development Rights ('TDR') for 18,393.91 Sq Mtrs were granted to the Respondent through issue of Development Right Certificates (DRC's'). A copy of the DRCs received by the Respondent are attached at Page no. 66 to Page no. 698 of the Paper-Book submitted before Your Honours. 2. On perusal of Para no. 6 of the agreement for surrender of land to PCMC dated 04th April, 2016 attached at Page no. 486 to Page no. 508 of the Paper-Book submitted before Your Honours, it can be seen that the TDR has been granted to the Respondent in accordance with Rule no. 4 of the notification dated 29 January, 2016 issued by the Urban Development Department of the Maharashtra Government. Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 6 1.3. In this regard it is respectfully submitted that the Land Acquisition Act, 1894 was replaced vide RFCTLARR Act In 2013 with the primary purpose to regulate land acquisition and provide for compensation, rehabilitation and resettlement of affected persons. Whereas, the MRTP Act, 1966, made provisions for planning, development, and use of lands within the state of Maharashtra. It also dealt with regional planning, ways to make better provisions for preparation of development plan and to ensure that the town planning schemes are made properly. 1.4. In this regard, section 96 of the RFCTLARR Act, as applicable for the AY 2017-18, provides for exemption from income tax, stamp duty and fees and reads as under: \"No Income-tax or stamp duty shall be levied on any award or agreement made under this Act, except under 46 and no person claiming under any such award or agreement shall be liable to pay any fee for a copy of the same\" 1.5. Further, relevant portion of Section 46 of the RFCTLARR Act, as applicable for AY 2017-18, is reproduced as under for Your Honours' ready reference as under: \"(1) Where any person other than a specified person is purchasing land through private negotiations for an area equal to or more than such limits, as may be notified by the appropriate Government, considering the relevant State specific factors and circumstances, for which the payment of Rehabilitation and Resettlement Costs under this Act is required, he shall file an application with the District Collector notifying him of (a) intent to purchase (b) purpose for which such purchase is being made (c) particulars of lands to be purchased...... …….Explanation. For the purpose of this section, the expression- (a) \"original land owner\" refers to the owner of the land as on the 5th day of September, 2011; (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. Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 7 1.6. During the course of the hearing, the Learned Department Representative ('Ld. DR') had argued that the case of the Respondent, involving the grant of TDR in lieu of the land acquired, falls within the purview of Section 46 of the RFCTLARR Act without providing any specific explanation regarding the applicability of section 46 in the case of the Respondent, Accordingly, it was contended that the Respondent would not be entitled to claim exemption from income tax, stamp duty, and registration fees as provided under Section 96 of the said Act. 1.7. However, on bare reading of Section 46 of the RFCTLARR Act, it is evident that Section 46 of the RFCTLARR Act, governs the application of rehabilitation and resettlement provisions in cases where land is acquired through private negotiations. The said Section mandates that any person, other than the \"specified persons\" defined therein, who intends to purchase land through private arrangement exceeding the threshold limits as may be notified by the Appropriate Government, is required to intimate the District Collector of such intention and furnish details regarding the purpose of acquisition and particulars of the land proposed to be purchased 1.8. It would be appreciated that the Respondent's case Involving the grant of TDR in lieu of the land acquired does not fall under the purview of Section 46 of the RFCTLARR Act since the same was acquired on account of reservation arising out of MRTP Act and not through private negotiations. 1.9. Further, CBDT vide Circular No. 36 of 2016 dated 25th October, 2016 offers due recognition to the provisions of section 96 enacted under the RFCTLARR Act so as to treat award under the said Act as tax-free under the Income tax Act, 1961. The operative Para 2 and Para 3 of the Circular No. 30 of 2016, dated 25th October, 2016reads as under: \"Para 2. The RFCTLARR Act which came in to effect from 1st January, 2014, in section 96, inter alia, provides that income- tax shall not be levied on any award or agreement made (except those made under section 46) under the RFCTARR Act. Therefore, compensation received for compulsory acquisition of land under the RFCTLARR Act (except those made under section 46 of RFCTLARR Act), is exempted from the levy of income-tax.\" \"Para 3. As no distinction has been made between compensation received from compulsory acquisition of agricultural land and non-agricultural land in the matter of providing exemption from income-tax under section the RFCTLARR Act, the exemption provided under 96 of the RFCTLARR Act is wider in scope than the tax-exemption provided under the existing provisions of Income-tax Act, 1961. This has created uncertainty in the matter of taxability Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 8 of compensation received on compulsory acquisition of land, especially those relating to acquisition of non-agricultural land. The matter has been examined by the Board and it is hereby clarified that compensation received in respect of award or compensation 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.\" Copy of the above Circular is attached herewith as Annexure-1 for Your Honours' ready reference and record. 1.10. Thus Your Honours would appreciate that where the compensation is exempt under section 96 of the RFCTLARR Act, the same would also be exempt from payment of taxes under the Income-tax Act, 1961 without any express provisions regarding the same under the Income-tax Act, 1961. 1.11. Your Honours would appreciate that it is an accepted fact that the land parcel of the Respondent was acquired under the provisions of the MRTP Act. 1.12. In this regards, it would be pertinent to note that section 103 of the RFCTLARR Act, as applicable for AY 2017-18, provided as under: \"The provisions of this Act shall be in addition to and not in derogation of, any other law for the time being in force.\" 1.13. On bare reading of the above, it can be inferred that any rights, benefits, or compensation provided under this Act exist alongside those provided by other existing laws, ensuring that affected individuals receive the most favorable conditions from whichever law provides a better outcome for them. 1.14. The above interplay between MRTP Act and RFCTLARR Act has also been recognised by the State Government of Maharashtra vide notification dated 29th January, 2016 issued by the Urban Development Department of the Maharashtra Government wherein the grant of TDR as fair compensation for the lands reserved for public amenities, social facilities and utilities in the Development Plans prepared under the provisions of MRTP Act have been provided. 1.15. The notification provides as follows: \"Whereas, the lands reserved for public amenities, social facilities and utilities in the Development Plans (hereinafter referred to as the said Development Plan) of the Municipal Corporations (hereinafter referred as to as the said Planning Authorities) prepared and sanctioned under the provisions of Maharashtra Regional and Town Planning Act, 1966 (hereinafter referred to as the said act) are being generally Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 9 acquired under Section 126 of the said Act read with relevant provisions of Land Acquisition Act, 1894 (hereinafter referred as to as the said LA Act) by granting \"Transferable Development Rights\". And whereas, the Land Acquisition Act, 1894 replaced by the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 is an Act of Indian Parliament that regulates land acquisition and provides rules for granting compensation, rehabilitation and resettlement to the affected persons and provides provisions for fair compensation to those whose land is taken away, brings transparency to the process of acquisition of land and assures rehabilitation of those affected. And whereas, in view of the provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, it is necessary to allow the fair compensation for the lands reserved for public amenities, social facilities and utilities in the Development Plans prepared under the provisions of Maharashtra Regional and Town Planning Act, 1966 by granting \"Transferable Development Rights and by allowing owner for development subject to certain conditions under Accommodation Principle.\" 1.16. After stating so, the notification has laid down Rules for grant of TDR as compensation on compulsory acquisition of lands under MRTP Act. A copy of the above notification is attached herewith as Annexure-2 for Your Honours' ready reference and record. 1.17. It may be worthwhile to mention that the TDR has been granted to the Respondent in accordance with Rule no. 4 of the very same notification dated 29th January, 2016 issued by the Urban Development Department of the Maharashtra Government. 1.18. In this regard, we respectfully draw the reference of Your Honours to the decision of the Hon'ble Madras High Court in the case of K. Chellapandian vs. Government of India, [WP (MD) No.21961 of 2018 & WMP(MD)Nos. 19909, 19910 & 21989 of 20181, wherein the Hon'ble Madras High Court has analysed the provisions of section 105 of the RFCTLARR Act alongwith various other provisions of the said Act and held that that even if the National Highways Act, 1956 remains in force for acquisition procedure, the compensation, rehabilitation and resettlement provisions of the RFCTLARR Act, 2013 automatically apply. The relevant portion of the said judgement is reproduced as under: “…14. As rightly contended by the learned Additional Solicitor General of India and the learned standing counsel for NHAI, Act, 1894 alone. Section 103 of the Act categorically states that the provisions of Central Act 30 of 2013 shall be in addition to and not in derogation of any other law for the time Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 10 being in force. In fact, clause 22 of the statement of objects and reasons of Central Act 30 of 2013 reads as follows: \"22. Certain Central Acts dealing with the land acquisition have been enlisted in the Bill. The provisions of the Bill are in addition to and not in derogation of these Acts. The provisions of this Act can be applied to these existing enactments by a notification of the Central Government.\" Central Act 30 of 2013 provides for repeal of the Land Acquisition Central Act 30 of 2013 bears the following bitfe: \"THE RIGHT TO FAIR COMPENSATION AND TRANSPARENCY IN LAND ACQUISITION, REHABILITATION AND RESETTLEMENT ACT, 2013 (30 of 2013)\" One can note that it has four components namely, acquisition, compensation, rehabilitation and resettioment. Of course, emphasis is more on fair compensation. In fact, compensation is a fall out of acquisition. In the Preamble portion also these four aspects are elaborated. Sub-section 3 of Section 105 talks only about compensation, rehabilitation and resettlement. It is conspicuously silent on acquisition. That is why, when this Court holds that 105(1) will have to yield place to Section 105(3) of the Act, this Court has to also hold that it will yield only in respect of matters provided for in Section 105(3) of the Act...\" Copy of the said judgement is attached as Annexure-3 to this submission. Therefore, the said judgment explicitly clarifies that while acquisition continues under other Acts, but the standards of compensation are governed by the RFCTLARR Act, 2013. 1.19. We further draw Your Honours' reference to a recent Judgement of the Hon'ble Delhi ITAT in the case of Harry Township Ltd v. ACIT [2025] 172 taxmann.com 278 (Delhi-Trib.) wherein the Hon'ble ITAT has held as under: \"Section 96 of the RFCTLARR Act, 2013 provides exemption from income tax and stamp duty of the compensation received on compulsory acquisition made under this Act for public purposes. Section 105(1) of the RFCTLARR Act, 2013 states that provisions of this Act shall not apply to enactments relating to land acquisition specified under Schedule Fourth (which includes NHAI Act also). However, as per amended sub-section (3) of section 105, the provisions of the RFCTLARR Act, 2013 relating to the determination of compensation in accordance with First Schedule shall apply to all cases of land acquisition under the enactments specified in Fourth Schedule of the said Act.\" Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 11 Copy of the said judgement is attached as Annexure-4 for your ready reference and record. 1.20. Your Honours would appreciate that it is an accepted fact that the land parcel of the Respondent was acquired under the provisions of the MRTP Act. Further, in view of the above judgement as well as notification issued by the State Government of Maharashtra, it can be logically inferred that although the acquisition of the Respondent's land was made under the MRTP Act, the determination of compensation, as well as rehabilitation and resettlement, shall be governed in accordance with the provisions of the RFCTLARR Act which provides an exemption from the levy of income tax, stamp duty and fees under Section 96. 1.21. Therefore upon a harmonious reading of the above judgement alongwith the notification dated 29th January, 2016 issued by the Urban Development Department of the Maharashtra Government, it can be clearly said that the compensation granted to the Respondent is determined as per the provisions of RFCTLARR. 1.22. In this background, we hereby draw Your Honours' reference to a recent judgement of the Hon'ble Chhattisgarh High Court, in the case of Sanjay Kumar Baid vs. ITO [TaxC No. 176 of 2025] wherein the Hon'ble High Court has held as under: 'In view of the above-stated legal position, it is held that once compensation is determined under the provisions of the RFCTLARR Act, as a necessary corollary, the benefits flowing from the provisions of the said Act, including exemptions from income tax, stamp duty and fees contemplated under Section 96 of the RFCTLARR Act, would also have to be made applicable.\" A copy of the said judgement is attached herewith as Annexure-5 for your ready reference and record. 1.23. In view of the above, it is clear that the compensation received by the Respondent is exempt from Income-tax in view of the express provisions of section 96 of the RFCTLARR read with CBDT Circular no. 36 of 2016 dated 25th October, 2016. 2. Prayer: In view of the above submission, it is prayed that the appeal filed by the Ld. AO be dismissed and proper relief be granted to the Respondent.” 8. He also placed reliance on the following decisions apart from the decisions referred in the written submissions : Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 12 1. Nandkumar Gajanan Lad Vs. ITO – ITA No.778/PUN/2022 order dated 01.06.2023 2. Mcorp Global (P) Ltd. Vs. CIT (2009) 178 Taxman 347 (SC) 3. Sanmar Speciality Chemicals Ltd. Vs. ITO (2018) 93 taxmann.com 330 (Madras HC) 4. Fidelity Shares & Securities Ltd. vs. DCIT (2017) 82 taxmann.com 108 (Gujarat HC) 9. Further, ld. Counsel for the assessee also made reference to the factual paper book which also gives the details of documents which were filed before the lower authorities. Scanned copy of Factual paper book-Index is given below : Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 13 Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 14 Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 15 10. On the other hand, ld. DR contended referring to the following written submissions and relied on the decisions referred therein : “This is an appeal filed by the Department against the order of the Id. CIT(A) in allowing the capital gain from sale of TDR as exempt from tax u/s. 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (RFCTLARR Act). 2. The brief facts of the case is that during the course of assessment proceedings, the Assessing Officer observed that the Respondent's capital account had increased by Rs.6,73,53,668. The Respondent during the course of assessment explained that during the relevant financial year, he had received Rs.6,85,71,504 from the sale of Transferable Development Rights (TDR) arising out of surrender of land. The Respondent claimed that the income from sale of TDR was exempt from tax, relying on a legal opinion obtained from M/s. Sudhakar Kale & Associates, Advocates and Solicitors. However, at Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 16 no stage of the proceedings did the respondent assessee specifically claim exemption u/s. 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (RFCTLARR Act). The AO, after examining the facts, held that the net consideration received from the sale of TDR was taxable as business income, since the respondent was engaged in the business of purchase and sale of land and development rights. 3. Aggrieved by the addition made by the Assessing Officer, the respondent preferred an appeal before the learned Commissioner of Income-tax (Appeals). In the appellate order, the Id. CIT(A) stated that the respondent filed a written submission claiming that the land was compulsorily acquired by the Pimpri Chinchwad Municipal Corporation (PCMC) and that, in consideration thereof, TDR rights for 18,391.91 sq. meters were granted to the respondent. On this basis, the respondent claimed that the receipts from sale of TDR were exempt under section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (RFCTLARR Act). The Id. CIT(A) accepted the claim and allowed the exemption without assigning any cogent reasons or verifying the applicability of the said provision. 4. It is pertinent to mention that in paragraph 4.4 of the appellate order, the learned CIT(A) has recorded as under: \"4.4 During the appellate proceedings, the appellant vide letter dated 06.10.2023 requested for adjournment of hearing seeking additional time to prepare the submission. It is seen that the appellant has not filed any written submission till date. In this regard, it is stated that...\" From the above, it is evident that the Id. CIT(A) has allowed the exemption without any supporting evidence or examination of facts to establish that the acquisition was covered under the RFCTLARR Act, and thus, the order suffers from lack of proper verification and reasoning. 5. It is seen from the record that the respondent assessee had purchased certain immovable property situated at Village Chikhali, within the territorial jurisdiction of the Pimpri-Chinchwad Municipal Corporation (\"PCMC\") from various transferors in the Financial Year 2008-09. A perusal of the registered conveyance instruments clearly evidences that, as on the date of purchase, the said parcel of land stood earmarked/reserved for public purposes under the Development Plan of the PCMC. The reservation existed pursuant to a Notification dated 30.05.2008 issued by the Town Development Division of the PCMC. 6. Subsequently, during Financial Year 2016-17, the respondent assessee surrendered the said reserved land to the Municipal Corporation. In consideration of such surrender/relinquishment, the respondent assessee has not accepted monetary compensation but Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 17 agreed to receive and was allotted Transferable Development Rights (\"TDR\"). The respondent assessee, thereafter alienated the said TDRs for an aggregate consideration of Rs.6,85,71,504 and has claimed that the said sum is exempt under Section 96 RFCTLARR Act\". 7. This claim is not tenable on the facts and in law, since the land in question was already a reserved land under a duly notified Development Plan prior to the assessee's purchase, the subsequent act of surrender is not a land acquisition within the meaning, import or scheme of the RFCTLARR Act. The statutory machinery prescribed under Chapter IV and in particular the procedure contemplated under Section 21 of the RFCTLARR Act, has neither been triggered nor followed in the present matter. For the exemption contemplated under the RFCTLARR Act to become applicable, the process envisaged under Section 21 would normally need to be initiated. 8. Under Section 21, the Collector is mandatorily required to publish a notice setting out, inter alia: (a) the Government's intention to acquire the identified land, (b) the particulars of the land proposed to be acquired, and (c) the proposed compensation, rehabilitation and resettlement package offered to the interested persons. The statute further enjoins that the notice must stipulate a date, being not earlier than 30 days and not later than 6 months from the date of publication, on which all persons interested are required to appear before the Collector. The Collector is also under a statutory obligation to ensure service of such notice upon all interested persons and to conduct an inquiry into objections, if any, to such acquisition, before proceeding further. 9. In the present case, there is nothing on record to suggest, nor has the respondent assessee produced any evidence, that any such due process under Section 21 was ever commenced or completed. The surrender of land by the respondent assessee was not pursuant to Section 21 of the RFCTLARR Act or any acquisition proceedings laid down under the RFCTLARR Act, but was merely a consequence of the land being already statutorily reserved prior to its purchase. Accordingly, the statutory conditions precedent for invoking Section 96 are wholly absent. 10. Section 96 of the RFCTLARR Act provides an exemption from income-tax on compensation or the enhanced compensation received through an award under the same Act. The acquisition of land by a Municipal Corporation, often under local laws like the Maharashtra Regional Town Planning (MRTP) Act, is generally not considered an acquisition under the central RFCTLARR Act. Therefore, the specific exemption under Section 96 of the RFCTLARR Act does not apply to compensation (in the form of TDR) received under the local planning laws. Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 18 11. On perusal of the copy of the legal opinion furnished by the respondent assessee, which forms part of the Paper Book, it is observed that the Advocate, in his opinion, has stated that the Pimpri Chinchwad Municipal Corporation (PCMC) is the \"Appropriate Authority\" for acquisition of the land under reservation. However, such an opinion is not in consonance with the provisions of the RFCTLARR Act. Under the RFCTLARR Act, the term \"appropriate government has been specifically defined to mean the Central Government or the State Government, depending upon the nature and purpose of the acquisition. The role of a Municipal Corporation or local body is generally limited to recommending or facilitating the acquisition of land required for public purposes, such as roads, parks, or public utilities. The power to initiate, approve, and notify the acquisition, determine compensation, and undertake rehabilitation and resettlement vests solely with the appropriate government as per the statutory framework of the RFCTLARR Act. Therefore, the acquisition of land directly by the Municipal Authorities, such as PCMC, without a notification or acquisition process undertaken under the RFCTLARR Act by the appropriate government, cannot be regarded as an acquisition under the said Act. Consequently, the compensation or consideration (including TDR/FSI granted in lieu of land) arising from such municipal action does not qualify for exemption under section 96 of the RFCTLARR Act. In view of the above, the legal opinion relied upon by the assessee is misconceived and inconsistent with the statutory provisions, and hence cannot form a valid basis for claiming exemption under section 96 of the RFCTLARR Act. 12. In this case, the land acquired by the PCMC was not under RFCTLARR Act and therefore, the responded assessee is not eligible for exemption from tax under 96 of RFCTLARR Act. In support of the above, it is relevant to refer to the decision of the Hon'ble Karnataka High Court in the case of CIT (TDS) v. Tushira Industries [2025] 168 taxmann.com 169 (Karnataka), wherein it was held that the income- tax exemption provided under Section 96 of the RFCTLARR Act is restricted only to the compensation or awards made under the provisions of the said Act itself. The Hon'ble Court observed that the wording of Section 96 \"made under this Act\" is explicit and unambiguous, and therefore only those awards or agreements executed under the RFCTLARR Act, 2013 qualify for exemption from income tax. Compensation awarded under other statutes does not enjoy this exemption. The Court further rejected the contention that all landowners who surrender land through compulsory acquisition, irrespective of the statute under which such acquisition takes place, form one homogeneous class entitled to the same exemption. It was held that such an interpretation would run contrary to the express language used by Parliament and its evident legislative intent. The Hon'ble Court also emphasized that the grant of exemption is a matter of legislative policy, and if Parliament had intended to extend such exemption to acquisitions made under any other law, it would have drafted Section 96 in broader terms to cover those situations as well. Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 19 13. Similarly, the RFCTLARR Act is a special legislation enacted to ensure just and fair compensation to the affected families whose land has been acquired or proposed to be acquired by the Government for various public purposes defined under the Act. The provisions of the RFCTLARR Act apply to any land acquisition, compensation, rehabilitation and resettlement undertaken by the appropriate authority, as defined under Section 3 of the Act, namely, the State Government, Central Government or the District Collector, when such land is acquired for its own use, hold and control, including for Public Sector Undertakings and other public purposes. Section 46 of the Act specifies a set of \"specified persons\" who are excluded from the purview of certain provisions of the Act. In the State of Maharashtra, the specified persons are those other than an Association of Persons, society or trust aided or controlled by the appropriate Government. Consequently, the specified persons exclude the appropriate Government and Government companies, and therefore, the exemption under Section 96 is available only in respect of acquisitions made by them. 14. Further, Section 105A, which was inserted with effect from 2018 and is applicable only to the State of Maharashtra, provides that the provisions of the RFCTLARR Act shall not apply to certain State enactments mentioned in Schedule V of the Act. Schedule V enumerates the State laws to which the RFCTLARR Act will not apply, namely, the Maharashtra Highways Act, the Maharashtra Industrial Development Act, the Maharashtra Regional and Town Planning Act and the Maharashtra Housing and Area Development Act. Accordingly, even if the respondent contends that the land was acquired under the Maharashtra Regional and Town Planning Act, 1966, the provisions of the RFCTLARR Act would not be applicable to such acquisition in view of its specific exclusion under Schedule V. 15. Section 96 of the RFCTLARR Act provides for exemption from payment of income tax and stamp duty on any award or agreement made under the Act, except in cases where the acquisition is made by the specified persons referred to in Section 46. However, in order to claim such exemption, it must be clearly established that the land was compulsorily acquired under the RFCTLARR Act, 2013, by an authority other than the specified persons and for the public purposes defined under the Act. In view of the above legal position, the decision of the learned CIT(A) in allowing the exemption under Section 96 of the RFCTLARR Act to the respondent is erroneous and requires to be withdrawn. 16. Without prejudice, it is submitted that the exemption contemplated under Section 96 of the RFCTLARR Act is not attracted in the present case. The respondent assessee has not received any monetary compensation on account of compulsory acquisition, other than the TDR. Thus, the property transferred by the assessee is Transferable Development Rights (TDR) and the deduction has been claimed on the sale consideration received from such TDR. Section Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 20 96 of the RFCTLARR Act exempts from tax the \"amount of compensation\" received on compulsory acquisition. In the present case, the consideration is not compensation determined and paid under the RFCTLARR Act, instead, it is the sale proceeds realised upon transfer of TDR, which are market-driven rights enabling utilisation of additional FSI and do not have any fixed, predetermined value under the said Act. Accordingly, the sale consideration arising on transfer of TDR cannot be regarded as \"consideration received against surrender of property\" within the meaning and scope of Section 96 of RFCTLAAR Act. Therefore, the exemption claimed by the respondent assessee is not admissible. This is submitted for your kind perusal and consideration.” 11. We have heard the rival submissions and perused the record placed before us. So far as the Revenue’s appeal is concerned, the issue under consideration is regarding the addition made by the Assessing Officer for income from sale of TDR mainly on account of the reason that assessee has not provided the details of cost of land appearing in the books of accounts, which have been acquired by Pimpri Chinchwad Municipal Corporation. Before proceeding ahead, we would like to take note of the finding of ld. AO making the impugned additions : “5] During the financial year 2016-17 there was a substantial increase in the proprietor's capital. As compared to the balance in capital account of Rs.7,08,85,113/- as of 31.03.2016 the balance in capital account was increased to Rs.13,82,38,781/- as of 31.03.2017. The increase of Rs.6,73,53,668/- was mainly on account of issuance of Transferrable Development Rights (TDRs) in the form of DRC (Development Right Certificates) amounting to Rs. 7,41,37,000/- in favour of the assessee by the Pimpri Chinchwad Municipal Corporation. After deducting the Corporation TDR Charges of Rs.50,55,296/- and Rs.5,10,200/- towards commission for sale of TDRs the assessee has shown the balance Rs.6,85,71,501/- directly as an increase in his capital account instead of routing through the Profit & Loss account, even though the nature of receipt in the hands was the revenue receipt as the assessee was indulged into substantial purchase and sale of land, plots, commercial properties etc. Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 21 5.1] Since the assessee is into the business of purchase and sale of land and the aforesaid revenue generated on account of sale of TDRs is directly related to his core business as the assessee carries on the business which is in adventure in the trade and commerce, the same forms part of his business income liable to be taxed under the relevant provisions of the Act. The assessee vide notice under section 142(1) of the Income Tax Act, 1961 dated 04.12.2019 was required to clarify his position on this issue along with independently verifiable evidences. 5.2] The assessee vide his submissions through e-proceeding on 10.12.2019 sought some more time to present explanation about income from TDR being exempt from the tax. However, in this aforesaid submission the assessee also mentioned that he had surrendered land amounting to Rs.6,71,65,095/- which has been taken over by Municipal Corporation, Following details regarding the said land(s) amounting to Rs.6,71,65,095/- was submitted by the assessee. S. No. Agreement No. Purchased vide sale deed date Purchased from Amount invested (₹) 1 Haveli-5-3621- 2010 6 April, 2010 Chandrabhaga Sane 85 & Others 15,690,500 2 Haveli-5-0821- 2009 7 February, 2009 More Family 7,687,835 3 Haveli-5-3621- 2010 7 February, 2009 Sane Family 7,687,835 4 Haveli-5-3621- 2010 12 May, 2010 Bababrao More & Others 36,098,925 Total 67,165,095 5.3] The assessee also submitted in his reply dated 10.12.2019 and asserted that if the net sale proceeds of Rs.6,85,71,504/- from sale of TDR is to be added to the income of the assessee, the cost of lands amounting to Rs.6,71,65,095/- has to be considered before such addition is made by the department. Therefore, it is needless to say that if the assessee has made aforementioned investments in the land in earlier years, the same should be appearing in the balance sheet of the assessee. The lands are not at all appearing into the balance sheet as an investment. In view of this, on verification of the balance sheet of the assessee as at 31.03.2016, it was noticed that out of the four lands in the aforementioned table, only the land amounting to Rs.76,87,835/- purchased from Mr. Subhash More and another land of Rs.76,87,835/- purchased from Mr. Kantilal Sane, totalling to Rs.1,53,75,670/- appearing at Serial No. 2 and 3 in the above details provided by the assessee is appearing as investment in the balance sheet of the assessee as at 31.03.2016. The other two lands ie, the lands at Serial No. 1 above amounting to Rs.1,56,90,500/- and the land at Serial No. 4 above amounting to Rs.3,60,98,925/-totalling to Rs.5,17,89,425/- were nowhere disclosed in the audited balance sheet of the assessee as Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 22 at 31.03.2016. Therefore, going by the assessee's own contention the sum of Rs.5,31,95,834/- le. (Rs.6.85,71,504/- (-) Rs. 1,53,75.670/-) comes under the purview of business income. Further, the assessee has never furnished the details narrating (i) the year in which land was purchased, (ii) amount invested, (iii) total land purchased, (iv) cost of land per square feet, (vi) total area of land sale, (vii) year of sale, (viii) rate at which it was sold, (ix) balance area with cost, (x) area acquired by the Corporation, (xi) amount, and (xii) cost of the area acquired for which TDR was given. Therefore, the aforesaid sum of Rs.5,31,95,834/- ie. the excess of revenue from sale of TDR over the investment value of land which according to the nature of business of the assessee is a business income and the same is added to the income of assessee. Penalty proceedings under section 270A of the Income Tax Act, 1961 are initiated separately for misreporting of income.” 12. We further observe that in the statement of facts filed by the Revenue main reference is about the issue of sale of TDRs whether exempt u/s.96 of the Right of Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Maharashtra Amendment) Act 2018 (RFCTLRR Act). The statement of facts filed by the Revenue reads as under : “The assessee is engaged in the business of sale and purchase of land. In this case, the assessee filed Original return of income on 31/10/2017 declaring total income of Rs. 28,37,460/ and carry forward of current year's losses of Rs. 30,12,118/, Subsequently, the case was selected for scrutiny and the assessment was completed on 30/12/2019 by assessing total income at Rs. 5,30,21,180/- after making addition of Rs. 5,31,95,834/-on account of disallowance of income from sale of TDR. 1.1 Aggrieved by the order, the assessee preferred the appeal before the Ld. CIT(Appeal). 2. The Id. CIT(A) allowed the appeal of the assessee by stating that \"I have perused the assessment order and the written submission filed by the appellant. The AO treated Rs. 5,31,95,834/- as revenue receipt from sale of TDR over the investment value of land which according to the nature of business of the appellant is a business income and added to the income of the appellant. In this regard, the appellant has stated that, his lands were compulsorily acquired by Pimpri Chinchwad Municipal Corporation (PCMC) and TDR rights for 18,393.91 Sq Mtrs were granted to the Appellant. The Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 23 TDR receipts were claimed to be covered under section 96 of Right of Fair Compensation and Transparency Land Acquisition, Rehabilitation and Resettlement (Maharashtra Amendment) Act 2018 (RFCTLRR Act) which provides exemption from Income Tax on receipt of such compensation. The assessee therefore did not offer the income earned from allotment of TDR to tax while filing his return of income. Further, the contention of the appellant is supported by circular No. 36/2016 dated 25.10.2016 issued by CBDT which states that compensation received in respect of award or settlement is exempted from the recovery of income tax under section 96 of RFCTLARR Act and is not taxable under the provisions of the Income Tax Act 1961 even if there are no exact provisions of exemption for such compensation in the I.Tax Act. In view of this, the addition of Rs.5,31,95,834/- is hereby deleted.” 3. The decision of the Id. CIT(A) is not found to be acceptable since no details have been brought out during the assessment proceedings or during the appellate proceedings as to whether the land held by the assessee were compulsorily acquired by the appropriate authorities as per the procedure laid down under the RFCTLARR Act, or the same were surrendered by the assessee in exchange of TDRs. The Id. CIT(A) has held that the TDRs received by the assessee is covered by the RFCTLARR Act and has given relief to the assessee without discussing the below mentioned specific facts. i. The assessee is engaged in the business of sale and purchase of land. During the assessment proceedings, no claim was made by the assessee as to proceeds on sale of TDRs being exempt under RFCTLARR Act. This claim was raised for the first time before the CIT(A). ii. RFCTLARR Act is a special legislation aimed at providing just and fair compensation to the affected families whose land has been acquired or proposed to be acquired by the Government for various purposes defined in the Act. iii. Section 2 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (RFCTLARR) Act, 2013 states that the RFCTLARR Act, 2013 is applicable to any land acquisition, compensation, rehabilitation and resettlement when the appropriate government (Section 3- SG, CG and collector of any district) acquires the land for its own use, hold and control including for PSU's and for public purposes. iv. Section 46 provides a set of specified persons who are excluded from scope of Section 46. In the state of Maharashtra, the specified persons are persons other than Association of persons (AOP) or society or trust aided or controlled by appropriate Government. Hence, specified persons excludes appropriate Government and Government Company. Therefore, exemption of Section 96 are available for acquisitions made by them. Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 24 v. Additionally, section 105-A applicable in only the State of Maharashtra w.e.f. 2018, provides that RFCTLARR Act, 2018 will not be applicable to certain acts enacted in Maharashtra as mentioned in Schedule-V of the RFCTLARR Act, 2013. RFCTLARR Act, 2013. vi. Schedule-V of RFCTLARR Act, 2013 provides a list of acts enacted in the state of Maharashtra on which this act will not be applicable i.e. exemption will not be applicable even if acquisition is not covered by section 46 of RFCTLARR Act, 2013. 1. The Maharashtra Highways Act (LV of 1955). 2. The Maharashtra Industrial Development Act, 1961 (Mah. III of 1962). 3. The Maharashtra Regional and Town Planning Act, 1966 (Mah. XXXVII of 1966). 4. The Maharashtra Housing and Area Development Act, 1976 (Mah. XXVIII of 1977).\" vii. If the land has been acquired under any of the Acts as stated above, RFCTLARR Act, 2013 is not applicable which in turn means that the claim of exemption u/s 96 of RFCTLARR Act, 2013 is not available and hence all capital gains shall be taxable. Section 96 of the RFCTLARR Act, 2013 provides exemption from income tax and stamp duty levied on any acquisition covered under the Act, except for persons referred to in section 46 of the RFCTLARR Act, 2013. However, for being covered under the said provisions, it has to be proved that the land was compulsorily acquired under the above provisions other than by the Specified persons for the purposes defined under the Act. Therefore, the decision of the Id. CIT(A) is not found to be acceptable and the same may be challenged further. 4. The decision of the Ld. CIT(A) is not acceptable on the basis of Grounds of appeal enclosed. Therefore second appeal is filed on the grounds enclosed as Grounds of appeal.” 13. During the course of hearing, ld. Counsel for the assessee made two fold submissions. He firstly stated that the land owned by the assessee has been acquired by PCMC and Transferable Development Rights (TDRs) have been issued in lieu thereof. He submitted that the TDRs valuing ₹7,41,37,000 were issued by PCMC and the income arising from the acquisition of the land (after reducing the costs incurred by the assessee for purchase of such land) is exempt from tax u/s.96 of RFCTLARR Act. He further submitted that Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 25 the TDRs issued by PCMC were sold by the assessee for a consideration of ₹6,85,71,501 and the assessee has actually incurred loss on sale of the TDR. He further submitted that firstly the assessee has earned exempt income in the form of receipt of TDRs and thereafter such TDRs have been sold at a loss. The amount received from sale of TDRs has been credited to the Capital account and therefore from the value of sale of TDR the cost of the land valued by PCMC for issuing TDR at ₹7,41,37,000 deserves to be allowed. 14. We observe that the assessee in its return of income has not claimed any exempt income u/s.96 of RFCTLARR Act. This fact has been admitted by ld. Counsel for the assessee that no such detail has been filed in the return of income. Only the amount received from sale of TDR has been credited to the Capital Account which ld. AO has examined. Therefore, admittedly, the issue of exempt income earned by the assessee during the year has not been examined by ld. AO nor any such detail has been filed by the assessee before ld. AO. Second part of the transaction is regarding the cost of land acquired by the PCMC. Now when the PCMC has acquired the land and issued the TDR to the assessee then the cost of such land ought to be booked in the books of account which are regularly audited. Ld. AO could only lay his hands on the cost of land at ₹1,53,75,670 which was the part of acquisition of many lands owned by assessee but for the remaining amount of cost of land at ₹5,17,89,425 ld. AO could not find the reference in the Fixed Asset chart. Further, when the matter reached before ld.CIT(A), he on examining the current assets observed that certain amount has been shown as advance against purchase of land which is the subject matter of sale of Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 26 TDR and based on such observation ld.CIT(A) has given the relief. But the moot question still remains about the claim of exempt income from acquisition of land by PCMC against which the TDRs have been issued to the assessee. Ld. Counsel for the assessee has filed detailed submissions along with referring to plethora of decisions stating that such income is exempt and once the income is exempt then the cost of value of TDR deserves to be allowed against the sale consideration of TDR. Ld. DR in the statement of facts has referred to this aspect that the claim of exempt income under RFCTLARR Act has neither been putforth in the return of income nor filed before the Assessing Officer. Even on observing the impugned order, we note that after 06.10.2023 assessee has not made any submission and even has not replied to the notice fixing the date of hearing on 24.03.2024. The index of the factual paper book also provides that most of the details were not filed before the Assessing Officer and also the documents placed at Sl.No.5,6,9,11,13,15,17, 19 and 21 were not placed before both the lower authorities. 15. Under these given facts, we deem it appropriate that the issues raised by the Revenue in the instant appeal as well as the issues raised in the Cross Objection filed by the assessee deserves to be restored to the file of ld. Jurisdictional Assessing Officer for afresh adjudication and to examine the following issues : (i) Whether the income from acquisition of land by PCMC issuing TDR at ₹7,41,37,000 is eligible for exemption u/s.96 of RFCTLARR Act, 2013. Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 27 (ii) Whether the cost of land acquired by PCMC has been booked in the regular books of account (iii) The transaction of sale of Transferable Development Rights and allowing the cost of acquiring such TDR. 16. We therefore restore the above referred issues to the file of ld. JAO for necessary examination and decide in accordance with law. Needless to mention that ld. JAO shall afford reasonable opportunity of hearing to the assessee. Ld. JAO shall carry the exercise on due consideration of the documents which have been filed for the first time before this Tribunal as stated by ld. Counsel for the assessee and also the written submissions filed from both the sides. Impugned order is set aside and the grounds of appeal raised by the Revenue and assessee are allowed for statistical purposes. 17. In the result, the appeal filed by the Revenue as well as the Cross Objection filed by the assessee are allowed for statistical purposes. Order pronounced on this 22nd day of December, 2025. Sd/- Sd/- (VINAY BHAMORE) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; \u0001दनांक / Dated : 22nd December, 2025. Satish Printed from counselvise.com ITA No.1486/PUN/2024 and CO No.17/PUN/2025 Dilip Motilalji Chordia 28 आदेश क\u0002 \u0003ितिलिप अ ेिषत / Copy of the Order forwarded to : 1. अपीलाथ / The Appellant. 2. \u000eयथ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, “B” ब\u0014च, पुणे / DR, ITAT, “B” Bench, Pune. 5. गाड\u0004 फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. Printed from counselvise.com "