Shri Saurbhbhai Rohitbhai Modi, Ahmedabad V. The Pr. CIT-1, Ahmedabad

ITA 180/AHD/2021

AI Insights

The case involves two appeals by different assessees, Saurabhbhai Rohitbhai Modi and Rohitkumar Chinubhai Modi, against the orders of the Pr. Commissioner of Income Tax-1, Ahmedabad, which were passed under section 263 of the Income Tax Act, 1961. The original assessments had accepted the assessees' claims of exemption on long-term capital gains from the sale of agricultural land, which was allegedly compulsorily acquired by the government. However, the Pr. Commissioner found that the land was not compulsorily acquired but was sold under private agreements with the Gujarat Industrial Development Corporation (GIDC), and thus the exemption was wrongly allowed. The Tribunal's decision affirmed the Pr. Commissioner's findings, leading to the dismissal of the appeals.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133605 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 19-10-2022
• Assessment Year: 2016-2017
• Appeal Filed On: 06-07-2021
• Other Referred Cases: Balakrishnan Vs. UIO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset; Revision of order; Earning of tax free income; Set aside; Capital Gains
• Section: 147; 6; 263; 11; 143(3); 142(1); 133(6); 143(2)

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘D’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE MRS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND MISS SUCHITRA RAGHUNATH KAMBLE, JUDICIAL MEMBER ITA No.180/Ahd/2021 Assessment Year :2016-17 Saurabhbhai Rohitbhai Modi F-2,Prasad Building Opp: Jain Derasar, Nehrunagar Circle Ambawadi 380 015. Gujarat. PAN : AAYPM 2507 N Vs. Pr.Commissioner of Income Tax-1, Ahmedabad. ITA No.181/Ahd/2021 Assessment Year :2016-17 Rohitkumar Chinubhai Modi 10, Shyam Kun Society Opp: Jain Derasar Nr.Nehrunagar Circle Ambawadi 380 015. Gujarat. PAN : ADLMPM 5066 E Vs. Pr.Commissioner of Income Tax-1, Ahmedabad. अपीलाथ / (Appellant) यथ /(Respondent) Assessee by : Shri Bandish Soparkar, AR with Shri Parin Shah, AR Revenue by : Shri Alok kumar, CIT-DR स ु नवाई क तार ख/Date of Hearing : 20/10/2022 घोषणा क तार ख /Date of Pronouncement: 11/01/2023 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER Present two appeals pertain to different assesses and have been filedagainst separate orders passed by the ld.Pr.Commissioner of IncomeTax-1, Ahmedabad [hereinafter referred to as “Ld.PCIT”] in exercise of his revisionary powers under section 263 of the Income ITA No.180 & 181/Ahd/2021 2 Tax Act, 1961 ("the Act" for short) both of even date; 18.3.2021pertainingto the Asst.Year 2016-17. 2. It was common ground that the reasons for assuming jurisdiction by the Ld.PCIT to revise the assessment order in both the cases was identical in the backdrop of identical set of facts. Therefore, both the appeals were taken up together for hearing. 3. The ld.counsel for the assessees contended that the facts in both the cases being identical, he would be dealing with the facts in the case of Shri Saurabhai Rohitbhai Modi in ITA No.180/Ahd/2021 and make his pleadings accordingly.We shall therefore deal with the appeal in ITA No.180/Ahd/2021 and our decision rendered therein will apply pari pasu to the other appeal also. ITA No.180/Ahd/2021 Sh. Saurabhbhai Rohitbhai Modi A.Y 2016-17 4. Ld.counsel for the assessee first drew our attention to the facts of the case pointing out that for the impugned year the assessee had filed return of income declaring total income of Rs.5,02,310/- .The assesses case was thereafter selected under CASS for compulsory scrutiny and assessment framed under section143(3) of the Act vide order dated 17.12.2018 accepting income returned by the assessee. The ld.counsel of the assessee stated that thereafter the ld.PCIT, on perusal of the assessment record, noted that the assesseehad claimed long term capital gain on sale of agricultural land as exempt u/s 10(37) of the Act on account of compulsory acquisition of the land by the Government, amounting toRs.2,74,83,073/-. The ld.PCIT noted from the record that it was not a case of compulsory acquisition of land by the Government, but ITA No.180 & 181/Ahd/2021 3 on the contrary it was a private contract (agreement to sell) between the assessee and the Gujarat Industrial Development Corporation (GIDC), and therefore the assessee had wrongly claimed exemption on account of compulsory acquisition of the land by the State as per the provisions of section 10(37) of the Act. The ld.PCIT also noted that there was no evidence on record to show that the land was being used for agricultural purposes two years prior to the date of transfer, which was necessary for claiming exemption under section 10(37) of the Act. Further he noted that the assessee had not returned capital gain vis a vis the complete amount of consideration agreed to be received for the transaction being Rs.21,73,47,900/- but only against the amount actually received i.e 75% thereof ,being Rs.16,30,10,925/-.Accordingly, the ld.PCIT found that the order passed by the AO accepting the exemption claimed by the assessee on account of the impugned transaction of land, was erroneous causing prejudice to the Revenue. A show cause notice was accordingly issued to the assessee, and after giving due opportunity of hearing to the assessee, the ld.PCIT passed order under section 263 holding that the AO while framing the assessment order had wrongly given benefit of exemption claimed by the assessee under section 10(37) of the Act, and had not subjected to tax the entire capital gain, after considering correct share of consideration. He held that the order passed by the AO was without making any necessary inquiry and verification vis-a-vis both the claim of exemption under section 10(37) of the Act and determination of correct amount of capital gain earned. Accordingly, he set aside the order passed by the AO directing him to pass a fresh assessment order in accordance with law. ITA No.180 & 181/Ahd/2021 4 Aggrieved by the same the assessee has come up in appeal before us raising the following grounds: “1. Ld. Pr. CIT, Ahmedabad - 1 erred in law and on facts in revising a scrutiny /assessment order passed by AO which is neither erroneous nor prejudicial to the f interest of revenue. 2. This action of Id. Pr. CIT revising an order passed by AO raising relevant queries and extensive verification of the details submitted during assessment by the appellant is without any justification to invoke revisional jurisdiction. 3. Ld. Pr. CIT erred in law and on facts revising scrutiny assessment order without appreciating that subject land was acquired vide 'Government of Gujarat Gazette' for public purpose by Gujarat Industrial Development Corporation (GIDC) that is held to be compulsorily acquired by judicial pronouncements. 4. Ld. Pr. CIT erred in law and on facts holding assessment order as erroneous and prejudicial to the interest of revenue since AO granted exemption u/s 10(37) of the Act as claimed by the appellant without verifying fulfillment of the conditions. 5. Ld. Pr. CIT erred in law and on facts invoking revisional jurisdiction in absence of AO noting in assessment order response to the query raised that was properly responded by the appellant during the assessment proceedings. 6. Ld. Pr. CIT erred in law and on facts revising scrutiny assessment order merely because he held a different opinion than AO in the matter. 7. Ld. Pr. CIT erred in law and on facts holding that assessment completed without any inquiry on the points for which case was selected for scrutiny as erroneous and prejudicial to the interest of revenue failed to appreciate clear difference between "Lack of inquiry" and "Inadequate inquiry." 5. The contentions raised before us by the ld.counsel for the assessee against the order passed by the Ld.PCIT, briefly put, are as under: • The revisionary jurisdiction assumed by the Ld.PCIT u/s 263 of the Act was bad in law since there was no error in the order passed by the AO who had made due inquires regarding the claim of exemption under section 10(37) of the Act and had thereafter taken a plausible view allowing the assesses claim. ITA No.180 & 181/Ahd/2021 5 • That even otherwise on merits the assesses claim to exemption under section 10(37) of the Act was in accordance with law as per CBDT Circular No.36 of 2016 dated 25.10.016 • That without prejudice to the above contentions,in any case no transfer as per section 2(47) of the Act read with section 53A of the Transfer of Property Act (TPA) had taken place in relation to the said land in the impugned year, and therefore no question arose of taxability of capital gains earned thereon arose in the impugned year; 6. Before proceeding to argue at length on the various limbs of his arguments as above, the ld.counsel for the assessee first pointed out the undisputed facts of the present case, stating that the land sold by the assessee,capital gain earned on which is in dispute whether exempt or not , pertained to four parcels of the land co- owned equally by the assessee and three other co-owners. The lands were identified as bearing survey nos.766, 777, 786 and 788, situated at village Khoraj, Dist. Ahmedabad. That these lands were initially notified by the Government for acquisition under section 4 of the Land Acquisition Act (LAA) on 5.9.2012 and a declaration for acquisition of the said land under section 6 of the said Act was also made on 7.10.2013 and award by the Collector under section 11(2) of the LAA was given with respect to one land bearing survey no.788 on 30.12.2013, but subsequently, the Land Acquisition Act was repealed by the Government w.e.f. 01.01.2014 and a new Act brought on statute i.e. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (“RFCTLRR Act” for short) w.e.f. 1-1-2014, but the Rules for the acquisition of the land under the new Act were notified by the State Government in October, 2017; that since the land could not be ITA No.180 & 181/Ahd/2021 6 acquired under the “RFCTLRR Act” in the absence of notification of Rules, GIDC, for whose purpose the State Government was initially acquiring the impugned land, went ahead and acquired the land from the transferees by mutual consent as per the power entrusted to GIDC under section 14(b) of the Gujarat Industrial Development Act, 1962 (GIDC Act); that an agreement to sell accordingly was entered into by the four co-owners and GIDC for three pieces of land i.e.survey nos.766, 777, and 786 for a consideration of Rs.21,73,47,900/- and cheque for 75% of the same amounting to Rs.16,30,10,925/- dated 16.12.2015 was issued by the GIDC along with agreement to sell being entered on 16.12.2015; the balance 25% was agreed to be paid on execution of the sale deed.That subsequently on 30.6.2017 the sale deed was registered between the four co-owners and the GIDC. Chronology in this regard was placed before us as under: Date Event Ref.Pg. 05.09.2012 Publication of preliminary notification u/s 4 of Land Acquisition act S.N. 766, 777, 786 and 788 are seen 68 30.08.2013 Sammatiqarar for the relinquishment of land S.N. 766, 777, 786 and 788 70-77 07.10.2013 Declaration of intended acquisition u/s 6 of Land Acquisition act S.N. 766, 777, 786 and 788 are seen 40-67 48- 49 30.12.2013 Award by Collector u/s 11(2) of Land Acquisition act S.N. 788 is seen 26-37 35 30.12.2013 100% advance compensation made u/s 11(2) of Land Acquisition act for S.N. 788 25 01.01.2014 RFCTLARR Act came into force S.114 repeals the Land Acquisition Act S.96 gives exemption of income Tax 23-24 16.12.2015 Agreement to sale between the four co-owners and GIDC for Rs.21,73,47,900/- for S.N. 766, 777, 786 Cheques of 75% sum - Rs.16,30,10,925/- dated 15.12.2015 mentioned 20-24 09.02.2016 Certificate from Collector that the lands are agricultural lands 39 ITA No.180 & 181/Ahd/2021 7 30.06.2017 Registered Sale deed is executed between four co-owners and GIDC 7. The ld.counsel for the assessee contended that CBDT had come out with a Circular dated 25.10.2016 stating that compensation received on land acquired under “RFCTLRR Act” was exempt from thelevy of income tax on capital gains earned thereon without any distinction being made whether the compensation was for the acquisition of an agricultural land or non-agricultural land. Ld.counsel for the assessee contended that the contentions of the assessee for claiming exemption ofcapital gain earned on the purported sale of land to GIDC, was that the acquisition of land was initiated by the State Government for the said purpose under the LAA which was subsequently repealed and new Act i.e. “RFCTLRR Act” came to be notified for the compulsory acquisition of land by State Government, but due to non-notification of the Rules with regard to the acquisition of the land under the new Act, the acquisition of the land in the impugned case was proceeded with not by the State Government, but by the GIDC itself by entering into an agreement with the assessee, and thesale of the land to GIDC, therefore being in pursuance to the compulsory acquisition of the land by the State Government, the income thereof was exempt from taxation as per the CBDT Circular No.36 of 2016. Having stated so, the ld.counsel for the assessee took us through all the documents stated in the chronology of events placed before us in paper book which are referred to in the chart given above. 8. Now taking up the first argument that this issue was examined by the AO during the assessment proceedings and that he had taken plausible view; the ld.counsel for the assessee contended that the ITA No.180 & 181/Ahd/2021 8 assessee’s case was selected for compulsory scrutiny for the purpose of verifying large income claimed as exempt under the head “capital gains and other sources”. In this regard, he drew our attention to this fact, as noted in the assessment order for the impugned year passed under section 143(3) of the Act placed before us at page no.31 & 32. Thereafter, he pointed out that during the assessment proceedings, the AO had issued notice under section 142(1) of the Act asking the assessee to furnish details of exempt income earned during the year along with expenditure incurred to earn the same, as also at point no.2 and point no.(xvi) and (xviii) of the notice issued under section 142(1) dated 11.10.2018 placed before us at PB Pg. No.83 to 88. He thereafter pointed out the detailed reply filed by the assessee to the same, pointing out the land was compulsorily acquired by the Government, and then claimed as exempt under as per CBDT Circular cited (supra), which exempted land compulsorily acquired, whether agricultural or not. He further pointed out that a statement of capital gain arising from the land acquired by the Government was filed along with agreement to sell entered into by the assessee and the GIDC dated 16.12.2015 and the letter of sale. Our attention was drawn to PB Page No.89 to 96 being submissions of the assessee dated 18.102.108 in response to the notice under section 142(1) stating the above along with details of land sold at PB Pg.No.92 being part of the said letter. He also pointed out that copy of the CBDT Circular No.36 of 2016 dated 25.10.2016 was also filed to the AO. The ld.counsel for the assessee contended that considering all the facts before him, accordingly, the AO took a plausible view that the assessee had rightly claimed his income as exempt. In this regard, the ld.counsel for the assessee pointed out that the view of the AO was plausible is evident from the fact that in the case one of the co-owners, re-assessment proceedings initiated ITA No.180 & 181/Ahd/2021 9 for the impugned year on the basis of proceedings u/s 263 of the Act conducted in the case of the assessee, the AO had accepted the claim of exemption to the assessee of the capital gain earned on the sale of the land. In this regard, he drew our attention to the order passed by the AO in the case of Poonam Rohitbhai Modi passed under section147 of the Act dated 25.3.2022; copy of which was placed before us. He drew our attention to the notice issued under section 143(2) read with section 147 of the Act in the case of the said assessee, pointing out therefrom that the reasons for reopening was the order passed by the Ld.PCIT in the cases of Shri Rohitkumar Chinubhai Modi and Saurabhbhai R. Modi, the assessees before us under section263of the Act, setting aside the order of the AO accepting the assessee’s claim of exemption of capital gains under section said 10(37) of the Act. Copy of the notice under section 142(1) was also placed before us. The ld.counsel for the assessee contended that the AO in this case of co- owner, had accepted identical claim as that of the assessee to exemption of capital gain, that too in the light of the order passed under section 263 of the Act in the case of the assessee. He stated therefore that this fortifies the view taken by the AO in the case of the assessee as being a plausible view and therefore, there was no error in theorder passed by him. 9. Next contention raised by the ld.counsel for the assessee was that even on merits, the finding of the ld.PCIT that this was not compulsory acquisition by the State Government, under either LAA or “RFCTLRR Act”, but a transfer of land by the assessee to GIDC, is not a plausible view considering theentire facts and circumstances of the case. The ld.counsel contended that it is not disputed that initially it was the State Government which had initiated compulsory ITA No.180 & 181/Ahd/2021 10 acquisition proceedings under the LAA, as it then existed, for the purpose of acquiring the land to be given to GIDC, but due to the Act being repealed and new law, “RFCTLRR Act” cominginto force, the Rulesof which were not notified, after very long lapse of time the GIDC proceeded with acquisition of the land by exercising its powers under section 14(b) of the GIDC Act. Therefore, though strictly speaking the land may not have been acquired by the State Government under the relevant law, the LAA, but it was merely for the reason that the new Act for acquiring the land by the State Government thoughhad been brought on the statutebut the machinery provisions by way of Rules were not notified , and the acquisition had therefore to be done by GIDC by exercising its powers and not through the route of land being acquired by the Government and then handing over to GIDC. He pointed out that theacquisition initiated by the State Government had to be compulsorily concluded by a Corporation of the State i.e. GIDC, due to delay in notification of Rules for acquiring the land by the State. He contended, for all purpose, therefore, the intent and objects always remained the acquisition of the land by the State Government, and merely because the agreement was executed by GIDC it did not tantamount to sale of land by execution of transaction of sale of land between two private parties; that it was never the intention of GIDC to privately acquire this land, which is evident from the entire chorology of events, and therefore, merely for the reason that transfer of land was executed by the GIDC it could not be termed as private transfer between the assessee and the GIDC, but was compulsory acquisition of the land by the State only. In this regard, he relied upon the decision ofApex Court in the case of Balakrishnan Vs. UIO, (2017) 80 taxmann.com 84 (SC). Referring to the facts of the case, he pointed out that in that case, initial ITA No.180 & 181/Ahd/2021 11 consideration for compulsory acquisition of the land by the State had been given by the Collector. But subsequently the assessee sought for enhancement of the compensation and instead of applying to make a reference under section 18 of the LAA to District Judge to determine enhanced compensation, he settled thematter with the party to whom the land acquired had been allowed by the Government i.e. i.e. Techno Park in the present case. That party agreed to the enhanced compensation. The AO in this regard held that enhanced compensation was not of the nature of compensation awarded by the State for acquiring his land, since it was given by private party, but the Hon’ble Apex Court held otherwise stating that the assessee was compelled to stake its claim for enhanced compensation from the privateparty to avoid litigationand since this compensation was in lieu of acquisition of the land by the State only, it did not matter who paid the compensation. The colour of the compensation relating to its original acquisition bythe State, would not change being in the nature of compensationfor the compulsory acquisition of the land. He drew our attention to para-8 of the order, copy of which was placed before us. The ld.counsel for the assessee contended that drawing an analogy from the said judgment, since the transaction initiated was coloured as acquisition of land by the State for handing over to GIDC, but due to operational reasons, it could not be acquired by the State and instead GIDC enteredinto an agreement to buy it from the assessee, it could not be stated that original colour of the transaction being a compulsory acquisition by the State was lost. In this regard, the ld.counsel for the assessee pointed that one piece of land i.e. Survey No.788 which was acquired during the existence of LAA only, was acquired at the same rate as that acquired by the GIDC and terms also were the same. ITA No.180 & 181/Ahd/2021 12 10. The alternative contention of the Ld.Counsel for the assessee was that no capital gains accrued during the year since no transfer took place in the impugned year as the agreement to sell entered into by the assessee with GIDC was not a registered agreement, but notarised agreement, and therefore, itwas not an agreement in the eyes of law even for the purpose of section 53A of the Transfer of Property Act. Inthis regard, he drew our attention to the decision of Hon’ble Apex Court in the case of CIT Vs. Balbir Singh Maini, 398 ITR 531 (SC). 11. As for the issue of quantum of compensation, the ld.counsel for the assessee contended that the compensation agreed included the part which was to be paid by the seller of the land for conversion of agriculture land to non-agriculture land, which was the liability of the seller as per the terms of agreement also, and therefore, itwas this portion which had been excluded from the sale consideration by the assessee. 12. The Ld.DR on the other hand heavily supported the order of the Ld.PCIT. 13. We have heard the rival contentions and gone through the order of the Ld.PCIT as also the documents and case laws referred to before us. The issue to be adjudicated is whether the Ld.PCIT was right in holding the assessment order being erroneous causing prejudice to the Revenue in allowingassesses claim of exemption of capital gains earned on transfer of land u/s 10(37) of the Act. The Ld.PCIT has found the claim to be wrongly allowed by the AO without examining /inquiring: ITA No.180 & 181/Ahd/2021 13 a. The eligibility to claim exemption u/s 10(37) of the Act b. The correct computation of capital gains The eligibility to claim exemption has been questioned by the Ld.PCIT finding that the assessee does not fulfill the necessary conditions of the exemption provision of a. the transfer having occurred by way of compulsory acquisition of land under law ; b. the land having been used for agricultural purposes two years prior to the date of transfer Both the conditions being needed to be fulfilled cumulatively for being eligible to claim exemption u/s 10(37) of the Act as is evident from the provisions of the section as under: “10(37) in the case of an assessee, being an individual or a Hindu undivided family, any income chargeable under the head "Capital gains" arising from the transfer of agricultural land, where— (i) such land is situate in any area referred to in item (a) or item (b) of sub-clause (iii) of clause (14) of section 2; (ii) such land, during the period of two years immediately preceding the date of transfer, was being used for agricultural purposes by such Hindu undivided family or individual or a parent of his; (iii) such transfer is by way of compulsory acquisition under any law, or a transfer the consideration for which is determined or approved by the Central Government or the Reserve Bank of India; (iv) such income has arisen from the compensation or consideration for such transfer received by such assessee on or after the 1st day of April, 2004. Explanation.—For the purposes of this clause, the expression "compensation or consideration" includes the compensation or consideration enhanced or further enhanced by any court, Tribunal or other authority;” 14. The computation of capital gains having been called to question by the Ld.PCIT noting that the assessee had computed capital gains only in relation to the component of agreed consideration actually received during the year i.e 75%. 15. The fact which is not disputed is that the assessee alongwith three other co-owners being Sh.Rohit Chinubhai Modi Ponnam ITA No.180 & 181/Ahd/2021 14 Rohitbhai Modi & Anila Rohitbhai Modi (all co-owners having equal share) had signed a banakhat bearing number 257/06/2015 on 16- 12-2015 with GIDC for sale @ Rs.1100/- per square metres of their land. The banakhat nowhere mentions the land being compulsorily acquired.Even as per the admission of the Ld.Counsel for the assessee the lands were neither acquired under the Land Acquisition Act,1894 nor the RFCTLARR Act,2013, which were the laws under which land could be compulsorily acquired. The land in fact was purchased by GIDC by exercising its power u/s 14(b) of the GIDC Act,1962. The letter of the Vice Chairman & MD,GIDC filed to the AO in response to notice issued u/s 133(6) of the Act clearly states so and which finds mention at page 5 of the Ld.PCIT’sorder as under: “ ...... However, in the reply dated 15.12.2018 bearing number GIDC/ACCTTS/FIN/1370 of the Vice Chairman & MD, GIDC( filed in response to notice u/s. 133(6) issued by the AO), it was mentioned that the corporation planned to acquire the impugned land under the provisions of erstwhile Land Acquisition Act, 1894. During the process of land acquisition under The Land Acquisition Act, 1894, the said Act got abolished and was replaced by new Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (also known as Land Acquisition Act ,2013 or RFCTLARR Act) w.e.f. 01.01.2014. It was further clarified by GIDC that the Rules for the acquisition of land under the new Act were notified by the State Government in October 2017. Hence, GIDC acquired the said land by Mutual Consent from the transferee i.e. Shri Rohitbhai C. Modi & Others as per the power entrusted to the corporation u/s. 14(b) of The GID Act, 1962.” Relevant section 14(b) of the GIDC Act placed before us by the Ld.Counsel for the assessee is also reproduced for clarity. “........... 14(b) to purchase by agreement or to take on lease or under any form of tenancy any land, to erect such buildings and to execute such other works as may be necessary for the purpose of carrying out its duties and functions; .......” ITA No.180 & 181/Ahd/2021 15 16. This being the undisputed fact,we do not find any infirmity in the order of the Ld.PCIT holding that the land were not transferred by way of compulsory acquisition under any law but were transferred by mutual consent and agreement between two private parties and the assesses therefore clearly did not qualify for exemption of its capital gain earned thereon u/s 10(37) of the Act. 17. The fact that the land was initially notified for acquisition under the Land Acquisition Act,1894 which got repealed before the grant of any award to these lands under the law and a new law was notified in its place i.e RFCTLAAR Act,2013, whose Rules since were not notified, GIDC went ahead to purchase the land vide these banakhats at rates agreed earlier in the LAA Act, does not grant the color of compulsory acquisition to this transaction.Undoubtedly the transaction between the assessee and GIDC is mutually agreed transaction and there was no compulsion on the assessee to transfer the land to GIDC. The initial notification of acquisition of these lands under the LAA no longer existed in law once the Act got repealed. The transitory provisions for lands notified under the LAA Act to be covered under the RFCTLAAR Act,2013, are dealt with in section 24 of the RFCTLAAR Act as under: “24. Land acquisition process under Act No. 1 of 1894 shall be deemed to have lapsed in certain cases.–(1) Notwithstanding anything contained in this Act, in any case of land acquisition proceedings initiated under the Land Acquisition Act, 1894,— (a) where no award under section 11 of the said Land Acquisition Act has been made, then, all provisions of this Act relating to the determination of compensation shall apply; or (b) where an award under said section 11 has been made, then such proceedings shall continue under the provisions of the said Land Acquisition Act, as if the said Act has not been repealed. (2) Notwithstanding anything contained in sub-section (1), in case of land acquisition proceedings initiated under the Land Acquisition Act, 1894 (1 of ITA No.180 & 181/Ahd/2021 16 1894), where an award under the said section 11 has been made five years or more prior to the commencement of this Act but the physical possession of the land has not been taken or the compensation has not been paid the said proceedings shall be deemed to have lapsed and the appropriate Government, if it so chooses, shall initiate the proceedings of such land acquisition afresh in accordance with the provisions of this Act: Provided that where an award has been made and compensation in respect of a majority of land holdings has not been deposited in the account of the beneficiaries, then, all beneficiaries specified in the notification for acquisition under section 4 of the said Land Acquisition Act, shall be entitled to compensation in accordance with the provisions of this Act.” The section specifies all circumstances where the acquisition initiated under the old law would now take place under the new law. Section 24(1)(a) states that in the circumstance no award has been made under the repealed LAA act, then the provisions of the new Act,RFCTLAAR Act 2013 , would apply for acquisition of land . In the present case though the assessee’s lands may have qualified for transition under the new law on account of acquisition being notified under old LAA Act but no award being made therein but the fact remains that it was not acquired even under the new law. As per the transitory provisions the acquisition could very well have been continued with as per the new law. Whatever may have been the compulsions, that the Rules were getting delayed to be notified for acquisition of land under the new law, but the fact remains that the land was not acquired by the State even under the new law. There is no reason nor scope for deeming the acquisition of the lands under the RFCTLAAR Act. 18. The banakhat entered into between the assessee and GIDC is on mutually agreed terms where there is nothing to the effect that the assessee has to compulsorily transfer its land and has no choice in the matter. Nothing to this effect was pointed out to us. Nor is this the case of the Ld.Counsel for the assessee. The assessee on its own volition agreed to transfer the land to GIDC. The assessee was ITA No.180 & 181/Ahd/2021 17 well within its rights to have refused to do so.Therefore there arises no question at all of giving this transaction the color of compulsory acquisition at all. 19. The case law referred to by the Ld.Counsel for the assessee of the Hon’ble apex court in the case of Balakrishnan(supra), we find does not apply to the facts of the present case. In the said case the acquisition of lands was compulsory acquisition and thereafter the additional compensation was agreed to between the private parties involved,to which the Hon’ble court held that acquisition being compulsory mere payment of compensation on agreed terms would not alter its character.In the case before us the transfer of land itself is not by way of compulsory acquisition under law but a voluntary sale and therefore the judgment of the Hon’ble court is of no assistance to the assessee. 20. The findings of the Ld.PCIT therefore that the assessee did not qualify for exemption u/s 10(37) of the Act since the lands were not compulsorily acquired, we find is correct. And therefore his findings that the AO’s order was erroneous for having granted exemption without examining eligibility on this count is also we hold correct. 21. Having found the assessee failing to fulfill one of the cumulative conditions required to be fulfilled for claiming exemption u/s 10(37) of the Act, we do not consider it necessary to deal with the other failure noted by the Ld.PCIT of the land having not been used for agricultural purposes.The AO’s order allowing claim of exemption is in error on account of the transfer of land not having been by way of compulsory acquisition alone.The issue of whether used for agricultural purposes or not prior to transfer therefore becomes only academic for adjudicating whether the order passed by ITA No.180 & 181/Ahd/2021 18 the Ld.PCIT holding the assessment order to be erroneous was in accordance with law. 22. As for the alternate contention of the Ld.Counsel for the assessee that no transfer in fact had taken place during the impugned year since the banakhat was not registered, we find that this is of no relevance while adjudicating upon the order of the Ld.PCIT. The reason being that this was never the issue before the Ld.PCIT whose order u/s 263 impugned before us finds the assessment order to be erroneous for having wrongly allowed the assesses claim of exemption u/s 10(37) of the Act.That was the limited issue considered by the Ld.PCIT. The assesses claimnever was to the effect that no capital gain accrued during the year at all. He had voluntarily returned capital gain as exempt during the impugned year. Nor do we find that the assessee ever made such claim before the Ld.PCIT during impugned revisionary proceedings. The order of the Ld.PCIT having been found by us to be in accordance with law on the issue raised therein, it cannot be set aside on an issue which was never there before the Ld.PCIT. Though needless to add that the assessee is at full liberty to raise this plea or any other plea in the set aside proceedings before the AO. In view of the above, we uphold the order passed u/s 263 of the Act by the Ld.PCIT. 23. Both appeals of the assesses are therefore dismissed. Order pronounced in the Court on 11 th January, 2023 at Ahmedabad. Sd/- Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad, dated 11/01/2023