Appeal Details
Counselvise Citation
[2022] 106 COUNSELVISE.COM (IT) 8170 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
4 month(s) 7 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
11-09-2022
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
Not Allotted
Assessment Year
2016-2017
Appeal Filed On
04-05-2022
Judgement Text
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, “SMC”, CHANDIGARH BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER आयकर अपील सं./ ITA No. 408/CHD/2022 नधा रणवष / Assessment Year :2016-17 Smt. Baljit Kaur, C/o Deepak Anand, Advocate Magzine Street, Near Santoshi Mata Mandir, Sangrur बनाम The ITO, Ward, Sangrur थायी लेखा सं./PAN NO: CJZPK9000J अपीलाथ /Appellant यथ /Respondent नधा रती क ओर से/Assessee by : Sh. Deepak Anand, Advocate. राज व क ओर से/ Revenue by : Smt. Priyanka Dhar, Sr.DR स ु नवाई क तार$ख/Date of Hearing : 06.09.2022 उदघोषणा क तार$ख/Date of Pronouncement : 12.09.2022 आदेश/Order This appeal has been preferred by the assessee against the order dated 24.06.2019 passed u/s 250(6) of the Income Tax Act, 1961 [in short 'the Act'] by the Ld. Commissioner of Income Tax, Patiala [herein referred to as ‘CIT(A)’] for assessment year 2016-17. 2.0 The brief facts of the case are that the assessee had filed the original return of income declaring an income of Rs. 9,89,170/- under the head ’‘income from other sources’. Subsequently, the return of income was revised declaring income of Rs. 2,87,474/-. In this revised return, an amount of Rs. 16,11,156/- was claimed as exempt income. Subsequently, the case was selected for scrutiny under the CASS guidelines for the following two reasons:- ITA No. 408-Chd-2022 (AY 2016-17) - Smt. Baljit Kaur, Sangrur 2 1. Payment of compensation on acquisition of immovable Capital gain / loss on sale of property is shown in TDS return filed by the acquirer, but property, capital gain is not declared in return of income. 2. Taxable income shown in Revised return is less than the Reduction of income in taxable income shown in the Original Return and large Revised Return. Refund has been claimed. 2.1 The AO noted that the Government had compulsorily acquired the land vide Award No. 9262/MC/NH664 dated 15.01.2014 and the assessee had received the compensation amounting to Rs. 14,50,040/- (Rs. 16,11,156/- minus TDS Rs. 1,61,116/-) by cheque dated 20.03.2015 from the Sub Magistrate cum Land acquisition Collector, Sangrur. The AO further observed that in the original return, the assessee had shown Long Term Capital Gain at Rs. 8,21,526/- but in the revised return, the assessee had claimed Long Term Capital Gain as exempt u/s 10(37) of the Act in view of Circular No. 36/2016 dated 25.10.2016 issued by the CBDT. 2.2 The AO called for information from the Land Acquisition Collector, Sangrur and, thereafter, reached the conclusion that the land was acquired under the provisions of the National Highways Act, 1956 and compensation was awarded under the provisions of Land Acquisition Act, 1894. The AO further observed that in these cases solatium @ 30% and additional compensation@ 12% from the date of Notification to the date of Award was awarded to the land owners ITA No. 408-Chd-2022 (AY 2016-17) - Smt. Baljit Kaur, Sangrur 3 which clearly proved that compensation was not awarded under the Right to Fair Compensation and Transparency in the Land Acquisition, Rehabilitation and Resettlement Act, 2013 (hereinafter referred to as ‘RFCTLARR’). The AO held that the compensation received by the assessee was not exempt u/s 10(37) of the Act and he proceeded to make an addition of Rs. 6,09,691/- being the amount of compensation received under the head ‘Long Term Capital Gain’ and another addition of Rs. 1,05,918/- under the head ‘income from other sources’ on account of 50% of interest received on compensation. The assessment was completed at income of Rs. 10,03,083/-. 2.3 Aggrieved, the assessee approached the Ld. First Appellate Authority challenging the assessment order. However, the Ld. CIT(A) dismissed the assessee’s appeal by holding that although the applicability of the Acquisition Act of 2013 has been given effect in respect of the enactment specified in the Fourth Schedule including the National Highways Act of 1956 w.e.f 01.01.2015, however, in terms of sub section (3) of Section 105 of the Land Acquisition Act of 2013 (as amended ), only the First Schedule, Second Schedule and the Third Schedule relating to the Rehabilitation and Resettlement and infrastructure amenities have been applied in respect of the National Highways Act of 1956 and further Section 24 of the Acquisition Act of 2013 has not been made applicable to the acquisitions made under the National Highway Act of 1956 . The Ld. ITA No. 408-Chd-2022 (AY 2016-17) - Smt. Baljit Kaur, Sangrur 4 CIT(A) further observed that section 96 of the Land Acquisition Act which exempted the compensation from the chargeability of Income Tax was also not applicable to the land acquired under the National Highways Act, 1956. 2.4 Now the assessee has approached this Tribunal challenging the order of the order of the Ld. CIT(A) by raising the following grounds of appeal:- 1. That the order of Ld. Commissioner of Income tax (Appeals), Patiala and Income Tax Officer, Sangrur is against law and facts. 2. That the Commissioner of Income Tax (Appeals) was not justified to sustain the order of Income Tax Officer, to assess the compensation as "Long Term Capital Gain" amounting to Rs.6,09,691/-. The compensation received on account of compulsory acquisition of land on National Highway-64 covered under RFCTLARR Act is totally exempted as per circular issued by Central Board of Direct Taxes & as per provision of law under RFCTLARR Act. 3. That the Ld. Commissioner of Income Tax (Appeals) was not justified to sustain the finding of Income Tax Officer to assess additional compensation as interest u/s 56 amounting to Rs. 1,05,918/-. 4. That the appellant craves leave to add or amend any ground of appeal before the appeal is heard or dispose off. 3.0 At the outset, the Ld. AR submitted that there was a delay of 204 days in filing of the appeal before the ITAT. It was submitted that the assessee was prevented by sufficient cause in filing the appeal in ITA No. 408-Chd-2022 (AY 2016-17) - Smt. Baljit Kaur, Sangrur 5 as much as the appeal should have been filed by 24.08.2019 but since the assessee’s husband Shri Teja Singh was hospitalized due to Kidney ailments, heart attack and by-pass surgery, there was a sufficient cause for the delay between the period 24.08.2019 to 15.03.2020. It was further submitted that, thereafter, the limitation was extended by the Hon'ble Apex Court in view of the Covid-19 pandemic and lock-down through down the country and this limitation was extended by the Hon'ble Apex Court from time to time till 28.02.2022. Our attention was drawn to the order of the Hon'ble Apex Court in Miscellaneous Application No. 21 of 2022 in Miscellaneous Application No. 665 of 2021 in Suo Motu Writ Petition (C) No.3 of 2020. The Ld. AR submitted that in view of this order of the Hon'ble Apex Court, the limitation period stood extended till a period of 90 days from 28.02.2022 and the assessee had filed the appeal on 24.05.2022 which was well within the stipulated extended period of limitation. The Ld. AR also drew our attention to the various documents and medical prescriptions supporting the assessee’s claim regarding the ailment of assessee’s husband and prayed that the delay be condoned. 4.0 In response, the Ld. Sr.DR objected to the prayer for condonation of delay. 5.0 Having heard both the parties on the issue of condonation of delay and also considering the fact that no assessee would benefit by ITA No. 408-Chd-2022 (AY 2016-17) - Smt. Baljit Kaur, Sangrur 6 delaying the filing of appeal except at her or his own peril and also duly giving credence to the fact that the delay has been suitably explained, I deem it expedient to condone the delay and admit the appeal for the purpose of regular hearing. 6.0 At the outset, the Ld. AR submitted that the assessee’s case stood covered by various orders of the ITAT wherein it has been held that with the passage of ‘RFCTLARR’ Act all compensations received qua this Act were exempt from imposition of Income Tax. He filed copies of orders of the ITAT in support of his contention. 7.0 In response, the Ld. Sr.DR submitted that she was relying heavily on the observations of the AO in this regard. It was submitted by the Ld. Sr.DR that there were numerous judicial precedents supporting the stand of the Department that the compensation received was taxable and that all the components therein would form part of income. It was also submitted that now the Hon'ble Courts have drawn distinction between interest u/s 28 of the Land Acquisition Act and Interest u/s 34 of the said Act. It was submitted that it has been held that whereas the compensation given to the assessee of the land acquired would be income, the enhanced compensation would be income by virtue of section 45(5) (b) of the Act. ITA No. 408-Chd-2022 (AY 2016-17) - Smt. Baljit Kaur, Sangrur 7 7.1 However, on a query from the Bench, the Ld. Sr. DR fairly accepted that the issue stood covered in favour of the assessee by numerous orders of the Chandigarh Bench of the ITAT. 8.0 We have heard the rival submissions and have also perused the material on record. The facts are not in dispute. It is seen that the Government had compulsorily acquired the land of the assessee vide Award No. 9262/MC/NH664 dated 15.01.2014 whereas the compensation cheque was dated 20.03.2015. It is also not in dispute that this land was acquired by the National Highways Authority of India in terms of section 3(A)(1) of the National Highway Act, 1956 for the purpose of widening of National Highway No. 64 on the stretch of land from KM 5.700 to KM 209.55 on Patiala – Sangrur – Bhatinda Section in District Sangrur in the state of Punjab. It is also not in dispute that vide Notification No. SO1138 (E) dated 03.05.2013, the Central Government had duly published the Notification regarding the acquisition and had also specified that the said land was to vest absolutely in the Central Government free from all encumbrances. 8.1 We note that the facts in this case are identical to the facts in the case of DCIT Vs. Shri Ram Gopal in ITA No. 397/Chd/2019 for assessment year 2015-16 wherein, vide order dated 30.05.2022, a Division Bench of ITAT Chandigarh had held that the compensation on such compulsorily acquired land was exempt from taxation. In this case, the Division Bench had duly taken note of the fact that land ITA No. 408-Chd-2022 (AY 2016-17) - Smt. Baljit Kaur, Sangrur 8 had been acquired from about 3000 land owners and only 636 land owners had been disbursed compensation till 31.12.2014 and the majority of land owners were given payments after 31.11.2014 i.e. after the date of coming into operation of the ‘RFCTLARR’ Act. In the present case also, although the date of award is prior to 31.12.2014, the cheque for compensation was received after first January 2015 and, therefore, the order of the Division Bench of the ITAT in the case of DCIT Vs. Ram Gopal (supra) would squarely cover the case of this assessee as well. For the sake of completeness the relevant paragraph containing the findings of the Division Bench of the Tribunal in the case of DCIT Vs. Shri Ram Gopal (supra) are being reproduced hereinunder:- “5.0 We have heard the rival submissions and have also perused the material on record. In this case the facts are not in dispute. From the records, it is apparent that the impugned transaction is covered under ‘RFCTLARR’ Act. Even the AO has not disputed this position that the land for which compensation has been received had been acquired by the National Highway Authority of India (NHAI) and it is also a matter of record and it also remains undisputed that NHAI is one of the bodies covered u/s 106 of the ‘RFCTLARR’ Act and all compensation given by them are exempt. Further as per Schedule 1 of the ‘RFCTLARR’ Act, compensation includes additional compensation, solatium and any other receipt which implies that solatium and interest are part of compensation. We also note that CBDT Circular No. 36/2016 dated 25.10.2016 has extended the exemption by including compulsorily acquisition of land without any restriction on area as well as acquisition of ITA No. 408-Chd-2022 (AY 2016-17) - Smt. Baljit Kaur, Sangrur 9 land. It is also settled law that the Income-tax authorities are bound by the guidelines laid down by the CBDT Circulars. The position as it stands now with the passage of ‘RFCTLARR’ Act, is that all compensations received qua this Act are not taxable. It has been clarified by the CBDT vide circular No. 36/2016 dated 21.10.2106 that even where there is no separate deduction allowable under the Income Tax Act, any compensation covered by section 105 and 106 of the ‘RFCTLARR’ Act is exempt from taxation. We note that the Ld. CIT(A) has also given a detailed findings on the issue in which the Ld. CIT(A) has also quoted and followed certain judicial precedents and we are in complete agreement with the findings so arrived at by the Ld. CIT(A) in this regard. Accordingly, we find no reason to interfere with the findings of the Ld. CIT(A) on the issue and we uphold his findings while dismissing the ground raised by the Department.” 8.2 We further note that identical issue had also come up in another case i.e. of Shri Satish Kumar, Sangrur and Other Vs. ITO, Sangrur in ITA Nos. 1182 and 1183/Chd/ 1019 for assessment year 2015-16 and vide order dt. 31.08.2021, the assessee’s appeals were allowed with the following observations:- “10. We have considered the submissions of both the parties and perused the material available on the record. In the present case, it is noticed that the assessee received the compensation on account of land acquired by NHAI. The assessee moved an application before the A.O. for rectification of the mistake and also filed the revised computation of income wherein the Short Term Capital Gain to the tune of Rs. 2,09,108/- and Long Term Capital Gain of Rs. 1,54,29,120/- was claimed as exempt on the basis of CBDT Circular No. 36/2016 dt. 25/12/2016 wherein it had been specifically stated that all the compensation received on account of compulsory acquisition after 01/01/2014 would be exempt from income tax as per section 96 of the RFCTLARR Act. The assessee moved the application under section 154 of the ITA No. 408-Chd-2022 (AY 2016-17) - Smt. Baljit Kaur, Sangrur 10 Act through his counsel on 03/01/2018 and the A.O. passed the order rejecting the application under section 154 of the Act on 14/11/2018 i.e; after 9 months 11 days. 10.1 In the present case it is not in dispute that the assessee received compensation on account of land acquired by NHAI. As per the provisions of section 96 of the RFCTLARR Act, the exemption from Income Tax and Stamp Duty would apply to an award or agreement made under the new Act which came 3 into force on 01/01/2014. In the instant case the assessee filed its return of income on 30/11/2015 as he was waiting for the clarification from the Income Tax Department wherein the subject of exemption from Income Tax on the compensation received on commercial land might get clear and the clarification from the CBDT came vide Circular No. 36/2016 dt. 25/10/2016 which read as under: Circular No. 36/2016 Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes ITA.II division, North Block, New Delhi, the 25th of October, 2016 Subject: Taxability of the compensation received by the land owners for the land acquired under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 ('RFCTLAAR Act')-reg.- Under the existing provisions of the income-tax Act, 1961 ('the Act'), an agricultural land which is not situated in specified urban area, is not regarded as a capital asset. Hence, capital gains arising from the transfer (including compulsory acquisition) of such agricultural land is not taxable. Finance (No. 2) Act, 2004 inserted section 10(37) in the Act from 01.04.2005 to provide specific exemption to the capital gains arising to an Individual or a HUF from compulsory acquisition of an agricultural land situated in specified urban limit, subject to fulfilment of certain conditions. Therefore, compensation received from compulsory acquisition of an agricultural land is not taxable under the Act (subject to fulfilment of certain conditions for specified urban land). 2. The RFCTLARR Act which came into effect from 1st January, 2014, in section 96, inter alia provides that ITA No. 408-Chd-2022 (AY 2016-17) - Smt. Baljit Kaur, Sangrur 11 income-tax shall not be levied on any award or agreement made (except those made under section 46) under the RFCTLARR 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. 3. As no distinction has been made between compensation received for compulsory acquisition of agricultural land and non-agricultural land in the matter of providing exemption from income-tax under the RFCTLARR Act, the exemption provided under section 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 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 agreement which 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. 4. The above may be brought to the notice of all concerned. 5. Hindi version of the order shall follow. Sd/- (Rohit Garg) Deputy Secretary to the Government of India (F.No. 225/88/2016-ITA.II) 10.2 From para 3 of the aforesaid Circular it would be clear that no distinction has been made between compensation received for compulsory acquisition of agricultural land and non agricultural land in the matter of providing exemption from income tax under the RFCTLARR Act, 2013. Now question arises as to whether the provisions of RFCTLARR Act, 2013 are applicable to the NH Act 1956 4 or not. In this regard the Hon'ble Rajasthan High Court in the case of Gopal Ram Vs. Union of India & Ors. (supra) referred by the Ld. CIT(A), observed as under: ITA No. 408-Chd-2022 (AY 2016-17) - Smt. Baljit Kaur, Sangrur 12 However, the Central Government vide Ordinance (N0.9 of 2014) dated 31.12.2014 has substituted Sub-section (3) of Section 105 of the Acquisition Act of 2013, which reads as under:- "(3) The provisions of this Act relating to the determination of compensation in accordance with the First Schedule, rehabilitation and resettlement in accordance with the Second Schedule and infrastructure amenities in accordance with the Third Schedule shall apply to the enactments relating to land acquisition specified in the Fourth Schedule with effect from 1st January 2015." The provisions of Ordinance (No.9 of 2014) dated 31.12.2014 were continued further vide Ordinance (N0.4 of 2015) dated 03.04.2015 and Second Ordinance dated 30.05.2015 (N0.5 of 2015) and the same were valid up to 31.08.2015. Subsequently, the Department of Land Resources, Ministry of Rural Development, Government of India issued the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Removal of Difficulties) Order, 2015 vide Notification dated 28.08.2015. The said Order is reproduced below: - "(l) This Order maybe called the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Removal of Difficulties) Order, 2015. (2) It shall come into force with effect from the 1 st day of September, 2015. (12 of 15) (3) The provisions of Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, relating to the determination of compensation in accordance with the First Schedule, rehabilitation and resettlement in accordance with the Second Schedule and infrastructure amenities in accordance with the Third Schedule shall apply to all cases of land acquisition under the enactments specified in the Fourth Schedule to the said Act." From the above, it is clear that the applicability of the Acquisition Act of 2013 has been given effect in respect of the enactment specified in Fourth Schedule including the NH Act of 1956 with effect from 01.01.2015. ITA No. 408-Chd-2022 (AY 2016-17) - Smt. Baljit Kaur, Sangrur 13 It is therefore clear that the applicability of the Acquisition Act 2013 has been given effect to the NH Act 1956 w.e.f 01/01/2015 and the assessee received the compensation on 05/11/2014 & 23/11/2015. In the present case also the land was compulsorily acquired by NHAI therefore the compensation received by the assessee was exempted under the Income Tax Act. Since the clarificatory Circular was issued by the CBDT on 25/10/2016 i.e; after the date of filing the return by the assessee on 30/11/2015 that is why an application under section 154 of the Act was moved by the assessee. 10.3 As regards to the applicability of the Circular issued by CBDT on the Income Tax Authorities, the Hon'ble Jurisdiction High Court in the case of B.S Bajaj And Sons Vs. CIT [1996] 222 ITR 418 held as under: “The circulars issued by the Central Board of Direct Taxes are binding on the officers of the Department of Income-tax. Benevolent circulars providing administrative relief to the assessee, even if they are issued subsequent to the decision by an authority under the Act, have to be taken notice of, and given effect to, if found applicable in the given facts. A circular, even if produced in the High Court for the first time during the course of hearing, has to be taken note of and the assessee will be entitled to the benefit of the circular, if found entitled, irrespective of the fact that it was not produced before the authorities below or was issued by the Central Board of Direct Taxes subsequent to the decision given by the Tribunal, Circular No. 329. Dated February 22, 1982, issued by the Board does not override the provisions of the Act. It is clarificatory in nature. It is a benevolent circular issued in favour of the assessee providing administrative relief and says that if the process involved is not merely conversion of standing trees into firewood but also manufacture of new saleable commodities, the benefit of deduction under section 80J and 80HH would be available.” 10.4 In the present case also the CBDT vide Circular No. 36/2016 dt. 25/10/2016 clarified that the compensation received in respect of award or agreement which has been exempt 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 provisions of exemption for such compensation in the Income Tax Act, 1961. In the said Circular it is also clarified that no distinction had been ITA No. 408-Chd-2022 (AY 2016-17) - Smt. Baljit Kaur, Sangrur 14 made towards compensation received for compulsory acquisition of agricultural land and non agricultural land in the matter of providing exemption from Income Tax under the RFCTLARR Act. In the instant case the assessee received compensation for compulsory acquisition of commercial land during the F.Y. 2014-15 which was exempted under section 96 of the RFCTLARR Act, as clarified by the CBDT Circular No. 36/2016 dt. 25/10/2016. We therefore considering the totality of the fact as discussed hereinabove are of the view that the Ld. CIT(A) was not justified in confirming the action of the A.O. in not accepting the claim of the assessee for exemption of the compensation received on compulsory acquisition of land acquired by the Land Acquisition Officer from Income Tax. Accordingly the appeal of the assessee is allowed.” 8.3 Therefore, on identical facts, and respectfully following the aforementioned two orders of the ITAT, in the present case also, I allow the appeal of the assessee. 9.0 In the final result, the appeal of the assessee stands allowed. Order pronounced on 12.09.2022. Sd/- (SUDHANSHU SRIVASTAVA) Judicial Member Dated : 12.09.2022 “आर.के.” आदेशक त+ल,पअ-े,षत/ Copy of the order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent 3. आयकरआय ु .त/ CIT 4. आयकरआय ु .त (अपील)/ The CIT(A) 5. ,वभागीय त न1ध, आयकरअपील$यआ1धकरण, च3डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड फाईल/ Guard File ITA No. 408-Chd-2022 (AY 2016-17) - Smt. Baljit Kaur, Sangrur 15 आदेशान ु सार/ By order, सहायकपंजीकार/ Assistant Registrar
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