Anil Plantations Pvt. Ltd., Kolkata V. PCIT-2, Kolkata, Kolkata

ITA 962/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1538 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 05-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Keywords: Capital asset
• Section: 143(3); 2(14); 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & SHRI WASE EM AHMED, AM] I.T.A NO.962/KOL/2017 ASSESSMENT YEAR : 2012-1 3 ANIL PLANTATIONS PVT. LTD. -VS.- PR. C.I.T . 2, KOLKATA KOLKATA [PAN : AACCA 7563 R] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI PARAS NATH KESHARI, FCA FOR THE RESPONDENT : SHRI.G.MALLIKARJUNA, CIT(DR) DATE OF HEARING : 06.09.2017. DATE OF PRONOUNCEMENT : 13.09.2017. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED 29.03.2017 OF PR. C.I.T.-2, KOLKATA PASSED U/S 263 OF THE INCOME TAX ACT, 1961 (ACT) RELATING TO A.Y.2012-13. 2. THE ASSESSEE IS A COMPANY. IT IS ENGAGED IN THE BUSINESS OF GROWING AND MANUFACTURING AND SELLING OF TEA. THE ASSESSEES TE A ESTATE IS LOCATED AT HARISHNAGAR TEA ESTATE, P.O.HARISHNAGAR VIA BHISHALGARH VILL.GOKUL NAGAR DISTRICT SEPAHIJALA, TRIPURA WEST 799102. DURING THE PREVIOUS YEAR A PORTION OF THE ASSESSEES TEA PLANTATION COMPRISING OF LAND TOGETHER WITH TEA GARDENS THEREO N WAS ACQUIRED BY THE GOVERNMENT UNDER THE LAND ACQUISITION ACT, 1894 FOR A PUBLIC P URPOSE VIZ., EXTENSION OF NORTH EAST RAILWAY LINE FROM AGARTALA TO SABROOM. AN EXTENT OF ABOUT 3.63 ACRES OF TEA GARDEN WAS COMPULSORILY ACQUIRED FOR THE AFORESAID PUBLIC PURPOSE. THE ASSESSEE RECEIVED A COMPENSATION OF RS.1,32,74,986/- ON COMPULSORY ACQU ISITION OF THE LAND. IT IS NOT IN DISPUTE THAT UPTO THE DATE OF ACQUISITION THE LAND WAS USED FOR THE PURPOSE OF AGRICULTURE 2 ITA NO.962/KOL/2017 ANIL PLANTATIONS PVT. LTD. A.YR..2012-13 2 AS THERE WAS AN EXISTING TEA GARDEN ON WHICH TEA PL ANTATIONS PRODUCING TEA LEAVES EXISTED. IT IS ALSO NOT DISPUTE THAT THE LAND IN QU ESTION IS MORE THAN 11 KMS FROM THE MUNICIPAL AREA AND THE POPULATION OF VILLAGE GOKUL NAGAR WAS LESS THAN 5000. THE CERTIFICATE OF THE DEPUTY COLLECTOR S.D.M. BISHALGA RH SEPAHIJALA TRIPUR CERTIFYING THE AFORESAID FACTS IS ON RECORD. THE LAND THEREFORE QU ALIFYS FOR BEING REGARDED AS AN AGRICULTURAL LAND WITHIN THE MEANING OF SECTION 2(1 4) (III) OF THE ACT. UNDER SECTION 2(47) (III) OF THE ACT, COMPULSORY ACQUISITION OF A CAPITAL ASSET IS ALSO REGARDED AS TRANSFER OF A CAPITAL ASSET CAPITAL GAIN THAT ACCR UES OR ARISES OUT OF COMPULSORY ACQUISITION IS CHARGEABLE TO TAX UNDER THE HEAD CA PITAL GAIN. IT IS HOWEVER TO BE MENTIONED THAT IT IS ONLY IN CASE WHERE THE ASSET W HICH IS THE SUBJECT MATTER OF TRANSFER SATISFIES THE DEFINITION OF CAPITAL ASSET AS DEFI NED U/S 2(14) OF THE ACT THAT THE CAPITAL GAIN CAN BE BROUGHT TO TAX ON ITS TRANSFER. AS WE H AVE ALREADY SEEN AGRICULTURAL LAND AS DEFINED IN SECTION 2(14)(III) OF THE ACT IS NOT A C APITAL ASSET. 3. THE ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y.2012-13 IN WHICH HE DID NOT COMPUTE AND OFFER TO TAX THE CAPITAL GAIN ON COMPUL SORY ACQUISITION OF ITS AGRICULTURAL LAND. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO SPECIFICALLY CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY CAPITAL GAIN ON COMPU LSORY ACQUISITION OF A PORTION OF THE TEA ESTATE WAS NOT OFFERED TO TAX. THE ASSESSEE VID E ITS LETTER DATED 17.12.2014 EXPLAINED THAT THE LAND IN QUESTION WAS AN AGRICULTURAL LAND WHICH WAS USED FOR AGRICULTURAL PURPOSE AND THEREFORE NOT A CAPITAL ASSET WITHIN TH E MEANING OF SECTION 2(14) OF THE ACT. THE ASSESSEE FURTHER SUBMITTED THAT THE COMPENSATIO N RECEIVED ON COMPULSORY ACQUISITION WILL BE IN THE NATURE OF AGRICULTURAL I NCOME WITHIN THE MEANING OF SECTION 10(1) OF THE ACT AND WAS THEREFORE NOT LIABLE TO TA X. THE FOLLOWING WAS THE REPLY OF THE ASSESSEE TO THE AO :- AGRICULTURE INCOME AROSE DUE TO COMPENSATION RECEI VED ON ACQUISITION OF AGRICULTURAL LAND RS..1,32,74,986 - WE SUBMIT THAT WE HAVE BEEN ENGAGED IN CULTIVATION, MANUFACTURING AND SELLING OF TEA. OUR TEA ESTATE IS LOCATED AT :- 3 ITA NO.962/KOL/2017 ANIL PLANTATIONS PVT. LTD. A.YR..2012-13 3 HARISHNAGAR TEA ESTATE P.O. HARISHNAGAR VIA BISHALGARH VILLAGE - GOKULNAGAR DISTRICT - SEPAHIJALA TRIPURA (WEST) - 799 102 DURING THE YEAR UNDER ASSESSMENT, GOVERNMENT OF TRI PURA HAS ACQUIRED THE LAND USED BY US FOR AGRICULTURAL PURPOSES. AT THE TIME O F REQUISITION BY TRIPURA GOVERNMENT AND ALSO EARLIER TO THAT, THE LAND WAS U SED BY US FOR AGRICULTURAL PURPOSES. HENCE THE COMPENSATION RECEIVED AMOUNTING TO RS.1,36T47,685/- BY GOVERNMENT OF TRIPURA IS PURELY AGRICULTURAL INCOME IN THE MEANING OF SECTION 10( 1) AND THEREFORE, NOT LIABLE TO TAX. YOUR HONOUR WI LL APPRECIATE THAT THE UNDERNOTED LEGAL JUDGEMENTS ARE SQUARELY APPLICABLE IN OUR PRE SENT CASE :- (I) IN CIT VS. ALL INDIA TEA AND TRADING CO. LTD. ( 1979) 117 ITR 525 (CAL), IT WAS HELD THAT AS THE LAND IN QUESTION WAS AGRICU LTURAL LAND WHICH WAS BEING USED FOR AGRICULTURAL PURPOSES, THE AMOUNT OR COMPENSATI ON PAID ON ITS ACQUISITION WAS NOT TAXABLE UNDER THE HEAD CAPITAL GAINS' AS THE S AID LAND WAS NOT A CAPITAL ASSET. (II) IN CIT VS. ALL INDIA TEA & TRADING CO. LTD. (1 996) 85 TAXMAN 391/219 ITR 544, HONBLE SUPREME COURT HAS HELD WHERE LAND OF ASSESSEE - TEA COMPANY WAS REQUISITIONED BY STATE GOVERNMENT AND SAME WAS GIVE N TO REFUGEES AND AT THE TIME OF REQUISITION ASSESSEE WAS CARRYING ON AGRICULTUR AL OPERATION OF LAND, COMPENSATION RECEIVED BY ASSESSEE WAS TO BE TREATED AS AGRICULTURAL INCOME SINCE SUCH COMPENSATION CLEARLY HAD THE CHARACTER OF RENT OR, IN ANY CASE, HAD TO BE REGARDED AS REVENUE DERIVED FROM THE LAND. THEREFOR E COMPENSATION PAID FOR ACQUISITION OF LAND BY STATE GOVERNMENT CAN ONLY BE REGARDED AS AGRICULTURAL INCOME WHICH ADMITTEDLY IS NOT TAXABLE.' IN THE LIGHT OF ABOVE LEGAL POSITION, WE SUBMIT THAT WE HAVE RIGHTLY CLAIMED THE COMPENSATION RECEIVED BY STATE OF TRIPU RA ON ACQUISITION OF OUR AGRICULTURAL LAND AMOUNTING TO RS.1,32,74,986 (RS.1 ,36,47,685 LESS COST OF LAND RS.3,72,699) AS NOT TAXABLE UNDER SECTION 10(1) OF I.T. ACT, 1961. 4. THE AO PASSED AN ORDER U/S 143(3) OF THE ACT DATED 18.12.2014 IN WHICH HE DID NOT BRING TO TAX ANY CAPITAL GAIN. IT MEANS THAT THE AO WAS SATISFIED WITH THE CLAIM OF THE ASSESSEE THAT THE LAND WHICH WAS COMPULSORILY ACQUI RED FOR WHICH THE ASSESSEE RECEIVED COMPENSATION WAS AN AGRICULTURAL LAND AND SUCH COMPENSATION WILL ALSO ASSUME THE CHARACTER OF AGRICULTURAL INCOME AND THE REFORE NOT CHARGEABLE TO TAX. 4 ITA NO.962/KOL/2017 ANIL PLANTATIONS PVT. LTD. A.YR..2012-13 4 5. THE CIT IN EXERCISE OF HIS POWERS U/S 263 OF THE ACT WAS OF THE VIEW THAT ORDER OF THE AO ACCEPTING THE CLAIM OF THE ASSESSEE AS STATE D IN PARA-4 ABOVE WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE CRU X OF THE ORDER OF CIT IS THAT THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS BE FORE THE AO TOOK A STAND THAT THE AMOUNT RECEIVED BY IT ON COMPULSORY ACQUISITION OF LAND WAS NOT LIABLE TO TAX UNDER THE HEAD CAPITAL GAIN ON THE GROUND THAT THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS ALL INDIA TEA AND TRADING CO. LTD. (1979) 11 7 ITR 525 (CAL) HELD THAT AGRICULTURAL LAND WHICH WAS USED FOR AGRICULTURAL P URPOSE AND WHICH ARE ACQUIRED AND FOR WHICH COMPENSATION IS PAID CANNOT BE BROUGHT TO TAX UNDER THE HEAD CAPITAL GAIN AS AGRICULTURAL LAND CANNOT BE REGARDED AS CAPITAL ASS ET AND THE SUM RECEIVED WAS IN THE NATURE OF AGRICULTURAL INCOME NOT CHARGEABLE TO TAX . THE HONBLE SUPREME COURT ALSO CONFIRMED THE VIEW OF THE HONBLE CALCUTTA HIGH CO URT IN THE CASE OF CIT VS ALL INDIA TEA & TRADING CO. LTD. (1996) 219 ITR 544 (SC). ACC ORDING TO THE CIT IN THE DECISION RENDERED BY THE HONBLE SUPREME COURT IT WAS NOTIC ED BY THE HONBLE SUPREME COURT THAT REFUGEES FROM BANGLADESH HAD OCCUPIED AGRICULT URAL LAND ON WHICH AGRICULTURAL OPERATIONS WERE CARRIED ON. THE GOVERNMENT ACQUIRED THESE LANDS AND GAVE THE LANDS SO ACQUIRED TO THE REFUGEES WHO OCCUPIED THOSE LANDS. THE REFUGEES ALSO CONTINUED TO CARRY ON AGRICULTURAL OPERATIONS OVER THE LAND ON WHICH T HEY ENCROACHED. THUS IN THIS CIRCUMSTANCES THE HONBLE SUPREME COURT HELD THAT C OMPENSATION RECEIVED ON COMPULSORY ACQUISITION IS NOT CHARGEABLE TO TAX UND ER THE HEAD CAPITAL GAIN. ACCORDING TO THE CIT IN THE CASE OF THE ASSESSEE TH E AGRICULTURAL LAND LOST ITS CHARACTER AS AGRICULTURAL LAND AFTER ACQUISITION BY THE RAILWAYS BECAUSE THEY USED THE LAND ACQUIRED FOR NON AGRICULTURAL PURPOSE. THE CIT WAS THEREFORE OF THE VIEW THAT THE AO OUGHT NOT TO HAVE ALLOWED EXEMPTION U/S 10(1) OF THE ACT ON T HE BASIS OF THE CASES CITED BY THE ASSESSEE BEFORE THE AO. THE FOLLOWED WERE THE RELEV ANT OBSERVATIONS OF CIT :- I HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF THE A SSESSEE. RELIANCE PLACED BY ASSESSEE ON THE DECISION OF HON'BLE SUPREME COURT I N THE CASE OF ALL INDIA TEA & TRADING CO. LTD. IS OF NO HELP, BECAUSE THE FACTS O F THIS CASE ARE DIFFERENT. IN THE CASE OF ASSESSEE, THE CHARACTER OF THE LAND CHANGE AFTER ACQUISITION. WHEREAS IN THE 5 ITA NO.962/KOL/2017 ANIL PLANTATIONS PVT. LTD. A.YR..2012-13 5 CASE OF ALL INDIA TEA & TRADING CO. LTD., THE LAND WAS BEING UTILIZED FOR AGRICULTURAL PURPOSE BOTH BEFORE AND AFTER ITS ACQU ISITION. THEREFORE, I HOLD THAT EXEMPTION U/S. 10(1) HAS BEEN INCORRECTLY ALLOWED B Y THE A.O, THUS MAKING THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE I NTEREST OF REVENUE. I, THEREFORE, SET ASIDE THE ASSESSMENT ORDER U/S. 2 63 AND DIRECT THE A.O TO COMPLETE THE ASSESSMENT AGAIN AFTER DISALLOWING EXEMPTION U/ S. 10(1). AFTER CONDUCTING THE INQUIRIES & VERIFICATION AS DI RECTED ABOVE, THE AO SHOULD PASS A SPEAKING ORDER, PROVIDING ADEQUATE OPPORTUNITY OF BETNG HEARD TO THE ASSESSEE. THE IMPUGNED ORDER U/S.143(3) 18/12/2014 IS ACCORD INGLY, SET ASIDE AND ASSESSMENT SHOULD BE DONE AS PER ABOVE DIRECTIONS. 6. AGGRIEVED BY THE ORDER OF CIT THE ASSESSEE H AS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 7. WE HAVE HEARD THE SUBMISSIONS OF THE LD. COU NSEL FOR THE ASSESSEE, WHO SUBMITTED THAT ORDER OF THE AO ACCEPTING THE CLAIM OF THE ASS ESSEE THAT COMPENSATION RECEIVED BY THE ASSESSEE ON COMPULSORY ACQUISITION OF ITS AGRIC ULTURAL LAND IS NOT CHARGEABLE TO TAX CANNOT BE TERMED AS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THIS REGARD THE LD. COUNSEL POINTED OUT THAT IN THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS ALL INDIA TEA AND TRADING CO. LTD. ( SUPRA) THE HONBLE SUPREME COURT WHILE DEALING WITH THE FACTS OF THE CASE OBSERVED T HAT THE AGRICULTURAL LAND WHICH WAS BEING USED FOR AGRICULTURAL PURPOSE EVEN AFTER ITS BEING ACQUIRED, THE AMOUNT OF COMPENSATION PAID ON ITS ACQUISITION WAS NOT CHARGE ABLE UNDER THE HEAD CAPITAL GAINS AS THE SAID LAND WAS NOT A CAPITAL ASSET. THE HONB LE SUPREME COURT FURTHER OBSERVED THAT IT IS CLEAR, THEREFORE, THAT AT NO POINT OF T IME OR AT LEAST TILL ITS ACQUISITION THE LAND LOST ITS CHARACTER OF AGRICULTURAL LAND. THE LD. C OUNSEL SUBMITTED THAT THE ABOVE OBSERVATIONS HAVE BEEN WRONGLY CONSTRUED BY CIT AS A CONDITION IMPOSED BY THE HONBLE SUPREME COURT THAT THE LAND ACQUIRED SHOULD CONTINUE TO BE AGRICULTURAL LAND PRIOR TO ACQUISITION AND AFTER ACQUISITION. IT WAS SUBMITTED BY HIM THAT THIS WRONG APPROACH ADOPTED BY CIT HAS RESULTED IN COMING TO T HE CONCLUSION THAT ORDER OF THE AO 6 ITA NO.962/KOL/2017 ANIL PLANTATIONS PVT. LTD. A.YR..2012-13 6 WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF TH E REVENUE. IT WAS HIS SUBMISSION THAT THE HONBLE CALCUTTA HIGH COURT IN ITS DECISION IN THE CASE OF CIT VS ALL INDIA TEA AND TRADING CO. LTD. (SUPRA) HAS SUMMARISED ITS OPINION ON THIS ISSUE AS FOLLOWS :- 27. HAVING DISCUSSED ALL THE CASES CITED AT THE BA R, WE WILL NOW SUMMARISE OUR OPINIONS IN THE FOLLOWING TERMS: (I)THE WORDS 'HELD BY-AN ASSESSEE' IN SECTION 2(4A) OF THE 1922 ACT INCLUDE PHYSICAL, ACTUAL, CONSTRUCTIVE AND ALSO SYMBOLIC PO SSESSION OF A PROPERTY OF ANY KIND; (II)A LAND IS AN AGRICULTURAL LAND IF IT IS USED FO R AGRICULTURAL PURPOSES AND, BRIEFLY SPEAKING, AN INCOME DERIVED FROM SUCH LAND BY AGRIC ULTURE. IS AN AGRICULTURAL INCOME ; (III)THOUGH OWNERSHIP IS A PROPERTY, ANY LAND FROM WHICH THE INCOME DERIVED IS AN AGRICULTURAL INCOME IS NOT A CAPITAL ASSET; (IV)IF NO AGRICULTURAL INCOME. CAN BE DERIVED BY AN ASSESSEE FROM AN AGRICULTURAL LAND IN THE ACCOUNTING YEAR OR FOR SOME TIME FOR AN Y REASON BEYOND HIS CONTROL, SUCH LAND DOES NOT AUTOMATICALLY CEASE TO BE AN AGR ICULTURAL LAND; (V) WHERE THE ASSESSEE IS THE OWNER OF AN AGRICULTU RAL LAND AND HE USES IT FOR AGRICULTURAL PURPOSES AND DERIVES AGRICULTURAL INCO ME FROM IT, ANY PROFITS OR GAINS ARISING FROM THE SALE, TRANSFER, ACQUISITION, ETC., OF SUCH LAND IS NOT TAXABLE UNDER THE HEAD 'CAPITAL GAINS'. FOR SUCH LAND IS NOT A CA PITAL ASSET; (VI) EVEN WHERE ANY PERSON OTHER THAN THE ASSESSEE USES AN AGRICULTURAL LAND BELONGING TO THE ASSESSEE FOR AGRICULTURAL PURPOSES WITH OR WITHOUT THE CONSENT OF THE ASSESSEE AND SUCH PERSON DERIVES AGRICULTURAL I NCOME FROM IT, ANY PROFITS OR GAINS ARISING FROM THE SALE, TRANSFER, ACQUISITION, ETC., OF SUCH LAND IS NOT TAXABLE UNDER THE HEAD 'CAPITAL GAINS' IN THE HANDS OF THE ASSESSEE; AND (VII) THE LAND IS A CAPITAL ASSET WHERE IT IS NOT U SED FOR AGRICULTURAL PURPOSES, FOR THERE CANNOT BE ANY QUESTION OF DERIVING ANY AGRICU LTURAL INCOME FROM IT, AND ANY SURPLUS ARISING FROM ITS SALE, TRANSFER OR ACQUISIT ION, ETC., IS TAXABLE UNDER THE HEAD 'CAPITAL GAINS', 28. WE WILL NOW RESTATE ONLY THOSE FACTS WHICH ARE RELEVANT FOR OUR PURPOSES. THE ASSESSEE USED THOSE LANDS FOR AGRICULTURAL PURPOSES AND DERIVED AGRICULTURAL INCOME FROM THOSE LAND AT THE TIME OF THEIR REQUISI TION IN'1949. THOSE LANDS WERE 7 ITA NO.962/KOL/2017 ANIL PLANTATIONS PVT. LTD. A.YR..2012-13 7 BEING USED BY THE LANDLESS PEOPLE AFTER REQUISITION FOR AGRICULTURAL PURPOSES WHO WERE ALSO DERIVING AGRICULTURAL INCOME FROM THOSE L ANDS AT THE TIME OF THEIR ACQUISITION IN 1959. 29. THEREFORE, AT ALL MATERIAL TIMES THOSE LANDS WE RE AGRICULTURAL LANDS AND THEY WERE HELD BY THE ASSESSEE AS THEIR OWNER ALTHOUGH I T LOST THEIR PHYSICAL POSSESSION IN 1949 BY REQUISITION. THOUGH THE ASSESSEE WAS PRE VENTED FROM EARNING ANY AGRICULTURAL INCOME FROM THOSE LANDS DUE 'TO THE AF ORESAID REQUISITION, THOSE LANDLESS PEOPLE BY USING THOSE LANDS FOR AGRICULT URAL PURPOSES ACTUALLY DERIVED AGRICULTURAL INCOME FROM THOSE LANDS IN 1949. 30. IN THESE CIRCUMSTANCES, AT NO POINT OF TIME THO SE AGRICULTURAL LANDS BECAME CAPITAL ASSETS IN THE HANDS OF THE ASSESSEE AND, AC CORDINGLY, THE CONTENTIONS OF MR. SENGUPTA MUST FAIL. 8. IT WAS SUBMITTED BY HIM THAT THE PROPOSITION LAID DOWN IN PARA 27 OF ITS JUDGMENT BY THE HONBLE CALCUTTA HIGH COURT DOES NOT IMPOSE A CONDITION THAT EVEN AFTER ACQUISITION COMPULSORY ACQUISITION THAT THE LAND SH OULD CONTINUE TO BE USED FOR AGRICULTURAL PURPOSE. IT WAS THEREFORE SUBMITTED BY HIM THAT ORDER OF THE AO WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE RE VENUE. THE LD. DR RELIED ON THE ORDER OF CIT AND IN PARTICULAR ON THE DECISION OF THE HONB LE ANDHRA PRADESH HIGH COURT IN THE CASE OF SURYANARAYAN MURTHY 42 ITR 83 (AP) 9. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. WE ARE OF THE VIEW THAT THE CIT WAS NOT JUSTIFIED IN INVOKING HIS JURISDICTION U/S 263 OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. IT IS NOT DISPUTED THAT UP TO THE DATE OF ACQUISITION OF THE LAND IT WAS USED BY THE ASSESSEE FOR THE PURPOSE OF AGRICULTURE. IT IS ALSO NOT DISPUTED THAT THE OTHER CONDITION FOR REGA RDING THE PROPERTY OF THE ASSESSEE THAT WAS ACQUIRED BY THE GOVERNMENT AS AGRICULTURAL LAND WITHIN THE MEANING OF SEC.2(14)(III) OF THE ACT IS SATISFIED. AS WE HAVE ALREADY NOTICED, THE DEFINITION OF A CAPITAL ASSET U/S 2(14) OF THE ACT DOES NOT INCLUDE AGRICULTURAL LAND. THEREFORE IF ANY INCOME ACCRUES ON COMPULSORY ACQUISITION OF AGRICUL TURAL LAND IT IS TO BE REGARDED AS AGRICULTURAL INCOME AND NOT CHARGEABLE TO TAX UNDER THE ACT UNDER THE HEAD CAPITAL 8 ITA NO.962/KOL/2017 ANIL PLANTATIONS PVT. LTD. A.YR..2012-13 8 GAIN. 10. THE MAIN CONTENTION OF THE CIT IN THE IMPUGNED ORDER IS THAT THE LAND SHOULD CONTINUE TO RETAIN THE CHARACTER OF AN AGRICULTURAL LAND EVEN AFTER ACQUISITION. THIS, IN OUR VIEW, IS BASED ON WRONG READING OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS ALL INDIA TEA & TRADING CO. LTD. (SUPRA). THE HONBLE SUPREME COURT HAD NOT LAID DOWN ANY PROPOSITION THAT TO BE REGARDED AS AN AGRICULTURAL INCOME THE LAND THAT IS COMPULSORILY ACQUIRED SHOULD RETAI N ITS CHARACTER AS AGRICULTURAL LAND BEFORE AND AFTER ACQUISITION BY THE GOVERNMENT. THO SE OBSERVATIONS WERE MADE IN THE CONTEXT OF DISTINGUISHING THE DECISION OF THE HONB LE ANDHRA PRADESH HIGH COURT RENDERED IN THE CASE OF PYDAH SURYANARAYAN MURTHY ( SUPRA). IN THE CASE OF PYDAH SURYANARAYAN MURTHYS CASE, THE FACTS WERE THAT LAN D OF THE ASSESSEE WAS REQUISITIONED FOR MILITARY PURPOSES AND COMPENSATION WAS PAID FOR USE AND OCCUPATION OF THE LAND SO REQUISITIONED. THE QUESTION BEFORE THE HONBLE COU RT WAS WHETHER SUCH COMPENSATION CAN BE REGARDED AS AGRICULTURAL INCOME OR NOT. THE HONBLE COURT HELD THAT AFTER REQUISITION BY THE MILITARY PURPOSE, THE LAND REQUI SITIONED WAS NOT USED FOR AGRICULTURAL PURPOSE AND THEREFORE DAMAGES FOR USE AND OCCUPATIO N CANNOT BE REGARDED AS AGRICULTURAL INCOME. THE HON'BLE DELHI HIGH COUR T IN THE CASE OF D.L.F. HOUSING & CONSTRUCTION (P) LTD. VS. C.I.T. ( 1983) 141 ITR 806 DELHI HAS HELD THAT THERE EXISTS DISTINCTION BETWEEN THE EXPRESSION 'COMPENSATION GI VEN UNDER AN AWARD FOR REQUISITION OF THE PROPERTY' AND 'COMPENSATION PAYABLE UNDER LA ND ACQUISITION ACT'. THE FORMER IS AS CASE OF PAYMENT FOR USE AND OCCUPATION WHEREA S THE LATTER IS FOR COMPULSORY TRANSFER OF THE PROPERTY. FROM THE AFORESAID OBSE RVATIONS IT IS CLEAR THAT THERE IS A DISTINCTION BETWEEN REQUISITIONING OF PROPERTIES AN D COMPENSATION PAYABLE FOR ACQUISITION OF A PROPERTY UNDER THE LAND ACQUISITIO N ACT. THE PAYMENT FOR USE OF AN OCCUPATION OF A PROPERTY CANNOT BE EQUATED WITH THE PAYMENTS MADE FOR ACQUISITION OF THE PROPERTY. IN THE FORMER CASE ONLY RIGHT TO USE AND ENJOY IS TRANSFERRED WHEREAS IN THE LATER CASE THERE IS A COMPLETE TRANSFER OF THE WHOL E INTEREST OVER OR COMPLETE OWNERSHIP OVER THE PROPERTY. WE ARE THEREFORE OF THE VIEW THA T THE APPROACH ADOPTED BY CIT IN THE PRESENT CASE WAS NOT PROPER IN LAW. SINCE THE ORDER OF THE AO IS NOT ERRONEOUS THE CIT 9 ITA NO.962/KOL/2017 ANIL PLANTATIONS PVT. LTD. A.YR..2012-13 9 WAS NOT JUSTIFIED IN INVOKING THE JURISDICTION U/S 263 OF THE ACT. WE THEREFORE QUASH THE ORDER U/S 263 OF THE ACT AND ALLOW THE APPEAL OF TH E ASSESSEE. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 13.09.2017. SD/- SD/- [WASEEM AHMED ] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13.09.2017. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.ANIL PLANTATIONS PVT. LTD., 11, CROOKED LANE, KOL KATA-700069. 2. PR. C.I.T.-2, KOLKATA. 3. CIT(DR), KOLKATA BENCHES, KOLKATA. BY ORDER TRUE COPY SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D. O., I.T.A.T., KOLKATA BENCHES