TRL RICELAND PVT LTD ,NEW DELHI V. ACIT, CIRCLE 25(1), NEW DELHI

ITA 2584/DEL/2022

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TRL Riceland Pvt. Ltd. appealed against the final assessment order for the Assessment Year 2018-19, which included a compensation of INR 36,51,33,731 received for compulsory acquisition of land by the Government of Haryana. The primary legal contention was whether this compensation was taxable under the Income Tax Act, 1961. The Tribunal considered the provisions of the RFCTLARR Act, 2013, particularly Section 96, which exempts such compensation from income tax, and the CBDT circular clarifying this exemption. The Tribunal noted that the Dispute Resolution Panel (DRP) and the Assessing Officer had not adequately addressed this exemption in their decisions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474534 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Other Referred Cases: Goetze (India) Ltd. vs. CIT, PCIT v. Headstrong Services India Pvt. Ltd., Sardar Sant Singh Makkar vs. ITO, Viswanathan M. vs. CIT, Seema Jagdish Patil vs. National Hi-Speed Rail Corporation Ltd., Harry Township Limited vs. CIT
• Laws Referred To: Income Tax Act, 1961, Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAVED AKHTAR
• Assessee Lawyers: AJAY VOHRA
• Section: 143(3); 144C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: A : NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI AVDHESH KUMAR MISHRA, ACCOUNTANT MEMBER ITA No.2584/Del/2022 Assessment Year: 2018-19 TRL Riceland Pvt. Ltd., Eros Corporation Tower Level-15, Nehru Place, New Delhi – 110 019. PAN: AAACU0649N Vs ACIT, Circle-25(1), New Delhi. (Appellant) (Respondent) Assessee by : Shri Ajay Vohra, Sr. Advocate; Shri Aditya Vohra, Advocate; & Ms Aakriti Bansal, CA Revenue by : Shri Javed Akhtar, CIT-DR Date of Hearing : 25.02.2025 Date of Pronouncement : 02.04.2025 ORDER PER ANUBHAV SHARMA, JM: This appeal is preferred by the assessee against the final assessment order dated 31.08.2022 of the Asstt. Commissioner of Income-tax (Appeals), Circle 25(1), Delhi (hereinafter referred as ‘the Ld. AO’) for Assessment Year 2018-19 passed u/s 143(3) r.w.s. 260 of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’). ITA No.2584/Del/2022 2 2. The grounds of appeal taken by the assessee read as under:- “1. That, on the facts and circumstances of the case and in law, final assessment order dated 31 August 2022 passed under Section 143(3) r.w.s. 144C(13) of the Income-tax Act, 1961 ('the Act') by Learned Assistant Commissioner of Income-tax, Circle 25(1), Delhi (herein referred to as 'Ld. AO') is bad in law. 2. That, on the facts and circumstances of the case and in law, Ld. AO as well as Hon'ble DRP have erred in not admitting additional claim filed by the Appellant during the course of proceedings with regard to exemption of compensation received by the Appellant for compulsory acquisition of land on pretext of following decision of Hon'ble Supreme Court in the case of Goetze (India) Ltd. vs. CIT [284 ITR 323 (SC)]. 3. That, on the facts and circumstances of the case and in law, Ld. AO as well as Hon'ble DRP have erred in not allowing exemption of compensation of INR 36,51,33,731, received for compulsory acquisition of land under Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 ('RFCTLARR Act, 2013'). The above grounds of appeal are mutually exclusive and without prejudice to each other. The Appellant craves leave to add, amend, vary, omit or substitute, withdraw any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal.” 3. On hearing both the sides, we find that the ld. Sr. Counsel relied the judgement of the Hon’ble Supreme Court in Goetze (India) Ltd. (supra) and brought before us sufficient material to show that the DRP was well apprised of the fact that in regard to the disputed exemption of compensation received from compulsory acquisition of land under Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (hereinafter referred as the Act of 2013 or ‘‘RFCTLARR Act’) the AO was aware of the revised computation filed. The DRP has taken note of the same, however, has failed to take into consideration of the same without assigning any reasons. The powers of DRP are co-terminous with the CIT(A), including the ITA No.2584/Del/2022 3 power to confirm, reduce or enhance the variation proposed and to consider the issues not agitated by the Assessee in the objections. In fact, under Section 144C, the Dispute Resolution Panel can issue directions as it thinks fit for the guidance of the Assessing Officer to enable him to complete the assessment and the Dispute Resolution Panel can confirm, reduce or enhance the variations proposed in the draft order. It is specifically stipulated in Section 144C that every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer. This is akin to the Assessing Officer giving effect to an order passed by the Appellate Authority or the Courts. Reliance for this can be placed on the decision of Hon’ble Delhi High Court in PCIT v. Headstrong Services India Pvt. Ltd. (2021) 197 DTR 329 /318 CTR 369 (Delhi) (HC). Thus we are of the view that though DRP should have taken cognizance of the same, but, at this stage, remitting the issue back to DRP will not be justified as this Tribunal is quite competent to determine this issue finally. Accordingly, allowing ground No.2, we proceed to decide the ground on merits being Ground No.3. 4. In regard to ground no. 3, the relevant facts are that during the previous year, relevant to assessment year under consideration, the Assessee had received Rs.36,51,33,731/- (Rupees Thirty Six Crore Fifty One Lakh Thirty Three Thousand Seven Hundred Thirty One only) towards compensation for compulsory acquisition of its Land by the Govt. of Haryana for public purpose of utilization and development of sector roads, sector 75 to 80 at Gurgaon. The ITA No.2584/Del/2022 4 company inadvertently offered the Long-Term Capital Gain arising on the aforesaid compensation in the original computation of Income while filing its original ITR for the relevant assessment year i.e., AY 2018-19. (Copy of ITR-V along with capital gain schedule of ITR 6 is provided on pages 401 to 406 and original computation of income attached at Page 431 to 433). 5. Ld. Sr. Counsel has submitted that by virtue of section 96 of the Act of 2013 no Income Tax is payable on any compensation received under an award or agreement made under the Act of 2013. The view is also supported by CBDT circular No 36/2016 dated 25 October 2016. We note that section 96 of the Act of 2013 inter alia provides that income tax shall not levied on any award or agreement under the Act of 2013 and the CBDT Circular No. 36 of 2016 dated 25.10.2016 directs that:- “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.” 6. In regard to this issue, we are of the considered view that the coordinate Bench, on which one of us the Judicial Member was also in quorum, in the case of Sardar Sant Singh Makkar vs. ITO, ITA No.1429/Del/2020, has taken note of the relevant provisions of the statute and while dealing with one of the components of the compensation in the form of annuity, has observed even that being part of the Award on the Act of 2013 is not taxable. The coordinate Bench ITA No.2584/Del/2022 5 decision is further bolstered by the decision of the Hon’ble Kerala High Court in the case of Viswanathan M. vs. CIT (2020) 116 taxmann.com 894 (Ker.) and by the decision of the Hon’ble Bombay High Court in the case Seema Jagdish Patil vs. National Hi-Speed Rail Corporation Ltd. (2022) 139 taxmann.com 249 (Bom) and, further, by the order of the Delhi Tribunal in Harry Township Limited vs. CIT in ITA No.1369/Del/2022. 7. In the light of the aforesaid discussion, we are inclined to allow ground No.3. Consequently, the appeal of the assessee is allowed. The AO is directed to recompute the income of the assessee by giving benefit of the relevant provisions, as per the discussions above. Order pronounced in the open court on 02.04.2025. Sd/- Sd/- (AVDHESH KUMAR MISHRA) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 02nd April, 2025. dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi "