ITAT Delhi holds that interest Income to be exempt on enhanced compensation for compulsory acquisition of Agriculture Land.

ITAT Delhi holds that interest Income to be exempt on enhanced compensation for compulsory acquisition of Agriculture Land.

The Income Tax Appellate Tribunal (ITAT), New Delhi Bench held that Agricultural land acquired under compulsory acquisition is exempt income under Section 10(37) of the Income Tax Act,1961.

The matter relates to Assessment Yeat appeal has 2012-13 and has been filed by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC).

It was submitted that the CIT(A) has erred both in law and on facts in confirming the addition of Rs. 24,88,134/- made by the Assessing Officer as ‘Income from other sources’ on account of interest u

/s 28 of Land Acquisition Act received by the appellant which was part of enhanced compensation received on compulsory acquisition of her agricultural land which is exempt u/s 10(37) of the Act.

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Agricultural Land acquired under Compulsory Acquisition is Exempt Income u/s 10(37): ITAT [Read Order]

ByKalyani B Nair-ON OCTOBER 27, 2022 6:03 PM

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Agricultural Land – Acquisition – Income – ITAT – taxscan

The Income Tax Appellate Tribunal (ITAT), New Delhi Bench held that Agricultural land acquired under compulsory acquisition is exempt income under Section 10(37) of the Income Tax Act,1961.

The appeal has been filed by the assessee; Kamla Devi is directed against the order of the National Faceless Appeal Centre (NFAC) for Assessment Year 2012-13.

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The Counsel for the assessee, Suraj Bhan Nain submitted that the CIT(A) has erred both in law and on facts in confirming the addition of Rs. 24,88,134/- made by the Assessing Officer as ‘Income from other sources’ on account of interest u/s 28 of Land Acquisition Act received by the appellant which was part of enhanced compensation received on compulsory acquisition of her agricultural land which is exempt u/s 10(37) of the Act.

Replying to the same, the Counsel appearing for the Revenue, Mithalesh Kr. Pandey placing reliance on the judgement of Punjab and Haryana High Court in the case of Mahender Pal Narang vs. CBDT, submitted that the interest received on compensation or enhanced compensation is to be treated as ‘Income from other sources’ and not under the head ‘Capital gains.’ Therefore, the same is not exempt u/s 10(37) of the Act.

The Revenue contested the same and argued that the interest received must be brought to Tax as Income from Other Sources.

However, ITAT Bench consisting of C M Garg, Judicial Member observed that “In the present case, from the orders of the authorities below, it is clear that the authorities below have treated interest received by the assessee on enhanced compensation u/s 28 of the Land Acquisition Act, 1984 as ‘Income from other sources’ and denied exemption u/s 10(37) of the Act. The facts and circumstances of the present case are identical and similar to the case of Ram Kishan wherein the coordinate Bench of the Tribunal categorically held that the interest received by the assessee u/s 28 of the Land Acquisition Act, 1984 on enhanced compensation is part and parcel of the compensation, if the agricultural land of the assessee has been acquired under compulsory acquisition and, thus, the same is exempt income u/s 10(37) of the Act.”