Income Tax Appellate Tribunal - Amritsar
Smt. Pooja Garg, Bathinda vs Ito, Ward -1(3), Bathinda on 6 June, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH, AMRITSAR
(VIRTUAL COURT)
BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER
AND SH. UDAYAN DASGUPTA, JUDICIAL MEMBER
I.T.A. No. 517/Chandi/2022
Assessment Year: 2016-17
Sh. Deepak Garg, Vs. Income Tax Officer,
#150 S/o Sh. Manohar Lal, Ward-2(1), Bathinda
Jawahar Nagar, Goniana Mandi,
Bathinda-151201
[PAN: AEQPG 0930H]
(Appellant) (Respondent)
I.T.A. No. 518/Chandi/2022
Assessment Year: 2016-17
Smt. Pooja Garg, Vs. Income Tax Officer,
#107 W/o Sh. Deepak Garg, Ward-1(3), Bathinda
Homeland Enclave, Goniana
Mandi, Bathinda-151201
[PAN: AFLPG 7626J]
(Appellant) (Respondent)
I.T.A. No. 519/Chandi/2022
Assessment Year: 2016-17
Smt. Shimla Garg, Vs. Income Tax Officer,
#150 W/o Sh. Manohar Lal, Ward-2(1), Bathinda
Jawahar Nagar, Goniana Mandi,
Bathinda-151201
[PAN: AAMPD 3459N]
(Appellant) (Respondent)
2
ITA Nos. 517 to 519/Chandi/2022
Deepak Garg v. ITO & Ors.
Appellant by : Sh. Sudhir Sehgal, A.R.
Respondent by : Sh. Radhey Shyam Jaiswal, Sr. DR
Date of Hearing : 13.05.2024
Date of Pronouncement : 06.06.2024
ORDER
Per Dr. M. L. Meena, AM:
This bunch of appeal has been filed by the assessee against the separate order of the ld. Commissioner of Income Tax (Appeals)-5, Ludhiana dated 17.05.2022 & 18.05.2022 in respect of Assessment Year:
2016-17.
2. Since, there are similar issues in ITA Nos. 517, 518 & 519/Chandi/2022 on identical facts and therefore these appeals were heard together and adjudicated by the consolidated order for the sake of brevity.
The grounds of appeal are reproduced from ITA No. 519/Chandi/2022 for the purpose of discussion and adjudication as follows:
"1.(a) That the Worthy CIT(A)-5, Ludhiana has erred in upholding the addition of Rs. 1,06,46,192 on account of compensation received on account of compulsory acquisition of agricultural land.
(b) That the Worthy CIT(A)-5, Ludhiana has failed to appreciate that the amount of compensation received as per the First, Second and Third Schedule of the RFCTLAAR Act, 2013 is exempt from tax.3
ITA Nos. 517 to 519/Chandi/2022 Deepak Garg v. ITO & Ors.
(c) That the Worthy CIT(A)-5, Ludhiana has erred in not following the circular No. 36 of 2016 dated 25.10.2016 issued by the Central Board of Direct Taxes which is binding upon him.
2.(a) That the Worthy CIT(A)-5, Ludhiana has erred in upholding the addition of Rs.6,97,372 on account of award received by the assessee @12% over and above the amount of compulsory acquisition.
(b) That the Worthy CIT(A)-5, Ludhiana has failed to consider that the above amount of Rs.6,97,372 was part and parcel of award and not in the nature of interest.
3. That the Appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off."
3. At the outset, the ld. counsel for the assessee has submitted that the matter involved in these appeals are covered issue by the co-ordinate Bench decision delivered in the case of Sh. Ranjeet Singh v. Income Tax Officer, Ward-1(1), Bathinda in ITA No. 91/Asr/2023 in respect of AY: 2016- 17 order dated 30.08.2023 on the issue of claim of exemption by the assessee from Long Term Capital Gains arising from the Compulsory Acquisition of Land under National Highway Act, 1956 by relying on section 96 of RECTLARR Act, 2013 and clarificatory CBDT Circular No. 36/2016 (F. No. 225/88/2016-ITA.II) dated 25.10.2016. The relevant part of the judgment is reproduced as under:
"5. Briefly the facts of the case are discussed from I.T.A. No. 91/Asr/2023, Assessment Year: 2016-17 as a lead case that residential land measuring 120.51 Sq. Yards was acquired under National Highways Act, 1956 vide 4 ITA Nos. 517 to 519/Chandi/2022 Deepak Garg v. ITO & Ors.
Notification dated 04.02.2014. The appellant received compensation of Rs.27,96,629/- and interest amounting to Rs.3,40,614/- totaling to Rs.31,37,243/- . The appellant claimed the amount of Rs.26,62,987/- as exempt from Income Tax in view of Section 96 of the RFCTLAAR Act CBDT and Circular No.36/2016 dated 25.10.2016.The AO has held that the land of the appellant was not acquired under the RFCTLAAR Act and award or agreement was not made under the RFCTLAAR Act so as to enable the appellant to be eligible u/s 96 of the RFCTLAAR Act. Accordingly, the benefit of exemption from income-tax is provided u/s 96 of the Act and that land acquisition effected under National Highway Act, 1956 is not eligible for benefit of exemption from income-tax as provided u/s 105 of that Act. The AO treated the amount of Rs.26,62,987/- as 'Long Term Capital Gains' u/s 45(5)(a) of the Act and added to the income of the appellant.
6. The Ld. CIT (A) has confirmed the addition by observing that Notification dated 31.12.2014 was issued by Ministry of Law & Justice wherein sub section (3) of section 105 of the RFCTLAAR Act was substituted by providing that the provision of the Act relating to the determination of compensation in accordance with First Schedule, rehabilitation and resettlement in accordance with 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 01.01.2015. The Notification is only applicable to extend certain benefits in accordance with the RFCTLAAR Act and such acquisitions made under the enactments relating to land acquisition specified in Fourth Schedule were not brought under the RFCTLAAR Act itself. If the intention of the Central Government were to extend the benefit of exemption u/s 96 of the RFCTLAAR Act to the acquisitions made under the National Highway Act, 1956, it could have omitted the National Highway Act, 1956 specified in the Fourth Schedule as provided u/s 105(2) of the RFCTLAAR Act. In view of the above, the AO concluded that the appellant is not eligible for claiming exemption from income tax on the basis of Circular No.36/2016 of the CBDT and u/s 96 of the RFCTLAAR Act and the amount of compensation received by the appellant on acquisition of her residential land is taxable under the provisions of the Income Tax Act, 1961. The AO also observed that notification for acquisition of land was issued in this case on 04.02.2014 and Award was given on 07.11.2014.
The Land Acquisition Collector has clearly held in his order that proprietary rights of the acquired land shall vest in Central Govt, with effect from 07.11.2014. However, Notification regarding amendment in section 105 of the RFTCLAAR Act was issued on 31.12.2014, which was applicable from 01.01.2015. Hence, even otherwise, the notification is not applicable in this case. He further discussed that the facts of the instant appeal are similar to the facts of the 5 ITA Nos. 517 to 519/Chandi/2022 Deepak Garg v. ITO & Ors.
Income-Tax Appellate Tribunal in the case of Jagdish Arora, Agra v. ITO (supra). The case laws relied upon by the appellant are distinguishable on facts. It can be seen that the appellant is not eligible for claiming exemption from income tax on the basis of Circular No.36/2016 of the CBDT and u/s 96 of the RFCTLAAR Act. It is further noted that the notification for acquisition of land was issued in this case on 04.02.2014 and Award was given on 07.11.2014. The Land Acquisition Collector has clearly held in his order that proprietary rights of the acquired land shall vest in Central Govt, with effect from 07.11.2014. However, Notification regarding amendment in section 105 of the RFTCLAAR Act was issued on 31.12.2014, which was applicable from 01.01.2015. Hence, I agree with AO that even otherwise, the notification is not applicable in this case. I find no reason to interfere with the AO's order on the issue. Therefore, in view of the above discussion, the amount of compensation received by the appellant on acquisition of the land is taxable under the provisions of the Income Tax Act, 1961.In the case of Jagdish Arora, Agra v. ITO Ward-1(2), Agra in ITA No. 59/Agra/2019 for Assessment Year: 2015-16, the Hon'ble ITAT Agra Bench vide order dated 14.06.2021 held vide para 19 to 21 is as under:
"19. As mentioned by the assessing officer in the assessment order, theacquisition award under the National Highway authority act 1956 was passed on24.2.2014, though cheques were received on 27/1/2015. In our consideredopinion, the chargeability of the income is required to be determined inaccordance with section 4 and 5of the Income Tax Act 1961. In the case of ITA No. 173/Agra/2019 title as Shri Krishna Kumar Sharma, this tribunal in para 6 had held as under:
6. From the perusal of aforesaid provision, the award made in Section 3G of the National Highways Act on 05.02.2013 and compensation was given as per Form 16A on 01.01.2014. Hence, we do not find applicability of RFCTLARR Act to the transaction under consideration before us. We are of the opinion that even section 24 is not applicable as in the present case award was passed on 7 .12.2013 which is a date prior to the date when RFCTAAR Act was made applicable.Therefore, its provisions are not applicable. Further as per section 5 income of assessee (compensation received by assessee) is required to be taxed when the said compensation have accrued in favour of the assessee or deemed to have been accrued. Undisputedly, the assessee was entitled to receive the compensation when the award was passed quantifying the amount in favor the assessee for acquisition of land. Therefore, in our opinion, the cut off date for the purpose of determining its taxability is the date when the assessee was entitled to receive the compensation and not the date when it was actually received 6 ITA Nos. 517 to 519/Chandi/2022 Deepak Garg v. ITO & Ors.
by the assessee. In the light of the above we do not find any merit in o he assessee. Accordingly, the same deserves to be dismissed"
20. Respectfully following the decision in the matter of Sh. Krishna Kumar Sharma, we are left with no other option but to dismiss the appeal of the assessee."
7. The CIT (A) also relied on the Hon'ble ITAT Agra Bench in the case of Krishna Kumar Sharma v. DCIT, Mathura in ITA No. 173/Agra/2019 dated 10.03.20121 where relevant paras 5 & 6 is as under:
"5. We have heard the rival submissions and have gone through the material available on record. It is clear that the land in question was acquired by National Highway Authority of India on 05.02.2013 under the National Highway Authority Act, 1856. When the award was passed acquiring the land, the Right to Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlement Act, 2013 (RFCTAAR Act] came into force with effect from 1st January, 2014 and the compensation as mentioned in Form 16A was given to the assessee on 01.01.2014. Section 3G of the National Highways Act, 1956 provides as under:
"(3 G) Determination of amount payable as compensation. --
a) Where any land is acquired under this Act, there shall be paid an amount which shall be determined by an order of the competent authority.
b) Where the right of user or any right in the nature of an easement on, any land is acquired under this Act, there shall be paid an amount to the owner and any other person whose right of enjoyment in that land has been affected in any manner whatsoever by reason of such acquisition an amount calculated at ten per cent; of the amount determined under subsection (l),for that land.
c) Before proceeding to determine the amount under sub-section (1) or sub-
section [2], the competent authority shall give a public notice published in two local newspapers, one of which will be in a vernacular language inviting claims from all persons interested in the land to be acquired.
d) Such notice shall state the particulars of the land and shall require all persons interested in such land to appear in person or by an agent or by a legal practitioner referred to in sub-section (2) of section 3C, before the competent authority, at a time and place and to state the nature of their respective interest in such land.
7ITA Nos. 517 to 519/Chandi/2022 Deepak Garg v. ITO & Ors.
e) If the amount determined by the competent authority under subsection (1] or sub-section (2) is not acceptable to either of the parties, the amount shall, on an application by either of the parties, be determined by the arbitrator to be appointed by the Central Government.
f) Subject to the provisions of this Act, the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply to every arbitration under this Act.
g) The competent authority or the arbitrator while determining the amount under sub-section (1) or sub-section (5), as the case may be, shall take into consideration--
(a) the market value of the land on the date of publication of the notification under section 3 A;
(b) the damage, if any, sustained by the person interested at the time of taking possession of the land, by reason of the severing of such land from other land;
(c) the damage, if any, sustained by the person interested at the time of Taking possession of the land, by reason of the acquisition injuriously affecting his other immovable property in any manner, or his earnings;
(d) if, in consequences of the acquisition of the land, the person interested is compelled to change his residence or place of business, the reasonable expenses, if any, incidental to such change."
6. From the perusal of aforesaid provision, it is clear that the award was made in Section 3G of the National Highways Act on 05.02.2013 and compensation was given as per Form 16A on 01.01.2014. Hence, we do not find applicability of RFCTAAR Act to the transaction under consideration before us. We are of the opinion that even section 24 is not applicable as in the present case award was passed on 05.02.2013,which is a date prior to the date when RFCTAAR Act was made applicable. Therefore, its provisions are not applicable. Further as per section 5 of the IT Act, income of assessee (compensation received by assessee] is required to be taxed when the said compensation have accrued in favour of the assessee or deemed to have been accrued. Undisputedly, the assessee was entitled to receive the compensation when the award was passed quantifying the amount in favour of the assessee for acquisition of land. Therefore, in our opinion, the cutoff date for the purpose of determining its taxability is the date when the assessee was found to been titled to receive the 8 ITA Nos. 517 to 519/Chandi/2022 Deepak Garg v. ITO & Ors.
compensation and not the date when it was actually received by the assessee. In the light of the above we do not find any merits in appeal of the assessee. Accordingly, the same deserved to be dismissed."
8. The Ld. AR for the appellant submitted that the Ld. CIT(A) NFAC has erred on facts & law in confirming the action of the AO of assessing the income of the assessee at Rs.30,02,350/- as against the income at Rs.3,39,360/- declared in the revised return of income filed on 27.05.2017; that he was not justified in law and on facts in rejecting the claim of exemption of the assessee from Long Term Capital Gains, arising from Compulsory Acquisition of Land under National Highway Act, 1956, by relying on Section 96 of RFCTLARR Act, 2013, and clarificatory Circular No.36/2016 (F.No.225/88/2016- ITA.II), Dated 25-10-2016 and that the Ld. CIT(A) NFAC has erred on facts & law in rejecting the claim of exemption of the assessee from Long Term Capital Gains, arising from Compulsory Acquisition of Land by relying on Circular No.36/2016 (F.NO.225/88/2016-ITA.II), Dated 25-10-2016whilerecording the finding that the case of the assessee is covered by order of the Agra Bench of the Hon'ble ITAT in the case of Jagdish Arora in which it has been held that the benefit of section 96 of RFCTLARR Act, 2013 cannot be given to the appellant from Long Term Capital Gains, arising from Compulsory Acquisition of Land under National Highway Act, 1956, while ignoring the contention of the assessee that the CIT(A) NFAC has allowed the exemption, on identical facts, in the case of Jaswinder Kaur Sahni, Bathinda; that ignored the contention of the assessee that the exemption has been allowed, on identical facts, by the Cuttack Bench of the Hon'ble ITAT in the case of Smt. Annapurna Mishra Vs. ITO [2019] 106 taxmann.com 170 and Patna Bench of the Hon'ble ITAT in the case of ITO, Patna vs. Shri Suresh Prasad [Patna Bench] and Kerala High Court in the case of Raghavan Nair Vs. ACIT [2018] 89 taxmann.com 212 [Kerala]. Thus, the Ld. AR argued that the Ld.CIT(A) NFAC has erred on facts and law in rejecting the claim of exemption of the assessee from Long Term Capital Gains, arising from Compulsory Acquisition of Land under National Highway Act, 1956, while ignoring the settled principle of law as laid down by Apex Court that where there are two opinions of Court on one issue, the opinion in favour of the assessee should be followed. The AR argued that Ld. CIT(A) NFAC has erred on facts and law in rejecting the claim of exemption of the assessee from Long Term Capital Gains, arising from Compulsory Acquisition of Land under National Highway Act, 1956, as the CIT(A) NFAC has failed to follow the principle of juridical consistency as laid down by Apex Court by ignoring the order of CIT(A) NFAC in 9 ITA Nos. 517 to 519/Chandi/2022 Deepak Garg v. ITO & Ors.
the case of Jaswinder Kaur Sahni of Bathinda on identical facts. In support, he filed a written synopsis which reads as under:
"1. The residential land measuring 120.51 Sq yards of the assessee was acquired under National Highway Act, 1956 vide notification dated 04.02.2014/award has been given on 07.11.2014 [para 5.3.1 of the order of the CIT(A) and para 6 on page 6 of order of the AO] and the assessee received the following compensation through bank on 19.05.2015.
Compensation 21,51,253/-
30% solatium 6,45,376/-
Addl. Compensation [calculated 3.46.558/-
@12% of the basic price
31,43,187/-
Less: TDS 35,695/-
Total amount received 31.07.491/-
1.1 The assessee filed his ITR for the AY 2016-17 on 21-12-2016 showing total income at Rs. 29,77,350/- including long term capital gains of Rs. 26,62,987/-. Thereafter, the assessee revised the ITR on 27.05.2017 showing total income at Rs.3,39,360/- under the head income from other sources.
1.2 The assessee claimed the above stated amount of Rs.27,96,629/- i.e., Compensation of Rs. 21,51,253/- and Solatium @ 30% of Rs.6,45,376/- in the revised return of income as exempt from Income Tax in view of Section 96 of the RFCTLARR Act, 2013 and Circular no. 36/2016 dated 25.10,2016.
2. In the case of the Assessee, the award was given on 07.11.2014 (also stated by AO in para 6 page-6), but it is a matter of fact that the award of compensation was not paid to the Assessee and it was paid only pn 19.05.2015 (proof in the form of bank statement is enclosed in the paper book-2-4).
3. The AO in his order has rejected the claim of the Assessee on two grounds and the same are dealt in as under:10
ITA Nos. 517 to 519/Chandi/2022 Deepak Garg v. ITO & Ors.
2. The AO has ignored the fact that since the compensation on account of compulsory acquisition of land has been received during the FY 2015-16 [i.e. 19.05.2015] the same is taxable under Section 45(5)(a) of the Act in the previous year in which such compensation has been first received.
3. Reliance is placed on the letter of Ministry of Transport and Highways dated 28th December 2017 [PB 74-80] in which it has been stated as under:-
"I am directed to say that the land required for National Highway Projects is acquired under the provisions contained in Section 3 of the National Highways (NH) Act, 1956. Pursuant to the enactment of the RFCTLARR Act of 2013 and its coming into force with effect from 01.01.2014, certain provisions of the 2013 Act became applicable to the other related Acts mentioned in the Fourth Scheduled, including the NH Act, 1956 with effect from 01.01.2015 in terms of Section 105(3) of the RFCTLARR, 2013. "
4. Further in the letter dated 28.12.2017 issued by Ministry of Road Transport & Highways under the subject: Land Acquisition under the National Highways Act, 1956 has been stated in para 4.6 (iii) as under: -
"(a) All cases of Land Acquisition where the Awards had not been announced under section 3G of the NH Act till 31.12.2014 or where such awards had been announced but compensation had not been paid in respect of majority of the land holdings under acquisition as on 31.12.2014, the compensation would be payable in accordance with the First Schedule of the RFCTLARR Act, 2013."
5. The reliance was placed on the order of Chandigarh Bench of the ITAT in the case of Satish Kumar Vs. ITO in ITA NO. 1182/Chd/2019 [PB 22- 42] in which the compensation received by the assessee on 05.11.2014 and 23.11.2015 under National Highway Act on compulsory acquisition of land by NHAI has been held to be exempt u/s 96 of the RFCTLARR Act vide circular no 36/2016 dt. 25.10.2016.
6. The case of the assessee is covered by the orders of Rajasthan High court in the case of Gopa Ram Vs. UOi dt. 22.01.2018 [followed by Chandigarh bench of the ITAT in the case of Satish Kumar] in which it has held that the provisions of the RFCTLARR Act, 2013 are applicable to National Highway Act, 1956
7. Hon'ble Supreme court in the case of UOI vs. Tarsem Singh others dated 19.09.2019 Civil Appeal No. 064 of 2019 it has been held by the Apex 11 ITA Nos. 517 to 519/Chandi/2022 Deepak Garg v. ITO & Ors.
Court that the provisions of RFCTLARR Act, 2013 are applicable to land acquired under national highway Act and the compensation has to be calculated and paid in accordance with the provisions of RFCTLARR Act, 2013.
g) High Court of Kerla in the case of Raghavan Nair v. ACIT - [2018] 89 taxmann.com 212 (Kerala) [PB 7-16] in which it has been held that the compensation received for compulsory acquisition of agriculture land for Kochi Metro Rail Project is exempt under section 96 of the RFCTLARR Act, 2013.
h) Reliance in this regard is also being placed on the judgment of the Hon'ble Punjab & Haryana High Court in the case of NHAI v. Modan Singh and Others and other group cases in FAO 756-2022 order dated 11.04.2023 wherein it has been held that the RECTLAAR Act, 2013 would apply to cases wherein award has been awarded prior to 31.12.2014 but compensation is not paid yet till 31.12.2014, even though the said acquisitions have been done under the NHAI Act, 1956.
a) It is a matter of fact that the award of compensation was not paid to the Assessee and it was paid only on 19.05.2015 (proof in the form of bank statement is enclosed in the paper book-2 PB-4).
4. The CIT(A) at the time of dismissing the appeal of the Assessee has relied uponthe order of the Agra Bench of ITAT in the case of Jagdish Arora vs. ITO andthe order has been reproduced in para 5.3 page 15 to 21 of the order of CIT(A)NFAC and the findings of the Hon'ble Bench are in para 5.3.1 on page 21 to 22 of the Order. The order and findings of the CIT(A) are dealt in as under:
Order of the CIT(A) Our arguments The Worthy CIT(A) has relied CIT(A) NFAC has not appraised the upon the order of the AO and assessee of the order of ITAT in the case of Jagdish has further held that the Arora vs. ITO before relying on the same Judgment of the Hon'ble Agra and has ignored the detailed written Bench in the case of Jagdish submissions filed on 16.01.2023 Arora vs ITO is totally a) The CIT(A) NFAC did not confront the applicable in the case of the assessee with the order of the Agra Bench of Assessee. the ITAT in the case of the Jagdish Arora vs. The facts in the case of the ITO and also did not take into cognizance the Jagdish Arora vs ITO are as detailed written submissions filed before the under: CIT(A) NFAC on 16.01.2023 in which the kind 12 ITA Nos. 517 to 519/Chandi/2022 Deepak Garg v. ITO & Ors. a) The acquisition order was attention of CIT(A) NFAC was drawn to the awarded on 24.02.2014 and order of Jaswinder Kaur Sahni Bathinda the payment was received on decided on identical facts in favour of the assessee & 27.01.2015. CIT(A) the NFAC has relied on the letter dt.
b) The Hon'ble Bench in para 17 at 28.12.2017 of Ministry of Road Transport and page-13 order has stated that the no Highways & also on the judgement of Supreme notification has been brought to the Court in the case of UOI vs. Tarsem Singh dated 19.09.2019 & also on the order of Kerala notice of the Bench by the Ld. AR others wherein it is clear that benefit High Court in the case of Raghavan Nair v.
ACIT - [2018] 89 taxmann.com 212.
Order of Agra Bench in the case of Jagdish of RFCTLAAR Act 2013 has Arora distinguishable on facts been extended to land a) The perusal of the order of Krishan Kumar acquired under the The Sharma proves that the award in the case National Highways Act, 1956 before the Hon'ble Bench was made on c in the absence of notification 05.02.2013 and the compensation was the benefit under section 96 of received on 01.01.2014 and since both the the RFCTLAAR Act 2013, dates falls prior to the date of application of cannot be extended to the RFCTLAAR Act. i.e. 01.01.2015 the case of Assessee. Krishan Kumar Sharma Tdecided on facts!
c) Further, it was held that, followed bv the Hon'ble Agra Bench in the though cheques were received case of Jagdish Arora cannot be applied to on 27.01.2015, the the case of assessee because in the case of changeability of the income is the assessee award has been given on required to be determined in 07.11.2014& the compensation has been accordance with section 4 and received on 19.05.2015. 5 of the IT Act. b)The counsel for the assessee (Jagdish
d) Further, reliance in the case did not refer the following important facts to Arora) of Krishan Kumar Sharma wherein it the Agra Bench of the Hon'ble ITAT. has been held as
(i) Letter of Ministry of transports Highways under reproduced at Pg-21 of dt. 28.12.2017 in which it has been stated CIT(A) order: that all cases of land acquisition where the "6. From the perusal of Awards had not been announced under aforesaid provision, the award section 3G of the NH Act till 31.12.2014 or made in Section 3G of the where such awards had been announced but National Highways Act on compensation had not been paid in respect of 05.02.2013 and compensation maioritv of the land holdings under was given as per Form 16A on acquisition as on 31.12.2014, the 01.01.2014. Hence, we do not compensation would be payable in find applicability of RFCTLARR accordance with the First Schedule of the 13 ITA Nos. 517 to 519/Chandi/2022 Deepak Garg v. ITO & Ors.
Act to the transaction under RFCTLARR Act, 2013" although the order of consideration before us. We the Hon'ble Bench was pronounced on are of the opinion that even 14.03.2021 and above said letter is dt.
section 24 is not applicable as 28.12.2017.
in the present case award was
passed on 7.12.2013 which is a
date prior to the date when c) Further regarding the chargeabilitv of the
RFCTAAR Act was made income as per provisions of sec 4 and 5 of
applicable. Therefore, its the it is stated that compensation on account
Act,
provisions are not applicable. of compulsory acquisition of land has been
Further as per section 5 received during the FY 2015-16 i.e.
of RFCTLAAR Act 2013 has Arora distinguishable on facts
been extended to land a) The perusal of the order of Krishan Kumar
acquired under the The Sharma proves that the award in the case
National Highways Act, 1956 before the Hon'ble Bench was made on
c in the absence of notification 05.02.2013 and the compensation was
the benefit under section 96 of received on 01.01.2014 and since both the
the RFCTLAAR Act 2013, dates falls prior to the date of application of
cannot be extended to the RFCTLAAR Act. i.e. 01.01.2015 the case of
Assessee. Krishan Kumar Sharma Tdecided on facts!
c) Further, it was held that, followed bv the Hon'ble Agra Bench in the
though cheques were received case of Jagdish Arora cannot be applied to
on 27.01.2015, the the case of assessee because in the case of
changeability of the income is the assessee award has been given on
required to be determined in 07.11.2014& the compensation has been
accordance with section 4 and received on 19.05.2015.
5 of the IT Act. b)The counsel for the assessee (Jagdish
d) Further, reliance in the case did not refer the following important facts to Arora) of Krishan Kumar Sharma wherein it the Agra Bench of the Hon'ble ITAT. has been held as
(i) Letter of Ministry of transports Highways under reproduced at Pg-21 of dt. 28.12.2017 in which it has been stated CIT(A) order: that all cases of land acquisition where the "6. From the perusal of Awards had not been announced under aforesaid provision, the award section 3G of the NH Act till 31.12.2014 or made in Section 3G of the where such awards had been announced but National Highways Act on compensation had not been paid in respect 05.02.2013 and compensation of maioritv of the land holdings under was given as per Form 16A on acquisition as on 31.12.2014, the 01.01.2014. Hence, we do not compensation would be payable in find applicability of RFCTLARR accordance with the First Schedule of the 14 ITA Nos. 517 to 519/Chandi/2022 Deepak Garg v. ITO & Ors.
Act to the transaction under RFCTLARR Act, 2013" although the order of consideration before us. We the Hon'ble Bench was pronounced on are of the opinion that even 14.03.2021 and above said letter is dt.
section 24 is not applicable as 28.12.2017.
in the present case award was
passed on 7.12.2013 which is a
date prior to the date when c) Further regarding the chargeabilitv of the
RFCTAAR Act was made income as per provisions of sec 4 and 5 of
applicable. Therefore, its the it is stated that compensation on account
Act,
provisions are not applicable. of compulsory acquisition of land has been
Further as per section 5 received during the FY 2015-16 fi.e.
income of assessee (compensation 19.05.20151 the same is taxable under received by assessee) is required to Section45(5)(a) of the Act In the previous be taxed when the said compensation year inwhich such compensation has been have accrued in favour of the firstreceived and the year of chargeabilitv assessee or deemed to have been isnever the issue and the same has never accrued. Undisputedly, the assessee beenpointed out by the AO.
was entitled to receive the compensation when the award was d) Detailed submissions has already been passed quantifying the amount in filedon 16.01.2023 but these have not been favor the assessee for acquisition of takeninto cognizance by the CIT(A). land. Therefore, in our opinion, the cut off date for the purpose of determining its taxability is the date when the assessee was entitled to receive the compensation and not the date when it was actually received by the assessee. In the light of the above we do not find any merit in o he assessee. Accordingly, the same deserves to be dismissed"
9. We have heard both the sides, perused the material on record, impugned order and case laws cited before us. Admittedly, in this case, the notification for compulsory acquisition of land was issued on 04.02.2014 and Award was given on 07.11.2014. The Land Acquisition Collector has clearly held in his order that proprietary rights of the acquired land shall vest in Central Govt. with effect from 07.11.2014. However, the award was paid only on 19.05.2015 (bank statement, APB, Pgs. 2-4).15
ITA Nos. 517 to 519/Chandi/2022 Deepak Garg v. ITO & Ors.
10. The Ld. AR argued that the AO has ignored the fact that since the compensation on account of compulsory acquisition of land has been received during the FY 2015-16 (i.e.19.05.2015) which is taxable under Section 45(5)(a) of the Act in the previous year in which such compensation has been first received and that misinterpreted the letter of Ministry of Transport and Highways dated 28th December 2017 [PB 74-80] in which it has been stated as under:-
"I am directed to say that the land required for National Highway Projects is acquired under the provisions contained in Section 3 of the National Highways (NH) Act, 1956. Pursuant to the enactment of the RFCTLARR Act of 2013 and its coming into force with effect from 01.01.2014, certain provisions of the 2013 Act became applicable to the other related Acts mentioned in the Fourth Scheduled, including the NHAI Act, 1956 with effect from 01.01.2015 in terms of Section 105(3) of the RFCTLARR, 2013."
11. The Counsel contended that the letter dated 28.12.2017 was issued by Ministry of Road Transport & Highways on the subject ofLand Acquisition under the National Highways Act, 1956 clarifying vide para 4.6 (iii) that-
"(a) All cases of Land Acquisition where the Awards had not been announced under section 3G of the NH Act till 31.12.2014 or where such awards had been announced but compensation had not been paid in respect of majority of the land holdings under acquisition as on 31.12.2014, the compensation would be payable in accordance with the First Schedule of the RFCTLARR Act, 2013."
12. From the record, it is evident that the Ld. CIT(A) NFAC has not rebutted to the assessee the of the order of ITAT in the case of Jagdish Arora vs. ITO while relying on the same and ignoring the written submissions filed on 16.01.2023wherein the kind attention of CIT(A) NFAC was drawn to the order of Jaswinder Kaur Sahni Bathinda decidedon identical facts in favour of the assessee by the CIT(A) NFAC relying on the letter dt.28.12.2017 of Ministry of Road Transport and Highways and also on the judgment of Hon'ble Supreme Court in the case of UOI vs. Tarsem Singh others dated 19.09.2019 and KeralaHigh Court in the case of Raghavan Nair v. ACIT - [2018] 89 taxmann.com
212. 16 ITA Nos. 517 to 519/Chandi/2022 Deepak Garg v. ITO & Ors.
13. On perusal of the facts of the instant case, the order of Agra Bench in the case of Jagdish Arora- (Supra)based on Krishan KumarSharma is distinguishable on facts as in that case the claim of exemption of the award was made before the Hon'ble Bench on05.02.2013 and the compensation was received on 01.01.2014 and since both the dates falls prior to the date of application of RFCTLAAR Act. i.e. 01.01.2015 and hence the case of Krishan Kumar Sharma was so decided on different facts was followed bv the Hon'ble Agra Bench in the case of Jagdish Arora cannot be applied to the case of assessee because in the case of the assessee award has been given on07.11.2014 and the compensation has been received on 19.05.2015.Further, in the case of Jagdish Arora (Supra), the important facts were neither brought to the knowledge nor considered by the Agra Bench of the ITAT that Letter of Ministry of transports Highways dt. 28.12.2017 in which it has been stated that all cases of land acquisition where the Awards had not been announced under section 3G of the NHAI Act till 31.12.2014 or where such awards had been announced but compensation had not been paid in respect of majority of the land holdings under acquisition as on 31.12.2014, the compensation would be payable in accordance with the First Schedule of the RFCTLARR Act, 2013"
although the order of the Hon'ble Bench was pronounced on14.03.2021 and even the above said letter was dt. 28.12.2017.As regards to the chargeability of the income as per provisions of sec 4 and 5 of the Act, we are of the view that the compensation on account of compulsory acquisition of land has been received during the Financial Year 2015-16 which also distinguishable on facts Jagdish Arora (Supra). Alastair ka Kam ho Gaya WhatsApp highlight please locate the score between India
14. Similarly in the case of Krishan Kumar Sharma (Supra), the award for acquisition was made on05.02.2013 and the compensation was received on 01.01.2014 and since both the dates fall prior to the date of application of RFCTLAAR Act. i.e. 01.01.2015. Thus, the case of Krishan Kumar Sharma (Supra) on the given facts followed by the Hon'ble Agra Bench in the case of Jagdish Arora (Supra) by the Ld. CIT(A) cannot be applied to the case of assessee because in the case of the assessee award has been given on07.11.2014 and the compensation has been received on 19.05.2015.
15. On identical facts, Chandigarh Bench of the ITAT in the case of Satish Kumar Vs. ITO in ITA NO. 1182/Chd/2019 [PB 22- 42] on considering that the compensation was received by the assessee on 05.11.2014 and 23.11.2015 under National Highway Act on compulsory acquisition of land by NHAI, held to be exempt u/s 96 of the RFCTLARR Act vide circular no 36/2016 dt. 25.10.2016.
17ITA Nos. 517 to 519/Chandi/2022 Deepak Garg v. ITO & Ors.
16. In the case of Gopa Ram Vs. UOI (Supra) the Hon'ble Rajasthan High Court by considering the Chandigarh bench of the ITAT in the case of Satish Kumar (Supra) held that the provisions of the RFCTLARR Act, 2013 are applicable to National Highway Act, 1956.
17. Hon'ble Supreme court in the case of UOI vs. Tarsem Singh others dated 19.09.2019 Civil Appeal No. 064 of 2019 observed that the provisions of RFCTLARR Act, 2013 are applicable to land acquired under national highway Act and the compensation has to be calculated and paid in accordance with the provisions of RFCTLARR Act, 2013.
18. The Hon'ble Jurisdictional Punjab & Haryana High Court in the case of NHAI v. Modan Singh and Others and other group cases in FAO 756-2022 order dated 11.04.2023 wherein it has been held that the RECTLAAR Act, 2013 would apply to cases wherein award has been awarded prior to 31.12.2014 but compensation is not paid yet till 31.12.2014, even though the said acquisitions have been done under the NHAI Act, 1956.
19. In the instant case, it is a matter of record that the award of compensation was not paid yet till 31.12.2014 and was paid only on 19.05.2015 as evident from bank statement (APB, Pgs. 2 PB-4).
20. In the backdrop of the aforesaid discussion on the factual matrix of the case and judicial pronouncement, we hold that the decision of Ld. CIT(A) is infirm and perverse to the facts on record. Accordingly, we set aside the impugned order, and as such, the addition is deleted.
21. Since the facts in ITA No.135/Asr/2023 for Assessment Year 2016-17 are identical to the facts in I.T.A. No. 91/Asr/2023 for Assessment Year 2016-17 and hence, our observation and finding given in I.T.A. No. 91/Asr/2023 shall be applicable to the appeal in ITA No.135/Asr/2023, in mutatis mutandis, Ordered accordingly.
4. In the present case, the Assessee has filed his return of income declaring a total income of Rs.70,66,720 on 31.08.2016 showing Long 18 ITA Nos. 517 to 519/Chandi/2022 Deepak Garg v. ITO & Ors.
Term Capital gains and interest on compensation to the tune of Rs.
1,06,46,192/- and 13,94,744/- respectively on account of compensation received on account of Land acquired by NHAI. The Assessee filed a revised return of income by claiming the above compensation and interest as exempt by relying upon the CBDT circular no. 36/2016 dated 29.05.2017 (APB, pages-16-17), wherein it has been specifically stated that all the compensations received on account of Compulsory acquisitions after 01.01.2014, would be exempt as per sec 96 of the RFCTALAR Act.
However, the AO rejected the claim and Cit(A) confirm the addition. The Ld. Counsel filed a synopsis narrating fact and objection to the Cit(A) order as under:
"4. The case of the assessee was selected for scrutiny and addition amounting to Rs. 1,13,43,564/- by treating the above said compensation and 50% of the amount of interest as taxable.
5. Appeal was filed before the CIT(A) and the same was dismissed.
6. Now, we are in appeal before the Hon'ble Bench against the above order of the CIT(A).
Our Arguments on merits of the case:
7. The timeline of the act and amendments in the same along with the facts of the case summarily placed on record.
8. Thus, the NHAI is one of the 13 authorities covered under the fourth schedule of the RFCTLARR Act and the same was not covered under the exemption u/s 96 of the Act.19
ITA Nos. 517 to 519/Chandi/2022 Deepak Garg v. ITO & Ors.
9. Subsequently, the Govt, issued Ordinance (No 9 of 2014) extending benefits to Fourth Schedule i.e. NHAI Act and section 105 was substituted. (Refer pages-12-15 of the paperbook)
10. Further, if the compensation has been received under the provisions of RFCTLAAR Act then, in the said case CBDT has duly exempted the compensations received under the RFCTLARR Act from the provisions of the Income Tax Act. The CIT(A) has not even cared to refer the same while recording his findings as mentioned on Pages 22 to 24 of his order.
11. The Ministry of Road Transport & Highways provided clarification for the matters connected therewith. Circular No. NH 11011/30/2015-LA by Government of India issued toy Ministry Of Roads And Transport and Highways, Dated 28.12.2017, have clarified the applicability of provisions of RFCTLAAR Act 2013 to NH Act 1956. It has been made clear that "In cases, where the Land Acquisition process was initiated and award of compensation under section 3G had also been announced before 01.01.2015 but the full amount of Award had not been deposited toy the acquiring agency with CALA, the compensation amount would liable to be determined in accordance with the First Schedule Of The RFCTLAAR Act 2013. "
12. The NH Act, 1956 finds a Place at Point 7 in the Fourth Schedule.
However, Government issued Ordinance (No 9 of 2014) extending benefits Of Compensation, Rehabilitation and Resettlement Mentioned in First, Second and Third Schedules to the Statutes Mentioned in the Fourth Schedule of the Act and section 105 was substituted.
13. Therefore, on the basis of the above the Hon'ble Court of Sh. Ravinder Kumar Kaushik, IAS, Commissioner cum Arbitrator, Faridkot, Division Faridkot vide Arbitration No. 920/2016 has announced that the assessee should be awarded as per RFCTLAAR Act (Refer page-38 & 40). No adverse inference with regard to the same has been drawn by the AO or the Worthy CIT(A). Therefore, the compensation paid to the assessee is covered under the provisions of RFCTLAAR Act.
14. Therefore, once the compensation has been received as per the provisions of RFCTLAAR Act, then the provisions of section 96 are applicable on the assessee as the said provisions cannot be read 20 ITA Nos. 517 to 519/Chandi/2022 Deepak Garg v. ITO & Ors.
independently and thus, the same are exempt from the provisions of Income Tax.
15. Further, it is submitted that Worthy CIT(A) has himself admitted the position that subsequent to the amendment made by the Government vide notification dated 31.12.2014, the compensation has to be decided in accordance with First, second and Third Schedule. Refer findings given on page-24 of his order.
16. However, the CIT(A) was of the view that the said amendment has been bought only to calculate compensation and the exemption under section 96 of the RFTLAAR Act is not applicable in respect of the said amendment. However, this contention of the CIT(A) is contradictory to the law especially when the CBDT itself vide circular No. 36 of 2016 has clarified the position (Refer page- of the paperbook) that "compensation received in respect of award or agreement which has been exempted from levy of income-tax vide section 96 of RFCTLAAR Act shall also not be taxable under theprovisions of Income Tax Act, 1961 even if no specific prevision of exemption for such compensation in the Income Tax Act, 1961."
17. Thus, in our case the compensation has been received as per the RFCTLAAR Act, thus, the same is exempted from the provisions of Income Tax Act, 1961. The Worthy CIT(A) has interpreted the two provisions of the same Act independently which is contradictory to the law as the provisions of section 96 of the RFCTLAAR Act applies on every compensation received under the said Act and no distinction with regard to the same is envisaged in the Act.
18. Further, it is submitted that in the case of Smt. Urmila Garg, Sangrur vs ITO, Sangrur- ITA No. 1182/CHD/2019, the Flon'ble ITAT Chandigarh has allowed the appeal of the assessee and held that the compensation received after the amendment issued by the Government vide ordinance dated 01.01.2015 are exempt from tax as the same are received as per the RFCTLAAR Act.
19. Reliance in this regard is also placed on the following judgments:-
a. Smt. Annapurna Mishra v. ITO - [2019] 106 taxmann.com 170 (Cuttack - Trib.) 21 ITA Nos. 517 to 519/Chandi/2022 Deepak Garg v. ITO & Ors.
b. Raghavan Nair v. ACIT - [2018] 89 taxmann.com 212 (Kerala High Court) c. Viswanath M. v. CIT - [2020] 116 taxmann.com 894 (Kerala High Court) d. Income Tax Officer vs Shri Suresh Prasad ITA No. 210/PAT/2018 (Patna Tribunal)
20. Further the assessee has also received as compensation (part of award) an amount equal to 12% of the amount of the compensation from the date of notification to the date of announcement of award amounting to Rs. 13,94,744.
21. The said amount of interest is part and parcel of the original AWARD itself and the same is clear from section 30(3) and section 69 of the RFCTLAAR Act as mentioned 4n Page 13 St 14 of the appellate order as the term mentioned in the said provisions of the Act are "AWARD" and not interest. Therefore, the compensation received on the compensation are part and parcel of award itself.
22. Furthermore, the words used in the exemption provisions of section 96 of RFCTLAAR Act also states that "No income tax or stamp duty shall be levied on any AWARD or AGREEMENT ". Therefore, RFCTLAAR Act exempts the total amount of AWARD from the Income Tax and thus, the addition made with regard to the same deserves to be deleted.
23. Furthermore, in the recent judgment of the Chandigarh Bench of ITAT in the case of The DCIT vs Ram Gopal in ITA No. 397/CHD/2019 wherein the Hon'ble Bench vide order dated 30.05.2022 has considered the issue and exempt that amount of the compensation received by the assessee including the amount received @12% of the compensation."
5. The Ld. DR rely upon the impugned order. However, he failed to rebut the contention of the Ld. AR regarding the claim of exemption in respect of compensation received from NHAI by the assessee including additional compensation at the rate of 12%.
22ITA Nos. 517 to 519/Chandi/2022 Deepak Garg v. ITO & Ors.
6. Heard both the sides, perusal of record, impugned order and written submission and a paper book filed before us. It is undisputed that the appellant has received the compensation under the provisions of RFCTLAAR Act and the CBDT has duly exempted the compensations received under the RFCTLARR Act from the provisions of the Income Tax Act. The CIT(A) has not even referred the same while recording his findings as stated on Pages 22 to 24 of the impugned order. It is noted that the Ministry of Road Transport & Highways provided clarification for the matters connected therewith vide Circular No. NH 11011/30/2015-LA of Government of India issued to Ministry Of Roads And Transport and Highways, Dated 28.12.2017, have clarified the applicability of provisions of RFCTLAAR Act 2013 to NH Act 1956. It has been made clear that "In cases, where the Land Acquisition process was initiated and award of compensation under section 3G had also been announced before 01.01.2015 but the full amount of Award had not been deposited to the acquiring agency with CALA, the compensation amount would liable to be determined in accordance with the First Schedule Of The RFCTLAAR Act 2013. Meaning thereby that once the compensation has been received as per the provisions of RFCTLAAR Act, then the provisions of section 96 are applicable on the assessee as the said provisions cannot be read 23 ITA Nos. 517 to 519/Chandi/2022 Deepak Garg v. ITO & Ors.
independently or in isolation and accordingly, the same are exempt from the provisions of Income Tax.
7. It is seen that the Ld. CIT(A) has admitted the fact that subsequent to the amendment made by the Government vide notification dated 31.12.2014, the compensation has to be decided in accordance with First, second and Third Schedule (page-24 of impugned order). However, the CIT(A) has mis interpreted the said amendment as it been bought only to calculate compensation and the exemption under section 96 of the RFTLAAR Act is not applicable in respect of the said amendment.
However, this contention of the CIT(A) is contradictory to the law especially when the CBDT itself vide circular No. 36 of 2016 has clarified the position that "compensation received in respect of award or agreement which has been exempted from levy of income-tax vide section 96 of RFCTLAAR Act shall also not be taxable under the provisions of Income Tax Act, 1961 even if no specific provision of exemption for such compensation in the Income Tax Act, 1961.
8. In the present case, the compensation has been received as per the RFCTLAAR Act, and thus, the same is exempted from the provisions of Income Tax Act, 1961. In our view, the CIT(A) has interpreted the two 24 ITA Nos. 517 to 519/Chandi/2022 Deepak Garg v. ITO & Ors.
provisions of the same Act independently in contradiction to the law as the provisions of section 96 of the RFCTLAAR Act applies on every compensation received under the said Act as no distinction with regard to the same is envisaged in the Income Tax Act.
9. On similar facts, in the case of Smt. Urmila Garg, Sangrur vs ITO, Sangrur- ITA No. 1182/CHD/2019, the ITAT Chandigarh Bench has allowed the appeal of the assessee and held that the compensation received after the amendment issued by the Government vide ordinance dated 01.01.2015 as exempt from tax as the same are received as per the RFCTLAAR Act.
10. Recently, in another judgment of the Chandigarh Bench of ITAT in the case of The DCIT vs Ram Gopal in ITA No. 397/CHD/2019 the Bench vide order dated 30.05.2022 has considered the issue and held that amount of the compensation received by the assessee including the amount received @12% of the compensation as exempt from Income Tax.
11. Considering the factual Matrix and Judicial Precedents, we hold that the decision of Ld. CIT(A) is infirm and perverse to the facts on record.
Accordingly, we set aside the impugned order, and as such, the addition is deleted.
25ITA Nos. 517 to 519/Chandi/2022 Deepak Garg v. ITO & Ors.
12. The facts in ITA Nos. 517 & 518/Chandi/2022 in respect of Assessment Year 2016-17 are identical to the facts in ITA No. 519/Chandi/2022 in respect of Assessment Year 2016-17 and hence, our observation and finding given in ITA No. 519/Chandi/2022 shall be applicable to the appeal in ITA Nos. 517 & 518/Chandi/2022, in mutatis mutandis, Ordered accordingly.
13. In the result, the appeals of the assesses are allowed.
Order pronounced in the open court on 06.06.2024
Sd/- Sd/-
(Udayan Dasgupta) (Dr. M. L. Meena)
Judicial Member Accountant Member
*GP/Sr.PS*
Copy of the order forwarded to:
(1)The Appellant:
(2) The Respondent:
(3) The CIT concerned
(4) The Sr. DR, I.T.A.T.
True Copy
By Order