2019 (2) TMI 1130 - AT - Income Tax

Entitlement to benefit of section 10(37) - acquisition of urban agricultural land - HELD THAT - The Hon ble Apex Court in the case of Balakrishnan v. Union of India & Others (2017 (3) TMI 745 - SUPREME COURT OF INDIA) had categorically held merely because the sale price is fixed through a negotiated settlement will not take away the proceedings from the Land Acquisition Act when the relevant provision of the Act are invoked. In the instant case, the entire procedure prescribed under the Land Acquisition Act was followed, only price was fixed upon a negotiated settlement. Therefore we hold that the acquisition of the urban agricultural land was a compulsory acquisition and the same would be entitled to the benefit enumerated in section 10(37) of the I. T. Act

Summary

Issues involved:
Whether the assessee is entitled to benefit of section 10(37) of the I.T. Act in respect of the land acquired?

Detailed Analysis:
The case involved a dispute regarding the entitlement of the assessee to the benefit of section 10(37) of the Income Tax Act in relation to the acquisition of land. The assessee owned two pieces of land in Vizhinjam village, which were notified for acquisition by the Government of Kerala. Subsequently, a sale deed was executed, selling the properties to Vizhinjam International Seaport Limited. The Assessing Officer denied the benefit of section 10(37) on the grounds that the land was not compulsorily acquired but was transferred through a sale deed. The CIT(A), relying on a judgment of the Supreme Court, held in favor of the assessee, stating that the land acquisition was entitled to the benefit under section 10(37) of the Income Tax Act.

The main contention before the Tribunal was whether the land acquisition qualified for the benefit under section 10(37) of the Income Tax Act. The Revenue argued that since the land was not compulsorily acquired but transferred through a sale deed, the benefit should not be granted. On the other hand, the assessee's representative cited judgments of the Supreme Court to support the claim that even if the price was fixed through negotiation, as long as the acquisition followed the procedure under the Land Acquisition Act, it should be considered compulsory acquisition. The Tribunal, after considering the submissions and the Supreme Court judgment, held that the acquisition of the urban agricultural land was indeed a compulsory acquisition, as the entire procedure under the Land Acquisition Act was followed, and the price was fixed through negotiation. Therefore, the Tribunal ruled in favor of the assessee, granting the benefit under section 10(37) of the Income Tax Act.

In conclusion, the Tribunal dismissed the appeal filed by the Revenue and the cross-objection filed by the assessee was also dismissed as infructuous since the Revenue's appeal was disposed of. The judgment highlighted the importance of following the prescribed procedures under the Land Acquisition Act to determine the nature of land acquisition for tax benefits under section 10(37) of the Income Tax Act.