2003 (3) TMI 283 - AT - Income Tax

Issues Involved:
1. Deletion of addition by holding recurring compensation as agricultural income exempt from tax.
2. Determination of the actual owner of the rental income.
3. Examination of the nature of the income as agricultural or non-agricultural.
4. Application of Section 45(5) of the Income Tax Act.
5. Relevance and admissibility of Khasra Girdawari as evidence.
6. Consideration of judgments from higher courts and their applicability to the case.

Issue-wise Detailed Analysis:

1. Deletion of Addition by Holding Recurring Compensation as Agricultural Income Exempt from Tax:
The Revenue contested the CIT(A)'s decision to treat recurring compensation as agricultural income exempt from tax. The Tribunal upheld the CIT(A)'s view, emphasizing that the compensation received for requisitioned agricultural land, which continued to be used for agricultural purposes, should be treated as agricultural income. The CIT(A) relied on the Supreme Court's judgment in CIT vs. All India Tea & Trading Co. Ltd., which held that compensation for requisitioned land used for agriculture is agricultural income.

2. Determination of the Actual Owner of the Rental Income:
The CIT(A) determined that the respondent was the real and beneficial owner of the compensation amount after a thorough examination of material evidence. The Tribunal found no new submissions or fresh material to rebut the findings of the AO and CIT(A). The Revenue's attempt to challenge this determination was rejected as it was not raised as a ground of appeal.

3. Examination of the Nature of the Income as Agricultural or Non-Agricultural:
The CIT(A) examined the evidence, including Khasra Girdawari records, and concluded that the land was used for agricultural purposes before and after requisition. The AO's reasons for treating the income as non-agricultural were found insufficient. The Tribunal agreed with the CIT(A) that the recurring compensation was agricultural income, as the land continued to be used for agricultural purposes.

4. Application of Section 45(5) of the Income Tax Act:
The AO initially treated the compensation as taxable under Section 45(5) on a protective basis. However, the CIT(A) and the Tribunal concluded that recurring compensation for requisitioned land did not attract capital gains tax under Section 45(5) since no transfer was involved and the ownership remained with the assessee.

5. Relevance and Admissibility of Khasra Girdawari as Evidence:
The CIT(A) and the Tribunal considered Khasra Girdawari as relevant evidence showing that agricultural operations continued on the land during the requisition period. The Tribunal noted that the AO did not produce any contrary evidence to rebut this. The reliance on Khasra Girdawari was supported by the Chandigarh Bench of the Tribunal in Anil Kumar vs. Asstt. CIT.

6. Consideration of Judgments from Higher Courts and Their Applicability to the Case:
The CIT(A) and the Tribunal relied on several judgments, including the Supreme Court's decision in CIT vs. All India Tea & Trading Co. Ltd. and the Delhi High Court's decision in DLF Universal Ltd. vs. Asstt. CIT. These judgments supported the view that compensation for requisitioned land used for agriculture is agricultural income. The Tribunal distinguished other judgments cited by the Revenue, noting that they were delivered on different facts.

Conclusion:
The Tribunal upheld the CIT(A)'s consolidated order for the assessment years 1990-91, 1992-93, and 1994-95, confirming that the recurring compensation received was agricultural income exempt from tax. Consequently, the remaining appeals filed by the Revenue were also dismissed.

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