2024 (8) TMI 883 - HC - Income Tax

Income tax demand on amount received under the award passed under the Land Acquisition Act, 2013 - compensation in terms of an award passed by the Special Land Acquisition Officer, Municipal Corporation Agra u/s 24 (1) of the right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (the Land Acquisition Act of 2013) - HELD THAT - We are of the considered opinion that amount of compensation received under an award passed under Land Acquisition Act, 2013, is not exigible to income tax under the Income Tax Act, 1961. Section 10(37) of the Income Tax Act, 1961 also provides clearly that any income arising from the transfer of agricultural land will not be exigible to Income Tax under the head Capital gains if such transfer of agricultural land is by way of compulsory acquisition under any law. The position has been further made clear by Circular No. 36 of 2016 issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Taxes on 25th October, 2016 in which it has been made abundantly clear that in terms of Section 96 of the Land Acquisition Act, 2013, a compensation received for compulsory acquisition of agricultural land or non-agricultural land is exempted from income tax. Thus, the apprehension raised by the petitioner in this petition is without any substance. The legal position is amply clear that any compensation received by a person under an award passed in terms of the Provisions of Land Acquisition Act, 2013 is exempted from payment of income tax except the amount received in reference to Section 46. Petitioner has not brought to our notice any assessment order passed against the petitioner demanding the income tax on the aforesaid income of the petitioner-company nor is there placed on record any demand notice issued by any Income Tax Authority. We dispose of this petition as infructuous.

Summary

The petitioner received compensation under Land Acquisition Act, 2013. The High Court ruled that this compensation is exempt from income tax. The petition was disposed of as infructuous.