2018 (10) TMI 1435 - AT - Income Tax

Entitlement to benefit of section 10(37) in respect of the land which was acquired - non granting of benefit in respect of acquisition of urban agricultural land that it was not a compulsory acquisition, but only executed through a negotiated sale deed - 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, in view of the above judgment of the Hon ble Apex Court (supra), 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. - Decided in favour of assessee.

Summary

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

Analysis:
The case involved a dispute regarding the entitlement of the assessee to the benefit of section 10(37) of the Income Tax Act for land acquired. The assessee was in possession of land in Vizhinjam village, which was later sold to Vizhinjam International Seaport Limited after being notified for acquisition by the Government of Kerala. 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), however, ruled in favor of the assessee citing the judgment of the Hon'ble Apex Court in a similar case. The Revenue appealed to the Tribunal challenging this decision.

The Tribunal considered the arguments of both parties. The Revenue contended that since the land was not compulsorily acquired but sold through a negotiated settlement, the benefit of section 10(37) should not apply. On the other hand, the assessee argued that the character of acquisition remained compulsory as the entire procedure under the Land Acquisition Act was followed, and only the price was determined through negotiation. The Tribunal referred to the judgment of the Hon'ble Apex Court in a similar case, where it was held that even if the sale price is fixed through negotiation, the character of acquisition remains compulsory if the procedures under the Land Acquisition Act are followed.

Based on the above interpretation of the law and the precedent set by the Hon'ble Apex Court, the Tribunal held that the acquisition of the urban agricultural land in this case was indeed a compulsory acquisition. Consequently, the assessee was deemed entitled to the benefit under section 10(37) of the Income Tax Act. Therefore, the appeal filed by the assessee was allowed, overturning the decision of the Assessing Officer and upholding the ruling of the CIT(A).

In conclusion, the Tribunal's decision was based on the interpretation of the Land Acquisition Act procedures and the application of relevant legal principles as established by the Hon'ble Apex Court in similar cases. The judgment clarified that the mode of fixing the sale price through negotiation does not alter the compulsory nature of the acquisition if the statutory procedures are duly followed.