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TMI Blog2022 (7) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... all compensation given by them are exempt. As per Schedule 1 of the RFCTLARR Act, compensation includes additional compensation, solatium and any other receipt which implies that solatium and interest are part of compensation - CBDT Circular No. 36/2016 dated 25.10.2016 has extended the exemption by including compulsorily acquisition of land without any restriction on area as well as acquisition of land. As also settled law that the Income-tax authorities are bound by the guidelines laid down the CBDT Circulars. The position as it stands now with the passage of the RFCTLARR Act, is that all compensations received qua this Act are not taxable. It has been clarified by the CBDT Vide Circular No.36/2016 dated 21.10.2016 that even where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me from house property, Long Term Capital Gain, interest income, manufacturing of egg trays and purchase and sale of food grains. The assessee s case was selected for scrutiny through CASS under Limited Scrutiny . During the course of assessment proceedings, it was noticed by the Assessing Officer (Assessing Officer) that the land including factory building of the assessee was acquired by the State Govt. and the assessee had received compensation amount of Rs. 6,27,31,581/- including interest. The details of the compensation amount received by the assessee were as under:- 1. Amount from compensation - Rs. 4,19,10,484/- 2. Interest - Rs. 82,47,979/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee under the head Long Term Capital Gains and capital gains was worked out at Rs. 5,22,85,716/- as per the following computation:- Full value consideration (Excluding Solatium Interest) 5,44,83,623/- Less Cost of acquisition (as per Index cost) 27,69,678/- Less Cost of Improvement 14,46,368/- Long Term Capital Gain 5,02,67,577/- Less exemption U/s 54F 50,00,000/- Less exemption U/s 54EC 55,55,000/- Long Term Capital Gain 3,97,12, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the assessee. The Ld. CIT(A) accepted the contention of the assessee and allowed the appeal of the assessee by directing the Assessing Officer to treat the entire compensation including solatium as exempt. 2.5 Against this order of the Ld. First Appellate Authority, the Department has now approached this Tribunal and has raised the following grounds of appeal:- 1. Whether on the facts in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,25,73,139/- under the head Long Term Capital Gain on account of solatium. 2. Whether on the facts in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs.41,23,990/- on account of interest received on comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income, the enhanced compensation would be income by virtue of section 45(5) (b) of the Act. Similarly, with reference to the exemption being allowed on interest received, the Ld. Sr. DR submitted that in terms of section 56(2) (viii) , the interest was taxable but the assessee can claim exemption on 50% of the interest amount in terms of section 57(iv) of the Act. 4.0 In response, the Ld. AR submitted that the Land was compulsorily acquired by Government situated at National Highway No. 64 on a stretch of land from Km 50.700 to Km 209.50 on the Patiala Sangrur - Bhatinda section. Our attention was drawn to the Award dated 15.01.2014. Our attention was also drawn to a copy of the letter by SDE wherein price was fixed vide meeting he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of the Income Tax Act, 1961 Act even if there is not specific provision of exemption for such compensation under the Income Tax Act, 1961. The Ld. AR submitted that, thus, in view of the factual position, the assessee s case fell squarely with the provisions of RFCTLARR Act and in view of the CBDT Circular, as afore mentioned, the Ld. CIT(A) had rightly deleted the addition made by the Assessing Officer. 5.0 We have heard the rival submissions and have also perused the material on record. In this case the facts are not in dispute. From the records, it is apparent that the impugned transaction is covered under RFCTLARR Act. Even the Assessing Officer has not disputed this position that the land for which compensation has been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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