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TMI Blog2023 (1) TMI 523X X X X Extracts X X X X X X X X Extracts X X X X ..... er in the LAA Act, does not grant the color of compulsory acquisition to this transaction. Undoubtedly the transaction between the assessee and GIDC is mutually agreed transaction and there was no compulsion on the assessee to transfer the land to GIDC. The initial notification of acquisition of these lands under the LAA no longer existed in law once the Act got repealed In the present case though the assessee s lands may have qualified for transition under the new law on account of acquisition being notified under old LAA Act but no award being made therein but the fact remains that it was not acquired even under the new law. As per the transitory provisions the acquisition could very well have been continued with as per the new law. Whatever may have been the compulsions, that the Rules were getting delayed to be notified for acquisition of land under the new law, but the fact remains that the land was not acquired by the State even under the new law. There is no reason nor scope for deeming the acquisition of the lands under the RFCTLAAR Act. The banakhat entered into between the assessee and GIDC is on mutually agreed terms where there is nothing to the effect that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever there before the PCIT. Though needless to add that the assessee is at full liberty to raise this plea or any other plea in the set aside proceedings before the AO. We uphold the order passed u/s 263 - Decided against assessee. - ITA No.180/Ahd/2021 And ITA No.181/Ahd/2021 - - - Dated:- 11-1-2023 - Mrs.Annapurna Gupta, Accountant Member And Miss Suchitra Raghunath Kamble, Judicial Member For the Assessee : Shri Bandish Soparkar, AR with Shri Parin Shah, AR For the Revenue : Shri Alok kumar, CIT-DR ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER Present two appeals pertain to different assesses and have been filed against separate orders passed by the ld.Pr. Commissioner of IncomeTax-1, Ahmedabad [hereinafter referred to as Ld.PCIT ] in exercise of his revisionary powers under section 263 of the Income Tax Act, 1961 ( the Act for short) both of even date; 18.3.2021pertainingto the Asst.Year 2016-17. 2. It was common ground that the reasons for assuming jurisdiction by the Ld.PCIT to revise the assessment order in both the cases was identical in the backdrop of identical set of facts. Therefore, both the appeals were taken up together for hearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due opportunity of hearing to the assessee, the ld.PCIT passed order under section 263 holding that the AO while framing the assessment order had wrongly given benefit of exemption claimed by the assessee under section 10(37) of the Act, and had not subjected to tax the entire capital gain, after considering correct share of consideration. He held that the order passed by the AO was without making any necessary inquiry and verification vis-a-vis both the claim of exemption under section 10(37) of the Act and determination of correct amount of capital gain earned. Accordingly, he set aside the order passed by the AO directing him to pass a fresh assessment order in accordance with law. Aggrieved by the same the assessee has come up in appeal before us raising the following grounds: 1. Ld. Pr. CIT, Ahmedabad - 1 erred in law and on facts in revising a scrutiny /assessment order passed by AO which is neither erroneous nor prejudicial to the f interest of revenue. 2. This action of Id. Pr. CIT revising an order passed by AO raising relevant queries and extensive verification of the details submitted during assessment by the appellant is without any justification to invoke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uted facts of the present case, stating that the land sold by the assessee, capital gain earned on which is in dispute whether exempt or not , pertained to four parcels of the land co-owned equally by the assessee and three other co-owners. The lands were identified as bearing survey nos.766, 777, 786 and 788, situated at village Khoraj, Dist. Ahmedabad. That these lands were initially notified by the Government for acquisition under section 4 of the Land Acquisition Act (LAA) on 5.9.2012 and a declaration for acquisition of the said land under section 6 of the said Act was also made on 7.10.2013 and award by the Collector under section 11(2) of the LAA was given with respect to one land bearing survey no.788 on 30.12.2013, but subsequently, the Land Acquisition Act was repealed by the Government w.e.f. 01.01.2014 and a new Act brought on statute i.e. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 ( RFCTLRR Act for short) w.e.f. 1-1-2014, but the Rules for the acquisition of the land under the new Act were notified by the State Government in October, 2017; that since the land could not be acquired under the RFCTLRR A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Registered Sale deed is executed between four co-owners and GIDC 7. The ld.counsel for the assessee contended that CBDT had come out with a Circular dated 25.10.2016 stating that compensation received on land acquired under RFCTLRR Act was exempt from thelevy of income tax on capital gains earned thereon without any distinction being made whether the compensation was for the acquisition of an agricultural land or non-agricultural land. Ld.counsel for the assessee contended that the contentions of the assessee for claiming exemption ofcapital gain earned on the purported sale of land to GIDC, was that the acquisition of land was initiated by the State Government for the said purpose under the LAA which was subsequently repealed and new Act i.e. RFCTLRR Act came to be notified for the compulsory acquisition of land by State Government, but due to non-notification of the Rules with regard to the acquisition of the land under the new Act, the acquisition of the land in the impugned case was proceeded with not by the State Government, but by the GIDC itself by entering into an agreement with the assessee, and thesale of the land to GIDC, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel for the assessee pointed out that the view of the AO was plausible is evident from the fact that in the case one of the co-owners, re-assessment proceedings initiated for the impugned year on the basis of proceedings u/s 263 of the Act conducted in the case of the assessee, the AO had accepted the claim of exemption to the assessee of the capital gain earned on the sale of the land. In this regard, he drew our attention to the order passed by the AO in the case of Poonam Rohit Bhai Modi passed under section147 of the Act dated 25.3.2022; copy of which was placed before us. He drew our attention to the notice issued under section 143(2) read with section 147 of the Act in the case of the said assessee, pointing out therefrom that the reasons for reopening was the order passed by the Ld.PCIT in the cases of Shri Rohitkumar Chinubhai Modi and Saurabhbhai R. Modi, the assessees before us under section263of the Act, setting aside the order of the AO accepting the assessee s claim of exemption of capital gains under section said 10(37) of the Act. Copy of the notice under section 142(1) was also placed before us. The ld.counsel for the assessee contended that the AO in this case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reason that transfer of land was executed by the GIDC it could not be termed as private transfer between the assessee and the GIDC, but was compulsory acquisition of the land by the State only. In this regard, he relied upon the decision of Apex Court in the case of Balakrishnan Vs. UIO, (2017) 80 taxmann.com 84 (SC). Referring to the facts of the case, he pointed out that in that case, initial consideration for compulsory acquisition of the land by the State had been given by the Collector. But subsequently the assessee sought for enhancement of the compensation and instead of applying to make a reference under section 18 of the LAA to District Judge to determine enhanced compensation, he settled the matter with the party to whom the land acquired had been allowed by the Government i.e. i.e. Techno Park in the present case. That party agreed to the enhanced compensation. The AO in this regard held that enhanced compensation was not of the nature of compensation awarded by the State for acquiring his land, since it was given by private party, but the Hon ble Apex Court held otherwise stating that the assessee was compelled to stake its claim for enhanced compensation from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order being erroneous causing prejudice to the Revenue in allowing assesses claim of exemption of capital gains earned on transfer of land u/s 10(37) of the Act. The Ld.PCIT has found the claim to be wrongly allowed by the AO without examining /inquiring: a. The eligibility to claim exemption u/s 10(37) of the Act b. The correct computation of capital gains The eligibility to claim exemption has been questioned by the Ld.PCIT finding that the assessee does not fulfill the necessary conditions of the exemption provision of a. the transfer having occurred by way of compulsory acquisition of land under law ; b. the land having been used for agricultural purposes two years prior to the date of transfer Both the conditions being needed to be fulfilled cumulatively for being eligible to claim exemption u/s 10(37) of the Act as is evident from the provisions of the section as under: 10(37) in the case of an assessee, being an individual or a Hindu undivided family, any income chargeable under the head Capital gains arising from the transfer of agricultural land, where- (i) such land is situate in any area referred to in item (a) or item (b) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was replaced by new Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (also known as Land Acquisition Act ,2013 or RFCTLARR Act) w.e.f. 01.01.2014. It was further clarified by GIDC that the Rules for the acquisition of land under the new Act were notified by the State Government in October 2017. Hence, GIDC acquired the said land by Mutual Consent from the transferee i.e. Shri Rohit Bhai C. Modi Others as per the power entrusted to the corporation u/s. 14(b) of The GID Act, 1962. Relevant section 14(b) of the GIDC Act placed before us by the Ld.Counsel for the assessee is also reproduced for clarity. .. 14(b) to purchase by agreement or to take on lease or under any form of tenancy any land, to erect such buildings and to execute such other works as may be necessary for the purpose of carrying out its duties and functions; . 16. This being the undisputed fact,we do not find any infirmity in the order of the Ld.PCIT holding that the land were not transferred by way of compulsory acquisition under any law but were transferred by mutual consent and agreement between two private parties and the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en, all beneficiaries specified in the notification for acquisition under section 4 of the said Land Acquisition Act, shall be entitled to compensation in accordance with the provisions of this Act. The section specifies all circumstances where the acquisition initiated under the old law would now take place under the new law. Section 24(1)(a) states that in the circumstance no award has been made under the repealed LAA act, then the provisions of the new Act, RFCTLAAR Act 2013 , would apply for acquisition of land . In the present case though the assessee s lands may have qualified for transition under the new law on account of acquisition being notified under old LAA Act but no award being made therein but the fact remains that it was not acquired even under the new law. As per the transitory provisions the acquisition could very well have been continued with as per the new law. Whatever may have been the compulsions, that the Rules were getting delayed to be notified for acquisition of land under the new law, but the fact remains that the land was not acquired by the State even under the new law. There is no reason nor scope for deeming the acquisition of the lands under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in fact had taken place during the impugned year since the banakhat was not registered, we find that this is of no relevance while adjudicating upon the order of the Ld.PCIT. The reason being that this was never the issue before the Ld.PCIT whose order u/s 263 impugned before us finds the assessment order to be erroneous for having wrongly allowed the assesses claim of exemption u/s 10(37) of the Act.That was the limited issue considered by the Ld.PCIT. The assesses claim never was to the effect that no capital gain accrued during the year at all. He had voluntarily returned capital gain as exempt during the impugned year. Nor do we find that the assessee ever made such claim before the Ld.PCIT during impugned revisionary proceedings. The order of the Ld.PCIT having been found by us to be in accordance with law on the issue raised therein, it cannot be set aside on an issue which was never there before the Ld.PCIT. Though needless to add that the assessee is at full liberty to raise this plea or any other plea in the set aside proceedings before the AO. In view of the above, we uphold the order passed u/s 263 of the Act by the Ld.PCIT. 23. Both appeals of the assesses are t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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