Compensation for land acquired under NH Act,1956 exempt u/s 96 RFCTLAAR Act if paid post-01.01.2015 per extended provisions.

ORDER

Per Udayan Dasgupta, J.M.:

This appeal is filed by the assessee against the order of the ld. CIT (A) NFAC, Delhi dated 21.10.2024 passed u/s 250 of the Income Tax Act, 1961 (henceforth the Act) which has emanated from the order of the ITO, Ward-2(1), Bathinda dated 14.12.2018 passed u/s 143(3) of the Income Tax Act, 1961.

2. The ld. DR filed an application for adjournment of hearing on the grounds of complexity of issues involved and citing heavy work load, which we consider not to be sufficient reasons for adjournment and as such, the same is rejected and we proceed to dispose of the appeal on merits of the case after hearing both the parties and considering the materials on record.

3. Brief facts emerging from records are that the assessee has filed return on 5^th August, 2016, disclosing income of Rs. 10.4 lakhs, (which included income from long term capital gains), computed on the basis of compensation received from Central Government under the National Highway Act 1956, amounting to Rs.1.22 crores on compulsory acquisition of residential lands (vide an award dated 7^th November, 2014 issued by the Competent Authority, SDM, Bhatinda), which includes interest of Rs.13.58 lacs received on delayed payment.

4. Subsequently, the return has been revised on 29^th July, 2017, at a lower figure of Rs. 3.58 lakhs, by claiming the land compensation received under the Act 56, as fully exempted in view of section 96 of RFCTLAAR Act read with CBDT circular No 36/2016 dated 25^th October, 2026.

5. However, the said claim of exemption, has been denied by the AO by observing as follows:

“4.8 To sum up, it is held that the land of the assessee was not acquired under the RFCTLAAR Act and award or agreement was not made under the RFCTLAAR Act so as to enable the assessee to be eligible u/s 96 of the RFCTLAAR Act. The benefit of exemption from income- tax is provided u/s 96 of the Act and that land acquisition effected under National Highway Act, 1956 is not eligible for benefit of exemption from income-tax as provided u/s 105 of that Act. Notification dated 31.12.2014 was issued by Ministry of Law & Justice wherein sub section (3) of section 105 of the RFCTLAAR Act was substituted by providing that the provision of the Act relating to the determination of compensation in accordance with First Schedule, rehabilitation and resettlement in accordance with Second schedule and infrastructure amenities in accordance with the Third Schedule shall apply to the enactments relating to land acquisition specified in the Fourth Schedule with effect from 01.01.2015. The Notification is only applicable to extend certain benefits in accordance with the RFCTLAAR Act and such acquisitions made under the enactments relating to land acquisition specified in Fourth Schedule were not brought under the RFCTLAAR Act itself. If the intention of the Central Government were to extend the benefit of exemption u/s 96 of the RFCTLAAR Act to the acquisitions made under the National Highway Act, 1956, it could have omitted the National Highway Act, 1956 specified in the Fourth Schedule as provided u/s 105(2) of the RFCTLAAR Act.

5. In view of the above, the assessee is not eligible for claiming exemption from income fat on the basis of Circular No.36/2016 of the CBDT and also 96 of the RECTLAAIR Act and apart from that the claim of the assessee u/s 10:37), he is not eligible also for exemption 10:37) of the IT Act as the assessee received compensation on acqui