Sec. 10(37) Exemption not Denied Solely due to State Goverment Compensation Order: ITAT
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- Last Updated on 3 June, 2023
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Case Details: Income-tax Officer v. Mohd. Aslam Baggar - [2023] 150 taxmann.com 364 (Amritsar-Trib.)
Judiciary and Counsel Details
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- Dr M.L. Meena, Accountant Member & Anikesh Banerjee, Judicial Member
- Joginder Singh, CA for the Appellant.
- Hitendra Bhauraoji Ninawe, CIT DR for the Respondent.
Facts of the Case
Assessee received compensation from the Jammu and Kashmir Govt. for acquiring rural agricultural land in the village Chinore, Jammu. While furnishing the return of income, the assessee claimed such income as exempt under section 10(37).
Considering that the State Government awarded the compensation amount, the Assessing Officer (AO) denied the exemption and taxed the compensation under head Capital Gains.
On appeal, the CIT(A) granted relief to the assessee and the matter reached the Amritsar Tribunal.
ITAT Held
The Tribunal held that the provisions should be construed in such a manner to ensure that the object of the Income-tax Act is fulfilled. If the language of the Act is clear, then the language has to be followed. If the language admits two meanings, then the matter is to be considered with reference to the objects and reasons and find out the true meaning of the provisions as intended by the legislature.
In the given case, the assessee’s agricultural land was compulsorily acquired by following the entire procedure prescribed under Land Acquisition Act. At the time of acquisition, the said land was under agricultural cultivation. Thus, merely because the compensation amount was awarded, determined and disbursed vide order of the State Govt., it would not change the character of acquisition from that of compulsory acquisition to voluntary sale to deny Section 10(37) exemption.
Therefore, there was no infirmity or perversity in the order of the Commissioner (Appeals). Accordingly, the impugned order was to be sustained.
List of Cases Referred to
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- Balakrishnan v. Union of India [2017] 80 taxmann.com 84/247 Taxman 16/391 ITR 178 (SC) (para 6.1).
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