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The Tax Publishers2020 TaxPub(DT) 2809 (Sur-Trib) INCOME TAX ACT, 1961
Section 10(37)
Merely because compensation amount was agreed upon it would not change the character of acquisition, from that of compulsory acquisition to the voluntary sale so as to deny exemption under section 10(37).
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Exemption under section 10(37) - Allowability - Compulsory acquisition of land treated as voluntary sale on account of compensation agreed upon between parties -
Assessee earned long-term capital gain (LTCG) on transfer of certain piece of land. He claimed that land was compulsory acquired by SMC hence LTCG thereon was exempt under section 10(37). AO took the view that agricultural land was actually purchased by the SMC and not compulsory acquired, because land was sold by executing sale deed between SMC and owners of the land. Therefore, by choosing route through execution of sale deed assessee had forgone the choice option for going through compulsory acquisition route which was eligible for exemption under section 10(37).Held: So far the contention of assessee that land was agricultural land and it was case of compulsory acquisition by SMC, it could be noticed that as per letter no. ACT/SR/3161 dated. 31-8-2010 it has been clearly mentioned by SMC that nature of payment was 'compulsory acquisition' (Land/ Building). Further apparent from the perusal of letter No. TBT/OUT/ 4089/ 22 dated. 23-9-2014 that land in question was placed under reservation by Government of Gujarat vide order dated Notification No. GH/V/100 of 2004/DVP/1403/3307/L dated. 2-9-2014 under the provision of section 20 of Gujarat Town Planning & Urban Development Act 1976 at the disposal of SMC to acquire land under section 77 of Bombay Provincial Municipal Corporation Act, 1949 for erection of Sewerage Treatment Plant. Thus, it was a case of compulsory acquisition of land for which the SMC under instruction of Government of Gujarat had also given a certificate dated 12-8-2010 [letter no. ACT/SR/NO2861] wherein nature of payment to assessee was described against compulsory acquisition of land at Dindoli. In view of above facts and circumstances, land was compulsory acquired by SMC, and hence, conditions as laid down in section 10(37) were duly satisfied and merely because compensation amount was agreed upon it would not change the character of acquisition, from that of compulsory acquisition to the voluntary sale. Accordingly, denial to section 10(37) exemption was not justified.
Followed:ITO v. Dipak Kalidas [ITA No. 2685/Ahd/2011, dated 14-8-2015 {PB-26-34). Relied:CIT v. Amrutbhai S. Patel Tax Appeal No. 355 of 2013 dated 15-4-2013 of Hon'ble Gujarat High Court ( copy of order placed at Page No. 35 to 40 of Paper Book). Balakrishnan v. Union of India & Ors. [Civil Appeal No. 1607/2010 dated 11-1-2017] : 2017 TaxPub(DT) 362 (SC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2009-10
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