Income Tax Appellate Tribunal

Kishor Ganpat Karande vs. Income-Tax Officer

MANU/IP/0805/2022

01.12.2022

Direct Taxation

Authorities are required to assist the assessee in the assessment proceedings by giving effect to the correct position of law

In present matter, the assessee raised grounds of appeal challenging the action of CIT(A) in confirming the order of AO in denying exemption under Section 54B of the Income Tax Act, 1961 (IT Act) and disallowance of improvement cost in the facts and circumstances of the case.

The evidences furnished amply shows that the land belonging to the assessee which was compulsorily acquired by the Government of Maharashtra is an agricultural land, the assessee was into agricultural activity during the period of two years immediately preceding the date of transfer was being used agricultural purposes by the assessee. Further, the said compensation was received by the assessee on or after 01-04-2004. Therefore, going by the conditions contemplated in clause (i) to (iv) of sub-section (37) of section 10 of the Act the compensation received by the assessee for compulsory acquisition of his land by the Government of Maharashtra is not chargeable under the head "Capital Gains" arising from transfer of agricultural land, therefore, do not form part of total income of the assessee. The assessee was into agricultural activity. The assessee is entitled to claim exemption under Section 10(37) of the Act.

As held by the High Court of Bombay in the case of Balmukund Acharya that, the authorities under the Act are required to assist the assessee in the assessment proceedings by giving effect on the correct position of law, even if the assessee makes wrong claim. The compensation derived from the Government of Maharashtra on the compulsory acquisition of assessee's land, the assessee is entitled to claim the same as exempted under Section 10(37) of the Act. Thus, the order of CIT(A) in confirming the view of AO in denying the deduction under Section 54B of the Act is not justified and the addition made thereon is deleted. The appeal of assessee is allowed.

Tags : Assessment Exemption Entitlement

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