Compensation for compulsory acquisition of Land: Not taxable even if there is no specific exemption provision in the Income-tax Act of 1961

1. The two-member bench of Sonjoy Sarma (Judicial Member) and Manish Borad (Accountant Member) has observed that no distinction was made between compensation received for compulsory acquisition of agricultural land and non-agricultural land in the matter of providing exemption from income tax under the RFCTLARR Act.

2.  The assessee relied on Circular No. 36/2016 dated 25.10.201 issued by the CBDT.

3. As per the circular, compensation received in respect of an award or agreement is exempted from the levy of income-tax vide section 96 of the RFCTLARR Act.

4. The compensation is also not taxable under the provisions of the Income-tax Act of 1961, even if there is no specific exemption provision in the Income-tax Act of 1961.

5.  The Tribunal upheld the order of the CIT(A).

“The assessee received compensation for compulsory acquisition of commercial land during the F.Y. 2014-15, which was exempted under section 96 of the RFCTLARR Act, as clarified by the CBDT Circular No. 36/2016 dt. 25/10/2016,” the tribunal ruled.