ITO Vs Dharam Singh (ITAT Delhi)
Compensation on Compulsory Acquisition of Urban Agricultural Land Exempt u/s 10(37): Revenue’s Appeal Dismissed
The Delhi Bench of the ITAT, in ITO v. Dharam Singh (AY 2014-15), upheld the order of the CIT(A) granting exemption under section 10(37) in respect of ₹5,00,16,500 received by the assessee on compulsory acquisition of urban agricultural land by the Haryana Government.
The Tribunal noted that the original sale deed executed in 2006 in favour of a private company was cancelled by a civil court due to non-payment of consideration, and the legal title reverted to the assessee’s mother. Subsequently, the land was compulsorily acquired by the State Government, and compensation was released to the assessee pursuant to orders of the Hon’ble Delhi High Court in liquidation proceedings of the buyer company.
Rejecting the Revenue’s contention that the receipt represented capital gains from sale for industrial purposes, the ITAT held that the nature of land as agricultural on the date of compulsory acquisition was decisive and that subsequent or intended non-agricultural use by a purchaser was irrelevant. The Tribunal clarified the distinction between rural and urban agricultural land and reiterated that section 10(37) specifically grants exemption for compulsory acquisition of urban agricultural land. Finding no infirmity in the CIT(A)’s reasoning or appreciation of facts, the Revenue’s appeal was dismissed
FULL TEXT OF THE ORDER OF ITAT DELHI
