Sanjay Kumar Baid Vs ITO (Chhattisgarh High Court)
Issues Involved
Whether compensation received for land acquisition under the National Highways Act, 1956 is exempt from income tax under Section 96 of the RFCTLARR Act ?
Judgment of the High Court
The High Court held that once compensation is determined under the RFCTLARR Act (by virtue of a 2015 Central Government Order making its provisions applicable to acquisitions under enactments in the Fourth Schedule, including the National Highways Act), the exemption from income tax in Section 96 is also attracted.
It overruled the lower authorities’ and Tribunal’s reliance on Section 105, holding that the intent of the Central Government and Supreme Court’s decisions (notably in Union of India v. Tarsem Singh and NHAI v. P. Nagaraju) require equal treatment and exemption.
The question of law was thus answered in favour of the assessee, and the Assessing Officer was directed to allow the exemption and pass a consequential order.
Reasoning of the High Court
The Court extensively cited Supreme Court precedents in Tarsem Singh (2 Judgments) and P. Nagaraju, emphasizing that all beneficial provisions (including exemption in Section 96) must be applied uniformly to land acquired under the National Highways Act, as otherwise it would be discriminatory and violative of Article 14 of the Constitution of India.
