Compulsory Acquisition of Hazira Agricultural Land Not Taxable as Capital Gain: ITAT Surat

Shantaben Ganpatbhai Patel Vs ITO (ITAT Surat)

Summary: ITAT Surat partly allowed the assessee’s appeal for AY 2008-09 concerning compensation of ₹1.70 crore received on compulsory acquisition of land at Hazira on behalf of Essar Steels Ltd. The assessee had not filed a return of income. The Assessing Officer treated the Hazira land as a capital asset within section 2(14) of the Income Tax Act, 1961 and, in an assessment under sections 144 read with 147, made an addition of ₹53,58,334 as long-term capital gains and ₹1,16,41,667 as income from other sources relating to compensation for construction/assets on the land. The CIT(A) partly allowed the assessee’s appeal. Before the Tribunal, there was a delay of 3,675 days. The assessee explained through an affidavit that she was a senior citizen and widow, her son had died in 2010, another son suffered a paralytic attack in 2013, and she was dependent on her grandson. She stated that she became aware of the CIT(A)’s 17.11.2014 order only after a Tax Recovery Officer issued a notice on 10.07.2024 demanding ₹6,65,82,648 and proposing auction of her property. Considering these exceptional circumstances, the Tribunal condoned the delay while expressly stating that the condonation should not be treated as a precedent in other cases.