If transfer of capital asset is by way of compulsory acquisition then there may be a case of exemption under S. 10(37) of IT Act

Income Tax Appellate Tribunal, Bangalore: In a recent order passed by Arun Kumar Garodia, Accountant Member and Lalit Kumar, Judicial Member restored a case under ITA No. 162 / CIT (A)-1 / BR / 16-17, 163 / CIT (A)-1 / BR /15-16 and 164 / CIT (A)-1 / BR / 16-17 back to Commissioner of Income Tax (Appeals) (CIT (A)) for a fresh decision.

The brief facts being that the appellant has challenged the order dated 20-12-2011 passed by the Income Tax Officer, Ward – 8 (4) which clearly declines to condone the delay in filing the appeal petition by the appellant in CIT(A), and has further contested that the ‘Capital Gain Tax’ that is being levied on the appellant is highly illegal and improper and hence needs to be quashed.

It was observed by this Bench that the appellant’s plea was in order and the delay in filing the appeal was fully justified and the fact that the appellant’s ‘Capital Gain’ was because of a compulsory acquisition by the National Highway Authority of India (NHAI) does not qualify for ‘Capital Gain Tax’ provided all conditions are satisfied under Section 10 sub-section 37 of the Income Tax Act, 1961, as per which if the transfer of capital asset is by way of compulsory acquisition under any law, or a transfer the consideration for which is determined or approved by the Central Government or the RBI then there may be the case of exemption under the said section. In lieu of quashing the order passed by the Income Tax Officer, Ward – 8 (4), the Tribunal ordered the case to be referred back to CIT(A) to be decided afresh after providing adequate opportunity of being heard to both the parties. [Rama Keshavadaspai v. The Commissioner of Income Tax (Appeals)-1, ITA Nos. 756 to 758/Bang/2017, decided on 15-12-2017]

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