Compensation - Compensation received in respect of award or agreement which has been exempted from levy of income-tax vide section 96 of the RFCTLARR Act shall also not be taxable under the provisions of income-tax Act, 1961 even if there is no specific provision of exemption for such compensation in the Income-tax Act, 1961

Facts: The grievance in instant writ petition is confined to the impugned assessment order and demand notice whereby the Assessing Officer, after undertaking the assessment order brought the case of the petitioner under scrutiny and issued a notice under Section 143 (1). In the result thereof, the petitioner received a show cause notice. Petitioner was represented through an authorised representative and brought to the fact that the aforementioned compensation can be exempted under Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 as it would not fall within the mischief of Section 54F of the Income Tax Act, 1961. In support of the aforementioned contention, reliance has been laid to Circular No.36/2016 dated 25.08.2016 whereby the Central Board of Direct Taxes issued a clarification that if the land is non-agricultural, it would not be taxable as per the provisions of the Income-tax Act, 1961. The assessment order and the demand notice are wholly without jurisdiction, malicious and not sustainable in the eyes of law.

Held, that the matter has been examined by the Board and it is hereby clarified that compensation received in respect of award or agreement which has been exempted from levy of income-tax vide section 96 of the RFCTLARR Act shall also not be taxable under the provisions of income-tax Act, 1961 even if there is no specific provision of exemption for such compensation in the Income-tax Act, 1961. This clarification is totally opposite to what has been assessed by the Assessing Officer. For the reasons aforementioned, the assessment and demand notice cannot sustain and are hereby quashed. - VISWANATHAN M. V/s CHIEF COMMISSIONER - [2020] 22 ITCD Online 019 (KER)