Gujarat High Court Quashes Reopening Of Assessment Order And Notice In Land Acquisition Case, Rules Compensation Not Taxable As Capital Gains
Live LawThe Gujarat High Court while quashing the reopening of an assessment order and notice issued to the petitioner in a land acquisition case, has ruled that compensation received for compulsory acquisition of land is not taxable as capital gains. However, after nearly two years, Anilaben received a notice under Section 148 of the Income Tax Act on March 31, 2021, from the Income Tax Officer, asking her to file a return of income for the assessment year 2016-2017. Feeling aggrieved by the notice and the order dismissing her objections, Anilaben approached the Gujarat High Court to challenge the validity of the notice issued under Section 148 and the order rejecting her objections. The court also placed reliance on the case of Balakrishnan versus Union of India reported in 80 taxmann.com 84 relating to compulsorily acquisition the Apex Court has dealt with and clarified that “on the transfer of agricultural land by way of compulsory acquisition under any law, no capital gain tax is payable,” and the court had held the conclusion of an authority that income has escaped assessment to be erroneous.