'Not just land value, even annuity given to landowners exempted from IT'

Chandigarh: In a landmark judgment that is likely to benefit a number of landowners whose agricultural lands have been acquired by the government in Haryana, an Income Tax Tribunal has ruled that the annuity paid to the farmers is to be considered part of the compensation and no income tax would be payable on it.

The Income Tax Tribunal comprising Anubhav Sharma, Judicial Member and Anil Chaturvedi, Accountant Member held that the findings of the Income Tax authorities in treating annuity differently from the compensation paid for the acquisition of land were erroneous.

The Tribunal was hearing an appeal filed by a landowner Sant Singh Makkar, a resident of Sector 14, Hisar, against the order passed by the Income Tax authorities of that town.

The appellant had sold his land for which he had received a compensation of Rs 60 lakh for land acquired at Chikan in Hisar, Rs 22.50 lakh for land acquired at Agroha in Hisar and Rs 1.13 crore for land acquired at Bhavdin (Sirsa).

The appellant's land had also been acquired by the Haryana Urban Development Authority for which he had received Rs 5.01 crore as compensation and Rs. 1.19 crore as interest thereon.

Besides this, the appellant also received Rs 7.12 lakh as annuity from the state government in accordance with the Right to Fair Compensation and Transparency in

Land Acquisition, Rehabilitation and Resettlement Act, 2013 (also referred to as R&R Act).

The appellant sought an exemption of Income Tax on this amount, but this was rejected by the Income Tax authorities who added this amount to the taxable income of the assessee.

Aggrieved by the decision of the Income Tax authorities, the appellant filed an appeal before the Income Tax Tribunal in Delhi.

While allowing the appeal, Judicial Member Anubhav Sharma and

Accountant Member Anil Chaturvedi said that the provisions of the R&R Act provide a choice between annuity and employment and the Act also provides for the minimum annuity to be paid.

"The form of award mentioned in the Act not only includes the market value of the land but also rehabilitation and resettlement entitlements allowed to the landowners arising out of the social impact assessment and study of the prospective acquisition of the land," the Tribunal said in its order while allowing the appeal.