Land initially purchased by assessee was a rural agricultural land and was thus was not a capital asset as per provision of section 2(14)(iii) till date of it being diverted into a non-agricultural land, capital gain accruing to assessee till date of diversion of land shall be exempt from tax. Tribunal held that compensation received on compulsory acquisition of rural agricultural land is not chargeable to tax and compensation received on compulsory acquisition of urban agricultural land is exempt from tax as per section 10(37) subject to conditions specified therein. (AY. 2014-15)
Krishna Mohan Choursiya. v. ITO (2022) 192 ITD 214 (Indore) (Trib.)
S. 10(37) : Capital gains-Agricultural land-With in specified urban limits-Rural agricultural land-Not converted in to non-agricultural-Capital gain is exempt-Income from transfer of agricultural land-Compulsory acquisition-Compensation received on compulsory acquisition of rural agricultural land is not chargeable to tax and compensation received on compulsory acquisition of urban agricultural land is exempt from tax Exempt from tax. [S. 2(14)(iii), 45]