Resolve I-T exemption disparity for land compensation: High Court

The Karnataka High Court has urged the Central government to resolve the issue of income tax exemption disparity for land compensation under various laws, excluding the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

“One cannot turn a Nelson’s eye to the apparent hostile discrimination of persons losing land in acquisition process under statutes other than the 2013 Act,” the court noted, highlighting the beneficial provisions for land-losers under the 2013 Act, which remain inaccessible to those affected by state legislation.

Justices Krishna S Dixit and Vijaykumar A Patil, forming the Division Bench, made these statements whilst sustaining an Income Tax Department appeal against a single judge’s ruling that had granted tax exemption to individuals whose land was acquired under State laws.

The Bench clarified that tax exemption is strictly limited to compensation under the 2013 Act, as specified by Parliament’s legislation.

The Bench acknowledged significant discontent among individuals who lost land under other statutes, not only regarding the absence of tax exemption but also concerning various enhanced compensation benefits available under the 2013 Act.

The court noted that “The benefit of package availing under the 2013 Act are pretty attractive compared to those contemplated under State legislations. Also, the amount of compensation to land-losers is much higher [under the 2013 Act].”

The Bench concluded by stating, “... ordinarily, land-losers in acquisition process, whichever be the statute, do constitute one homogenous class, at least viewed from the angle of recompense.

It is high time that the Central government addresses this aspect of the matter and assuages the grievance of land-losing farmers, consistent with the policy content and laudable intent enacted in Section 96 of the new Act. Much is not necessary to specify.” The court directed its registry to forward the judgement copies to the Ministry of Finance and the Law Commission of India.