In Brief
A farmer owning 27.70 acres of agricultural land in Kerala had it compulsorily acquired by the government under the Land Acquisition Act for development of Techno Park. Although the initial compensation was disputed and later agreed upon through negotiation at a higher amount (Rs. 38,42,489), the farmer claimed tax exemption under Section 10(37) of the Income Tax Act for income from compulsory acquisition. The income tax department reopened the assessment, treating it as voluntary sale. The Supreme Court held that compulsory acquisition retains its character even when compensation is agreed upon; the statutory acquisition procedure initiated by the government cannot be undone by subsequent negotiation. The exemption applies, and the reopening of assessment was quashed.
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