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2008 (6) TMI 583 - HC - Income TaxInterpretation of statutes - TDS u/s 194LA - interest levied for non-compliance - seeking to cover Payments made by way of compensation on acquisition of certain immovable property - Whether meaning of ‘agricultural land’ as found in the definition of ‘capital asset’ u/s 2(14) is imported for the purpose of section 194LA - non-remitting deduction at source at 10 per cent of the compensation distributed to the owners of agricultural land whose land had been acquired - petitioner-authority had distributed compensation payment in favour of the owners who had owned certain agricultural lands which had been acquired by the authority - HELD THAT:- A proper reading and understanding of section 194LA leaves one with no ambiguity or misunderstanding about the object and scope of this section. It is very clear that obligation cast on a person distributing compensation is only in respect of payment for immovable property. Such immovable property does not include agricultural land and such agricultural land may be located in any place including in an urban agglomeration and the meaning of ‘agricultural land’ as given in section 2(14) of the Act is not imported for the purpose of section 194LA of the Act. The authority functioning under the Act has obviously gone wrong by quoting artificial meaning of ‘agricultural land’ as contained in section 2(14) of the Act, defining capital asset. The definition of capital asset is given for the purpose of indicating that the transfer of capital asset if has resulted in some gain and becomes capital gain, it is an income taxable as income includes capital gains. When statutory provision is so very clear, it is rather surprising that the authority functioning under the Act has misread this provision and emphatically enforced the provision in a way not provided under the section itself and further threatened the petitioner with the possibility of mulcting with penalty u/s 271(1) of the Act. It is also surprising that the Commissioner before whom the revision petition was taken, could not see the scope content and meaning of section 194LA of the Act which is as clear as a day light and allowed further proceedings against the complaining petitioner. Therefore, this writ petition is allowed. The impugned order passed by the Income-tax Officer is hereby quashed in this petition itself and there is no further need for the petitioner to pursue the revision petition u/s 264 of the Act. Petitioner awarded cost of ₹ 10,000 against the respondents. Rule made absolute.
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