TMI Blog2011 (4) TMI 202X X X X Extracts X X X X X X X X Extracts X X X X ..... is not a decisive factor when the land itself is agricultural land though may not be used for agricultural purposes but unless and until the same is used for non-agricultural purposes it cannot be said that the land cannot be treated as agricultural land for the purposes of section 194LA - The SLAO has already specified certain lands which were non-agricultural land and therefore,do no find any reason to interfere with the order of the CIT(A) - Accordingly, the order of the CIT(A) is upheld. - 4174 (MUM.) OF 2009 - - - Dated:- 29-4-2011 - J. SUDHAKAR REDDY, VIJAY PAL RAO, JJ. Sanjiv Dutt for the Appellant. Vimal Punamiya for the Respondent. ORDER Vijay Pal Rao, Judicial Member. ‑ This appeal by the revenue is directed against the order, dated 15-4-2009 of CIT(A) for the assessment year 2005-06 arising from the order passed under section 201(1) and 201(1A) of the Income-tax Act, 1961 . 2. The revenue has raised the following grounds in this appeal: "1. On the facts and in the circumstances of the case, the ld. CIT(A), Thane, erred in holding provisions of section 194LA which are not attracted in this case by ignoring the material fact these ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the agricultural produce section it is shown as uncultivated but this does not change the nature of land as such. The AO did not accept the contention of the SLAO and observed that on verification of the 7/12 extract filed, it is cleared that the acquired land shown as PAD or OSHAD. Barron or Desolate and the acquisition of the said land shown in the column as land not available for cultivation. Therefore, the AO concluded that the land acquired is not agricultural land as per the definition of agricultural land under the Income-tax Act and clearly attracts the provisions of section 194LA of the Act. The AO held that the SLAO failed to deduct the tax of payment of compensation on compulsory acquisition. Accordingly, the AO treated the SLAO as assessee in default as per the provision of section 194LA read with section 201(1) in respect of the non-deduction of tax under section 201(1) at Rs. 1,85,25,861 and interest payable thereon under section 201(1A) at Rs. 58,16,468 total amounting to Rs. 2,43,42,329 vide order, dated 12-3-2008. 2.2 The SLAO challenged the said order before the CIT(A) who held that the assessee was correct in not deducting the tax at source on payment of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and is for non-agricultural purposes and the land was sold per sq.ft, the consideration of these factors are to be taken into account while deciding the issue of the nature of the land. The learned DR has also relied upon the decision of the Hon'ble Kerala High Court in the case of Nalini v. Dy. Collector, Land Acquisition [2007] 294 ITR 423, State of Kerala v. Mariyamma [2005] 144 Taxman 744 (Ker.) and submitted that the question whether the land acquired was agricultural land within the meaning of section 2 (14) (a)(b) of Income-tax Act and was not liable to TDS under section 194LA could be decided by the Income-tax Authorities and not by the LAND Acquisition Court and the remedy available with the party is either to approach the competent authority under section 197 or to pay tax and get it refunded . Thus, the learned DR has given more emphasis on the point that the question whether the land acquired was agricultural land and liable to deduct tax under section 194LA has to be deducted by the Revenue authority and not by SLAO. The learned DR has also submitted that the AO has pointed out the various discrepancy in the 7/12 extracts filed by the assessee filed before the CIT(A) w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being pointed out in the said letter, dated 13-3-2009. As the remark is not supported by evidence the same may be discarded as being factually incorrect. As far as the issue of acquired lands bearing the remarks of the same being either "PAD/OSAD" is concerned, it is submitted that the lands being notified for acquisition, the same were not used by the holders of the land in the year of acquisition for raising any agricultural crops and hence the revenue authorities have put the remark of said lands being "PAD or OSAD" i.e., fallow. 2.7 The learned AR further pointed out that any land which is an agricultural land does not automatically become a non-agricultural land if agricultural produce is not raised thereon. Unless specific permission as provided under sections 42 and 44 of the Maharashtra Land Revenue Code is received by the holder of the land from the collector, agricultural lands cannot be converted to non-agricultural use. 2.8 The learned AR submitted that the Assessing Officer has held that tax was required to be deducted from the consideration paid, for the only reason that agricultural operations may not have been carried out on these lands. The AO did so while con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant record. As far as the objection for admitting fresh evidence by the CIT(A) is concerned we note that the CIT(A) has given the opportunity to the AO of being heard and also forwarded the relevant record for his comments. The AO vide letter, dated 13-3-2009 submitted the report which been reproduced by the CIT(A) in paragraphs 3 and 5 of the impugned order. From the said report it is evident that the AO has taken into account 7/12 extract in respect of each transfer of land. Thus, in view of this fact that the AO was offered proper opportunity of hearing as well as to file written report which was considered by the learned CIT(A), the objection raised by the revenue that there is a violation of Rule 46A has no legs to stand. Accordingly, we reject the objection raised by the learned DR. 2.11 The second main objection raised by the learned DR is that since the land under acquisition was not cultivated and as per the 7/12 extract as well as the notification of acquisition, the land under acquisition was shown as Barron, desolate and not under cultivation. It is to be noted that these facts and factors are relevant only for the purpose of acquisition and determination of compensa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us factors whether the land is under cultivation or Barron/desolated, if the land is thickly habituated and constructed are relevant for the purpose of acquisition. Accordingly these are the various necessary factors have to be taken into account for acquisition of the land. These are categories of the agricultural land itself and does not change the nature and character of the agricultural land itself. The rate of compensation of the agricultural land also depend upon the various classes /categories of the agricultural land if the land is under cultivating, the compensation has to be determined by taking into consideration the land and loss of income of the owner. If the land is not under cultivation the rate of compensation would be without any income or loss of the owner. Moreover, when the land has been acquired as agricultural land and compensation is paid for the agricultural land then there is no scope for doubting the nature of land acquired by the authorities for the purpose of section 194LA. The Explanation provided under section 194LA clearly manifests that the definition under section 2(14) of the Act is not relevant because the land situated in the area as referred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other than agricultural land. 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 include capital gains" 2.14 As we understood that the definition under section 2(14) of the Act is for the purpose of taxing the capital gain on transfer of the land. Whereas the term use under section 194LA is only for the limit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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