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TMI Blog2008 (6) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner is Mysore Urban Development Authority, a statutory authority created under section 3 of the Karnataka Urban Development Authorities Act, 1987. 4. The authority in the normal course of its functioning does acquire lands belonging to private persons and other persons and develops the same and distribute residential plots by forming layouts either for the benefit of residence or even for forming commercial complexes and other public amenities. 5. It appears the petitioner-authority had distributed compensation payment in favour of the owners who had owned certain agricultural lands which had been acquired by the authority to the tune of Rs. 3,67,94,840. The Income-tax Authorities were of the view that for the period 1-10-2004 to 5-1-2006 while this was the quantum of compensation paid to owners whose property had been acquired by the petitioner-authority, they had not deducted 10 per cent of this amount and had not remitted the same to the credit of the income-tax authorities and therefore the petitioner-authority had been called upon not only to remit this amount but also with interest of Rs. 5,88,717 for non-compliance with the statutory provisions of section 194LA of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount and remit it to the income-tax authorities. 8. The Income-tax Officer who had issued notice, heard the representative of the authority who had objected for the proposition and proceeded to pass the order dated 30-1-2006 (copy at Annexure-D) holding that the petitioner-authority was not only liable to make payment of the amount as indicated in the earlier part of this order but would also be liable for levy of penalty under section 271(1)(c) of the Act which is equal to the amount of tax ought to have been deducted. 9. The petitioner-authority after being threatened not only with the demand but also the proposed further penal action, it appears preferred a revision petition under section 264 before the respondent No. 2 - Commissioner of Income-tax. 10. The authority had also sought for stay of the enforcement of the order and further proceedings before the Commissioner. The Commissioner though was seized with the revision petition, nevertheless, appears to have not ordered stay of further proceedings and it is at this stage the petitioner-authority has approached this court by filing this revision petition. 11. This Court admitted this petition on 17-8-2006 and granted in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of agricultural land or it could be other lands also and in the absence of information as to whether the entire compensation is in respect of agricultural land or even other lands, the matter cannot be examined by this court; that if the land is converted land, particularly, being within the urban agglomeration, then also provisions of section 194LA are attracted and therefore there is nothing for this court to interfere in the matter. 17. While normally this court will not examine a matter which is pending or seized before any other authority and would direct the aggrieved person to abide by the proceedings by the authority which the petitioner himself had invoked, I find in the present case, there is no other question involved except interpretation of provisions of section 194LA of the Act or to be precise, understanding of the provisions of section 194LA of the Act and therefore the writ petition is entertained as the officers under the Act have proceeded to invoke the power under section 194LA of the Act on an erroneous understanding of this section. 18. The very authority also has indicated that the compensation being paid is in respect of agricultural land acquir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbiguity 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. 22. 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. The definition of capital asset under section 2(14) of the Act, which reads as under: "(14) 'capital asset' means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include- (i )any stock-in-trade, consumable stores or raw materials hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of agricultural land. 23. The Legislature has taken care to levy tax on the income, which is other than agricultural income, knowing its legislative limitations and by seeking to rope in income attributable to transfer of asset with development potential, which is essentially not an income attributable to agricultural operations. This exercise does not in any way affect or control the provisions of section 194LA and more so when the very provision expressly seeks to retain agricultural land with or without urban potential to be as an agricultural land only and further treats it as not an immovable property. 24. 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 under section 271(1) of the Act. 25. 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 agai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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