TMI Blog2008 (6) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... ot 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner-authority had been called upon not only to remit this amount but also with interest of ₹ 5,88,717 for non-compliance with the statutory provisions of section 194LA of the Act. 6. Section 194LA of the Income-tax Act, 1961, reads as under: 194LA. Payment of compensation on acquisition of certain immovable property. -Any person responsible for paying to a resident any sum, being in the nature of compensation or the enhanced compensation or the consideration or the enhanced consideration on account of compulsory acquisition, under any law for the time being in force, of any immovable property (other than agricultural land), shall, at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent of such sum as income-tax thereon: Provided that no deduction shall be made under this section where the amount of such payment or, as the case may be, the aggregate amount of such payments to a resident during the financial year does not exceed one hundred thousand rupees. Explanation.- For the purposes of this section, - ( i ) agricultural land means agricultural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less, 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 interim relief staying further proceedings and thereafter the respondents have entered appearance through standing counsel. 12. I have heard Sri P. S. Manjunath, learned counsel for the petitioner and Sri Aravind, learned counsel for the respondents. 13. While Sri P. S. Manjunath, learned counsel for the petitioner points out that a reading of section 194LA of the Act makes it very clear that compensation amount paid in respect of the agricultural land is not covered by the provisions of section 194LA of the Act; that the understanding of the Income-tax Officer to the contrary is in the teeth of the provisions; that the Income-tax Officer while passing the impugned order has necessarily sought to invoke the definition of capital asset as contained in section 2(14) of the Act, as in sub-clause ( iii ) of clause (14) of section 2, agricultural land in India excludes such agricultural land with urban potential for development, even for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 acquired by the development authority. There is no question of further examination of this aspect on the premise that it is either non-agricultural or land converted etc. 19. Insofar as the understanding of the provisions of section 194LA is concerned, I find that unlike many other sections under the Act, this section is fairly short and simple. It does not give scope for either ambiguity or interpretation. It has to be merely read and understood and nothing more. The caption to the section which reads as Payment of compensation on acquisition of certain immovable property is very indicative as to for what purpose the provision has been made. One should appreciate that the liability here is a artificial liability on the person distributing the compensation in respect of immovable property as in the hands of the recipient the compensation received may be capital gain which is income taxable under the Act and therefore the Legislature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 held for the purposes of his business or profession; ( ii )personal effects, that is to say, movable property (including wearing apparel and furniture, but excluding jewellery) held for personal use by the assessee or any member of his family dependent on him. Explanation. -For the purposes of this sub-clause, jewellery includes- ( a )ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stone, and whether or not worked or sewn into any wearing apparel; ( b )precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel; ( iii )agricultural land in India, not being land situate- ( a )in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, muni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sibility 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 against the complaining petitioner. 26. The understanding of the section 194LA of the Act is as indicated in this order. Notwithstanding the pendency of the revision petition, as the impugned order passed by the Income-tax Officer has to be examined only on the understanding of the provisions of section 194LA and on the understanding and as indicated in this order, the order cannot withstand scrutiny. The order of the Income-tax Officer at Annexure-A is quashed notwithstanding the pendency of the revision petition before the Commissioner. This order is passed as I find subjecting the petitioner to further proceedings by asking the petitioner to go before the Commissioner and await further examination of his revision petition is an avoidable hardship. 27. In the circumstances, this writ petition is allowed. The impugned order passed by the Income-tax Officer, W2(1)(TDS), Mysore bear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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