New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (8) TMI 164 - GUJARAT HIGH COURT

2016 (8) TMI 164 - GUJARAT HIGH COURT - TMI - TDS on Payment of compensation on acquisition of certain immovable property - applicability of section 194LA qua the compensation for the buildings - Held that:- Section 194LA applies when the compensation for acquisition of immovable property is being disbursed. Term 'immovable property' has been explained in clause(ii) of the Explanation to section 194LA as to mean any land (other than agricultural land) or any building or part of a building. If th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ion would determine the market value of the land and in cases where such land also has fruit bearing trees, would separately compensate for loss of such trees. In view of such factors, we do not seen any applicability of section 194LA for compensation to the trees. - Coming to controversy regarding the compensation for buildings, at the outset, we are somewhat surprised by the observations of the Tribunal that the State Government had determined a uniform rate for the land under acquisition .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

erial suggesting any adjustment on part of the State Government in determining the market value of the land. We do not find on what basis the Tribunal was prompted to make such observations. In any case, being dehors the evidence on record, we discard such conclusion of the Tribunal. - What therefore, emerges from the record is that the Land Acquisition Officer bifurcated his award by awarding separate compensation for the land, for the building and for the trees. The compensation for the bu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the farmers who were cultivating the land or that they were in the nature of godown for storing the agricultural implements or agricultural produce. Even if therefore, the lands were in the nature of agricultural lands, for the purpose of deducting tax under section 194LA of the Act, the question of deducting tax on the compensation for buildings would certainly arise. The buildings do not form part of the agricultural lands or at any rate have not been shown to be in the nature of small farm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

R : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The Revenue is in appeal against the judgement of the Income Tax Appellate Tribunal ( the Tribunal for short) dated 18.8.2010. While admitting the appeal, following substantial questions of law were framed : (A) Whether the Tribunal below committed substantial error of law in holding that the land in question was an agricultural land by totally misinterpreting the provisions contained in Section 194LA of the Income Tax Act including the explanation give .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

irement of depositing tax at source under section 194LA of the Income Tax Act, 1961 ( the Act for short) arose in the backdrop of land acquisition proceedings instituted by the State Government for acquiring certain parcels of lands for and on behalf of M/s. Essar Steels Ltd., a public limited company. The Special Land Acquisition Officer passed a common judgement and separate awards concerning different landowners whose lands were under acquisition. In one such award dated 21.1.2008, he awarded .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

294/- towards compensation for land, ₹ 24,56,56,141/- towards compensation for buildings and ₹ 55,68,700/- towards compensation for trees. On such compensation, the Land Acquisition Officer awarded 30% solatium, additional compensation at the rate of 12% under section 23(1A) and awarded total compensation of ₹ 92,16,11,136/- . Likewise, for another block of lands, the Land Acquisition Officer had awarded total compensation of ₹ 56,27,55,035/- . 4. According to the Revenue .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

der section 201 of the Act. 5. The Assessing Officer passed an order dated 29.1.2009 in which he held that the assessee, though required, had failed to deduct tax under section 194LA of the Act. He was therefore, to be treated as an assessee in default. He was therefore, required to pay an amount of ₹ 8,42,85,887/- which was computed as under : i) Amount paid for acquisition a) Land Rs.36,09,43,438/- b) Construction, Trees etc. Rs.38,29,74,373/- Total payment Rs.74,39,17,811/- Details of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

abour and skill for the purpose of cultivation or for keeping it in a cultivable state. So far as compensation for buildings is concerned, he was of the opinion that the buildings were for the purpose of residence of farmers and compensation for such buildings would be chargeable to tax. 7. The assessee carried the matter in appeal and argued that the lands were agricultural lands so shown in the revenue records. The compensation was worked out on such basis. There was nothing on record to sugge .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s. There is no irrigation facility in any of the lands and only Kharif crops would grow. Of the total land, portion of land giving good yield is very small. On the basis of the contents of the said letter of the District Agricultural Officer, the CIT (Appeals) confirmed the view of the Assessing Officer holding that the lands in question cannot be stated to be agricultural lands and therefore, not excluded from the regime of deduction of tax under section 194LA of the Act. 9. The assessee carrie .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that the compensation was paid by the Land Acquisition Officer for the lands along with the houses as a composite asset and houses cannot be separated from the lands, which was agricultural land. The Tribunal further observed that : 29.5 We observe from the part of compensation paid that the State Government has determined a uniform rate to every chunk of land so acquired which in fact could not be a market reality, therefore, farmers' houses standing on the land which could fetch a higher p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

committed a serious error in ignoring the fact that the Assessing Officer had carried out the detail inquiry about the nature of the land and come to specific conclusion that the lands were not possible of any cultivation. These lands were therefore, not agricultural lands. 2) The Tribunal placed too much reliance on the fact that the lands were shown as agricultural lands in the revenue records. 3) So far as compensation for the trees is concerned, the same would not form part of the compensati .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

20 ITR 43(SC). 12. On the other hand, learned counsel Shri Soparkar represented the respondent Special Land Acquisition Officer and raised the following contentions : 1) The lands were shown as agricultural lands in the revenue records and that is how the compensation was awarded by the Special Land Acquisition Officer. For the purpose of deducting tax at source, these were sufficient indications that the lands were agricultural lands. It is always open for the Revenue to make a detailed inquiry .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pensation thereof, since it does not form part of immovable property as defined in the said section. If the trees are seen as forming part of the land under acquisition, the land itself being an agricultural land, compensation for the trees would receive the same treatment. 4) Insofar as the compensation for the buildings is concerned, the counsel submitted that the buildings were erected by the farmers for their residence or for carrying out agricultural operations. The compensation for the bui .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ompulsory 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ay reproduce the relevant portion thereof : (14) "capital asset" means xxxx [(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, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand; or [(b) in any area within the distance, measured aeriall .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pality or cantonment board referred to in item (a) and which has a population of more than ten lakh. Explanation-For the purposes of this subclause, population' means the population according to the last preceding census of which the relevant figures have been published before the first day of the previous year]] 15. As is well known section 201 of the Act provides for consequences for failure to deduct tax at source. 16. Section 194LA thus casts a duty on a person responsible for paying com .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the explanation the agricultural land means agricultural land in India including land situated in any area referred to in clauses (a) and (b) of subclause (iii) of clause (14) of section 2. Thus any agricultural land situated in India would by virtue of this explanation be treated as an agricultural land for the purpose of section 194LA, even if it happens to be one referred to in clauses(a) and (b) of subclause( iii) of clause (14) of section 2 and consequently any compensation for acquisiti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mtrs. Kharaba lands or waste lands were awarded compensation at the rate of ₹ 1 per Are. Perusal of these awards would show that major portion perhaps more than 95% of the land area was treated as non irrigated Jirayat land. A small portion of certain survey numbers formed as Kharaba land. 18. The fact that these lands were shown as agricultural lands in the revenue records is not in dispute. The fact that the Land Acquisition Officer awarded compensation treating such lands as agricultur .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

his Court in case of Madhabhai H. Patel(supra). In the said case, the question whether the land was agricultural land or not arose in the background of the provision of capital gain upon sale of land. The Court after referring to various tests laid down in case of Commissioner of Income tax v. Siddharth J Desai reported in (1983) 139 ITR 628 (Guj), observed as under : 13. Even in that decision, this court has again emphasised that if the land is classified in the revenue records as agricultural .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and in the revenue records and if till the date of its sale it is used and exploited as agricultural land, and if the owner of the land had not taken any step, which would indicate his intention to exploit the land thereafter as nonagricultural land, then such a piece of land will have to be regarded as agricultural even though it is included within the municipal limits or it is sold on a per square yard basis and not acreage basis. The purpose for which such a land is sold, though not relevant, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tivated till the year 1967-68. The land was cultivated personally by the assessee. The said land belonged to the family and he got it by way of inheritance and not by way of purchase from some other party. There is no material which discloses that attempt was made by the assessee either to purchase or sell any other land in the past. He had not, at any point of time, applied for permission to use the land for nonagricultural purposes. All these factors have been taken into consideration along wi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e agreement dated December 18, 1963, it is in terms stated that the assessee was selling the land as agricultural land only and, therefore, was not going to sign any application or plan for a nonagricultural use of the said land. There is no material to show that the assessee had taken any part either in getting the plots subdivided into subplots, or in getting the plans prepared and passed for nonagricultural use. All those steps were taken by the purchaser of the land and not by the assessee. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Revenue that the Tribunal committed an error in holding that the land in question was agricultural land. In this view of the matter, we answer the question in the affirmative, that is, against the Revenue and in favour of the assessee. No order as to costs. 20. The Supreme Court in case of Gemini Pictures Circuit Private Ltd. (supra) observed that each case would depend on its peculiar facts and no two cases would be identical. The tests evolved by the Courts are in the nature of guidelines and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ent had taken place in the vicinity of land, was held not to militate against the fact that it was agricultural land. 21. Thus the fact that a particular land is treated as an agricultural land in the revenue records and so treated since long and continues to invite land revenue seems to be strong prima facie factors to suggest that the land was agricultural land. The Courts have ofcourse held that this would be a rebuttal presumption and if in a given case, it is shown that the land was never p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fore the Special Land Acquisition officer at that stage is to ascertain the market value of the land under acquisition as on the relevant date i.e. date of publication of section 4 notification. Quite apart from the very character of the land being agricultural or otherwise, range of other factors would be relevant for such purpose including the non agricultural use potential of the land. On the other hand, the applicability of section 194LA of the Act would depend on whether the compensation wh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e, did the Assessing Officer have sufficient materials to ignore the Government land records in which the land is shown as an agricultural land on which the owners continue to pay the land revenue year after year. 24. In this context, we have noticed that the Revenue authority placed heavy reliance on two factors, One was the personal visit by the Assessing Officer and the other was the certificate issued by the District Agricultural Officer dated 16.6.2004. The visit, as correctly pointed out b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

certificate of the Agricultural Officer was also general in nature and did not pinpoint whether and what portion of the land was totally uncultivable. The award does segregate the Kharaba land for compensation at a much lower rate of ₹ 1 per Are as against the Jirayat land which were compensated at the rate of ₹ 300 per sq. mtrs. The observations of the Assessing Officer that there was no facility of irrigation and that part of the land, suffered from ingress of saline water, would .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rees, we notice that total compensation of ₹ 55.68 lacs was paid under the award dated 21.1.2008 against the compensation for land at ₹ 36.95 crores. Similar figures appear in other award also. Section 194LA applies when the compensation for acquisition of immovable property is being disbursed. Term 'immovable property' has been explained in clause(ii) of the Explanation to section 194LA as to mean any land (other than agricultural land) or any building or part of a building. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pensation would determine the market value of the land and in cases where such land also has fruit bearing trees, would separately compensate for loss of such trees. In view of such factors, we do not seen any applicability of section 194LA for compensation to the trees. 27. Coming to the last element of controversy regarding the compensation for buildings, at the outset, we are somewhat surprised by the observations of the Tribunal that the State Government had determined a uniform rate for the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

other contemporaneous material suggesting any adjustment on part of the State Government in determining the market value of the land. We do not find on what basis the Tribunal was prompted to make such observations. In any case, being dehors the evidence on record, we discard such conclusion of the Tribunal. 29. What therefore, emerges from the record is that the Land Acquisition Officer bifurcated his award by awarding separate compensation for the land, for the building and for the trees. The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version