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2016 (8) TMI 168 - PUNJAB AND HARYANA HIGH COURT

2016 (8) TMI 168 - PUNJAB AND HARYANA HIGH COURT - TMI - Land acquired being agriculture land - appellant’s case is that the lands acquired being agricultural lands were outside the ambit of section 194L and 194LA - revenue records not to be considered as additional evidence - Held that:- The appellant not having made an application for a certificate under section 197(1) of the Act cannot be precluded it from contending that it was not bound to deduct tax at source and to pay over the same in th .....

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id to the NRI land owners. The reply was also confined to NRIs under section 195 of the Act. No application was made under section 197 in respect of the residents of India. The order of the Tribunal, therefore, proceeds on a factually incorrect basis. - The decision of the Tribunal, therefore, rejecting the application for admission of additional evidence in the form of revenue records is incorrect and based on incorrect findings of law and of fact. Even assuming that the revenue records do .....

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not concern as to whether any agricultural activity is being carried on at the site or not. The Superintendent also expressly stated that no verification is required to be made or is actually made as to whether any agricultural activity is conducted on the land or not. The Assessing Officer held that in view of this evidence the appellant had not verified at the time of disbursement of compensation whether the land in question was actually being used for agricultural purposes or not. No inferenc .....

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er of the Income Tax Appellate Tribunal dismissing the appellant/assessee s appeal against the order of the Commissioner of Income Tax (Appeals) dated 30.11.2007 relating to the assessment year 2005-06. 2. Mr. Jhingan, the learned counsel appearing on behalf of the appellant pressed only question nos. (iii) and (iv) which in our view raise substantial questions of law. The appeal is, therefore, admitted on the following substantial questions of law:- (I) Whether in the facts and circumstances of .....

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ernment acquired about 170 acres of land for which the appellant had to make payment. Before making the payment, the appellant addressed a letter dated 17.01.2005 to the Commissioner of Income Tax enquiring about the rate at which the TDS was to be deducted in respect of the amounts to be paid to Non-Resident Indians. This letter is not annexed to the appeal. What is annexed is a letter dated 25.01.2005 addressed by the Income Tax Officer in reply to the petitioner s letter. The subject of the l .....

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this distinction later. 4. On 28.06.2005 Income Tax Officer conducted a survey during which the statements of the Patwari and the Superintendent, employees of the appellant, were recorded. It was found that the appellant had made payment towards compensation for acquisition of land at Rs. 66,05,507/- on which TDS of Rs. 6,88,874/- was to be deducted and paid under section 194- LA together with interest of Rs. 49,651/- under section 201(IA) aggregating to Rs. 7,38,525/-. It was also found that t .....

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any income derived from such land by- (i) agriculture; or (ii) the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market; or (iii) the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in paragraph (ii) of th .....

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lip;……………….. but does not include- (iii) agricultural land in India, not being land situate- …………… Payment of compensation on acquisition of certain immovable property. 194LA. 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 .....

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pees. Explanation.-For the purposes of this section,- (i) "agricultural land" means agricultural land in India including land situate in any area referred to in items (a) and (b) of sub-clause (iii) of clause (14) of section 2; (ii) "immovable property" means any land (other than agricultural land) or any building or part of a building. 6. The Income Tax Officer held that section 194LA was applicable to the appellant s case and that there was non-compliance of the section on .....

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ecords that the appellant had made an application under Rule 46A of the Income Tax Rules, 1962 to produce additional documentary evidence, namely, revenue records to establish that the lands were agricultural lands. This application was rejected on the ground that the Patwari and the Superintendent who were the appellant s employees had in the enquiries made statements contrary to the appellant s case and that the appellant had not produced any material to rebut the same. It was further found th .....

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essing Officer had only relied upon the statement of the Patwari which was recorded behind its back without providing it a reasonable opportunity to cross-examine him. It was contended that in any event the statement made by the Patwari did not prove that the land was not agricultural land. It was further contended that the provisions of section 194LA were not applicable. The appellant made an application even before the Tribunal to admit the revenue records as additional evidence. This applicat .....

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determined with reference to definition given in section 2(14)(iii)(a) and (b) of the Act and not with reference to the tenure of the land shown in the land revenue records. A combined reading of section 194LA and the definition of agricultural land given under section 2(14)(iii)(a) and (b) makes it abundantly clear that the competent authority to decide whether any compensation awarded is eligible to income tax is the Income Tax Officer. So it is clear that remedy available to the party is eith .....

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ame is rejected. 9. The Tribunal proceeds on the incorrect basis that the words agricultural land are to be determined with reference to the definition in section 2(14). The Income Tax Act, 1961 does not define the words agricultural land . Section 2(1A) defines agricultural income. The section uses the word agricultural . For instance, sub section 2(1A)(a) defines agricultural income to mean any rent or revenue derived from the land used for agricultural purposes. Sub section (1A)(b) defines ag .....

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rence to the definition in section 2(14) and not with reference to the tenure of the land shown in the land revenue records is, therefore, erroneous. There is nothing in the order that supports the observation that these words are defined in section 2(14). 10. Absent any definition of the word agriculture and the words agricultural purposes , they must be considered in the general sense in which they are understood in common parlance. The above judgment supports this view. The Income Tax Officer .....

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der section 197 of the Act or to pay income tax and get it refunded is also erroneous. Section 197 of the Act reads as under:- Certificate for deduction at lower rate: 197. (1) Subject to rules made under sub-section (2A), where, in the case of any income of any person or sum payable to any person, income-tax is required to be deducted at the time of credit or, as the case may be, at the time of payment at the rates in force under the provisions of sections…………&hellip .....

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ll, until such certificate is cancelled by the Assessing Officer, deduct income-tax at the rates specified in such certificate or deduct no tax, as the case may be. (2A) The Board may, having regard to the convenience of assessees and the interests of revenue, by notification in the Official Gazette, make rules specifying the cases in which, and the circumstances under which, an application may be made for the grant of a certificate under sub-section (1) and the conditions subject to which such .....

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certificate that his total income justifies no deduction of income tax. If such an application is made, the Assessing Officer is bound to give him such certificate as may be appropriate provided of course that he is satisfied that the assessee is entitled to it. This is clear firstly from sub section (1) of section 197 of the Act which provides that the Assessing Officer shall on an application made by the assessee in this behalf give to him such certificate as may be appropriate. The obligatio .....

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aising such a contention in the assessment proceedings. 13. Section 197 is for the benefit of the assessee. This is clear from sub section (2) which entitles an assessee to whom such a certificate is given under sub section (1) to deduct income tax at the rates specified in the said certificate or to deduct no tax as the case may be. It does not, however, compel the assessee to do so. Nor does it provide any adverse consequences if the assessee does not apply for a certificate. 14. Sub section ( .....

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and in the appeals before the CIT(Appeals) and the Tribunal. 16. The Tribunal further held that the assessee had made an application under section 197 and that he got a certificate from the Assessing Officer under that section vide a letter dated 25.01.2005. We had earlier referred to this letter and mentioned that it was important. What is important is that the letter was in response to an application under section 197 but only in relation to the compensation to be paid to the NRI land owners. .....

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e appellant s case that the land was agricultural land, it cannot by any stretch of imagination be held that they are irrelevant. The revenue records are relevant to the issue as to whether the lands referred to therein are agricultural lands or not. 18. Mr. Sethi invited our attention to the assessment order which refers to the statements made by the appellant s employees, namely, the Patwari and the Superintendent. Their evidence is of no assistance to the issue as to whether the lands were ag .....

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