TMI Blog2021 (12) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... ved at under negotiated settlements during acquisition of property? - HELD THAT:- Acquisition of property becomes compulsory in nature whenever and wherever property is obtained by the government, pursuant to proceedings initiated for land acquisition under the relevant land acquisition laws. Negotiated settlements arrived at with government or governmental bodies for transfer of property, after proceedings for acquisition have been initiated remain in the realm of compulsory acquisition. The decision to part with the property, which is the subject matter of a negotiated settlement, does not originate from any exercise of a free mind of the owner of the property. It stems from the compulsion imposed by proceedings for acquisition. The trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MT.M.ISHA, ADV SRI.K.R.VINOD, ADV SELMA JANNATH, SRI.R.SANJITH, MS.JENCY SUSAN JOSE, SMT.M.S.LETHA AND SRI.V.SRI NATH JUDGMENT Bechu Kurian Thomas, J. The issue that arises for consideration in this batch of writ appeals relate to the question whether tax is liable to be deducted at source for amounts paid as compensation arrived at under negotiated settlements during acquisition of property. The learned Single Judge held that tax cannot be deducted at source under Section 194LA of the Income Tax Act, 1963 (for short, 'the Act') in respect of compensation paid to the land owners which was arrived at based on negotiated settlements. 2. The above question springs from proceedings for acquisition of land initiated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants. 5. Before we consider the aforesaid submission of the learned counsel for the appellant, we wish to mention that the impugned judgment was rendered on 03.06.2014 and even though the appeal was admitted in 2014, there was no stay of operation of the judgment and accordingly the compensation amounts would have already been disbursed to the writ petitioners, in tune with the impugned judgment. 6. Be that as it may, Section 194LA was inserted in the statute book by Finance Act 2004 With effect from 01-10-2004. The section reads as below: S.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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... movable property other than agricultural land becomes payable, the person responsible for paying such compensation or consideration shall be bound to deduct ten percent of such sum as income tax at the time of payment. The proviso to the section, as it then stood, further stipulated that the deduction need not be made, if the aggregate amount of such payment to the person during a financial year, does not exceed two hundred thousand rupees. It is obvious that the emphasis in the section is on the words compulsory acquisition . If the nature of acquisition is compulsory, then, irrespective of whether the amounts are paid as compensation or as consideration, the deduction becomes mandatory, provided the other conditions are applicable. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision which was relied upon by the learned Single Judge i.e. Info Park v. Asst. Commissioner of Income Tax [2008 (4) KLT 782] was overruled by the Supreme Court in the aforesaid case. 10. For a better comprehension the observations of the Supreme Court in Balakrishnan's case (supra) are extracted as below : 7. It is in the aforesaid factual backdrop, this Court is to determine as to whether it can be treated that the land of the appellant was compulsorily acquired. From the facts mentioned above, it becomes apparent that the acquisition process was initiated by invoking the provisions of the LA Act by the State Government. For this purpose, not only Notification under Section 4 was issued, it was followed by declaration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant had to take. 8. In our view, insofar as acquisition of the land is concerned, the same was compulsorily acquired as the entire procedure under the LA Act was followed. The settlement took place only qua the amount of the compensation which was to be received by the appellant for the land which had been acquired. It goes without saying that had steps not been taken by the Government under Sections 4 and 6 followed by award under Section 9 of the LA Act, the appellant would not have agreed to divest the land belonging to him to Techno Park. He was compelled to do so because of the compulsory acquisition and to avoid litigation entered into negotiations and settled the final compensation. Merely because the compensation amount is agr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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