Dated This The 9[Th] Day Of September, 2015 v. Income Tax Officer And Another

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR WEDNESDAY, THE 9TH DAY OF SEPTEMBER 2015/18TH BHADRA, 1937 PETITIONER: -------------------- WP(C).No. 21478 of 2015 (H) ---------------------------- KOCHI METRO RAIL LTD. , 8TH FLOOR, REVENUE TOWER, PARK AVENUE, ERNAKULAM, PIN - 682 011, REPRESENTED BY ITS DIRECTOR (PROJECTS) SHRI.MAHESH KUMAR. BY ADVS.SRI.V.M.KURIAN SRI.MATHEW B. KURIAN SRI.K.T.THOMAS SRI.ISAC T.PAUL RESPONDENT(S): -------------------------- 1. UNION OF INDIA, NIRMAN BHAVAN, NEW DELHI, PIN - 110 011, RPERESENTED BY SECRETARY, MINISTRY OF URBAN DEVELOPMENT. 2. STATE OF KERALA, SECRETAIRAT, M.G.ROAD, THIRUVANANTHAPURAM - 695 001. 3. THE DISTRICT COLLECTOR, CIVIL STATION, KAKKANAD, ERNAKULAM DISTRICT - 682 030. 4. THE COMMISSIONER OF INCOME TAX, CENTRAL REVENUE BUILDING, I.S PRESS ROAD, ERNAKULAM - 682 018. ERNAKULAM - 682 018. R1 BY ADV. SRI.N.NAGARESH, ASSISTANT SOLICITOR GENERAL R2 & R3 BY GOVERNMENT PLEADER SRI.LIJU V.STEPHEN R4 BY SRI.JOSE JOSEPH, SC, BY ADV. SRI.CHRISTOPHER ABRAHAM BY ADV. SRI.K.M.V.PANDALAI THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 09-09-2015, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 21478 of 2015 (H) --------------------------------------- APPENDIX PETITIONER(S)' EXHIBITS: ------------------------------------- P1 - TRUE PHOTOCOPY OF THE MEMORANDUM OF UNDERSTANDING EXECUTED BETWEEN THE PEITIONER AND RESPONDENTS 1 AND 2 ON 04.11.13.BETWEEN THE PEITIONER AND RESPONDENTS 1 AND 2 ON 04.11.13. P2 - TRUE PHOTOCOPY OF THE GO(MS) NO. 35/2011/TRAN DT. 04.7.11 ISSUED BY THE 2ND RESPONDENT IN CONNECTION WITH CONSTITUTION OF THE LAND ACQUISITION UNIT.THE 2ND RESPONDENT IN CONNECTION WITH CONSTITUTION OF THE LAND ACQUISITION UNIT. P3 - TRUE PHOTOCOPY OF THE G.O(RT) NO. 621/13/RD DT. 04.2.13 ISSUED BY THE 2ND RESPONDENT IN CONNECTION WITH CONSTITUTION OF THE LAND ACQUISITION UNIT.THE 2ND RESPONDENT IN CONNECTION WITH CONSTITUTION OF THE LAND ACQUISITION UNIT. P4 - TRUE PHOTOCOPY OF GO(RT) NO. 1806/14/RD DT. 06.5.14 ISSUED BY THE 2ND RESPONDENT.2ND RESPONDENT. P5 - TRUE PHOTOCOPY OF THE GO(RT) NO. 2085/14/RD DT. 22.5.14 ISSUED BY THE 2ND RESPONDENT.THE 2ND RESPONDENT. P6 - TRUE PHOTOCOPY OF THE CONSOLIDATED STATEMENT RELATING TO COMPENSATION FOR LAND ACQUISITION FOR THE KOCHI METRO RAIL PROJECT.COMPENSATION FOR LAND ACQUISITION FOR THE KOCHI METRO RAIL PROJECT. P7 - TRUE PHOTOCOPY OF THE AGREEMENT DT. 21.8.14 ENTERED INTO BETWEEN THE 2ND RESPONDENT ANDTHE LAND OWNER.BETWEEN THE 2ND RESPONDENT ANDTHE LAND OWNER. P8 - TRUE PHOTOCOPY OF THE LETTER DT. 05.6.15 ISSUED BY A LANDOWNER TOTHE PETITIONER.THE PETITIONER. P9 - TRUE PHOTOCOPY OF THE LETTER DT. 05.6.15 ISSUED BY A LANDOWNER TOTHE PETITIONER.THE PETITIONER. P10 - TRUE PHOTOCOPY OF THE LETTER DT. 06.6.15 ISSUED BY THE A LANDOWNER TO THE PETITIONER.LANDOWNER TO THE PETITIONER. RESPONDENTS' ANNEXURES: NIL. //TRUE COPY// P.S. TO JUDGE A.K.JAYASANKARAN NAMBIAR, J. =========================================== W.P.(C). No. 21478 of 2015 =====================================================Dated this the 9[th] day of September, 2015 JUDGMENT P8 - TRUE PHOTOCOPY OF THE LETTER DT. 05.6.15 ISSUED BY A LANDOWNER TOTHE PETITIONER.THE PETITIONER. P9 - TRUE PHOTOCOPY OF THE LETTER DT. 05.6.15 ISSUED BY A LANDOWNER TOTHE PETITIONER.THE PETITIONER. P10 - TRUE PHOTOCOPY OF THE LETTER DT. 06.6.15 ISSUED BY THE A LANDOWNER TO THE PETITIONER.LANDOWNER TO THE PETITIONER. RESPONDENTS' ANNEXURES: NIL. //TRUE COPY// P.S. TO JUDGE A.K.JAYASANKARAN NAMBIAR, J. =========================================== W.P.(C). No. 21478 of 2015 =====================================================Dated this the 9[th] day of September, 2015 JUDGMENT The petitioner is a company, incorporated under theCompanies Act, which has been constituted with the objective ofbuilding a metro rail system for the city of Kochi. The grievance ofthe petitioner in the writ petition is with regard to its liability todeduct tax at source from payments of compensation amounts tothe persons from whom land was acquired in connection with theproject. It is the case of the petitioner that, as per the provisions ofRight to Fair Compensation and Transparency in Land Acquisition,Rehabilitation and Resettlement Act, 2013 (hereinafter referred toas the “2013 Act”), and in particular Section 96 therein, there is anexemption envisaged from income tax in respect of amounts by wayof compensation received by landowners. It is his contentiontherefore, that in the light of the said provision under the 2013 Act,the provisions of the Income Tax Act, that govern deduction of taxat source, from payments made to the persons from whom landwas acquired, will have to be read down so as to exempt thepetitioner from deducting any tax at source from compensationamounts paid to such persons. The petitioner would place relianceon the decision of the Hon'ble High Court of Karnataka, inHyderabad Industries Ltd.v. Income Tax Officer and another W.P.(C). No. 21478 of 2015 [(1991) 95 CTR(Kar) 164], where the provisions of Section 195of the Income Tax Act were held as not requiring a person todeduct tax at source in respect of income that was exempt fromtaxation under the Income Tax Act. He would also place relianceon the decision of the Hon'ble High Court of Gauhati in SingKillingv. Income Tax Officer and Others[(2002) 175 CTR (Gau)668] which was rendered in the context of Section 206C of theIncome Tax Act. In the said decision, it was clarified, in thecontext of Section 206C of the Act that, if the income itself isexempted, any deduction/collection on account of Income Tax atsource, would be beyond the powers conferred by the provisions ofthe Act. It is on the basis of the aforesaid contentions that thepetitioner would pray for a declaration that, the benefit ofexemption from income tax provided under Section 96 of the 2013Act would be available to compensation amounts paid by thepetitioner in connection with land acquisition for the Kochi MetroRail Project. 2.A counter affidavit has been filed by the 4[th] respondent,wherein the averments in the writ petition are denied. It is alsostated, relying on the decision of this Court in 2008 (4) KLT 782 W.P.(C). No. 21478 of 2015 that in cases where there is no compulsory acquisition of landunder the Land Acquisition Act, 1894, even if the provision ofSection 194LA are not applicable, the provisions of Section 194IAof the Income Tax Act would apply to govern deduction of tax atsource from payments made to the persons from whom lands wereacquired. It is the case of the respondents that, in the instant casethere was no acquisition in terms of the Land Acquisition Act andtherefore, Section 96 of the 2013 Act, on which the petitionerplaces reliance may not strictly apply. 3.I have heard the learned counsel appearing for thepetitioner as also the learned Standing Counsel appearing for the4[th] respondent. W.P.(C). No. 21478 of 2015 that in cases where there is no compulsory acquisition of landunder the Land Acquisition Act, 1894, even if the provision ofSection 194LA are not applicable, the provisions of Section 194IAof the Income Tax Act would apply to govern deduction of tax atsource from payments made to the persons from whom lands wereacquired. It is the case of the respondents that, in the instant casethere was no acquisition in terms of the Land Acquisition Act andtherefore, Section 96 of the 2013 Act, on which the petitionerplaces reliance may not strictly apply. 3.I have heard the learned counsel appearing for thepetitioner as also the learned Standing Counsel appearing for the4[th] respondent. On a consideration of the facts and circumstances of the caseand the submissions made across the bar, I find that the provisionsunder the Income Tax Act, that govern tax deduction at source inconnection with payment of amounts as compensation foracquisition of land, is governed either by the provisions Section194LA or in other cases by Section 194IA. In both theseprovisions, the liability to deduct tax at source is on any person W.P.(C). No. 21478 of 2015 responsibleforpayinganysumbywayofconsideration/compensation to another, in connection withacquisition/transfer of immovable property. It is significant to notethat, in neither of these provisions is the mandate of deduction oftax at source qualified by the requirement that the amount paid byway of compensation/consideration should constitute an income ofthe recepient under the Income Tax Act. I am therefore, notimpressed with the submission of counsel for the petitioner thatthe provisions of Section 96 of the 2013 Act would come to his aidin exempting him from the requirement of deducting tax at sourcefrom compensation/consideration amounts paid to persons, fromwhom immovable property was either acquired or obtainedthrough negotiated purchase. The petitioner, as a personresponsible for making payments, contemplated under eitherSection 194IA or under Section 194LA of the Income Tax Act,would be obliged to deduct tax at source in accordance with thesaid provisions under the Income Tax Act. The decisions reliedupon by the petitioner, as noticed above, were rendered in thecontext of provisions which were not similarly worded as Section194LA/Section 194IA, and hence cannot come to the aid of thepetitioner in this writ petition. The availability of the benefit of W.P.(C). No. 21478 of 2015 any provision exempting compensation amounts from the levy ofIncome Tax, is a matter that will have to be considered in theindividual assessments of the recepients of the said amounts. Thesame cannot have a bearing on the liability of the petitioner todeduct tax at source while making the payments so long as theprovisions of S. 194 LA and S.194 IA do not contemplate anexemption to the petitioner from discharging his obligation todeduct tax at source. The upshot of the above discussion is that theprayers sought for in the writ petition cannot be granted. The writpetition, therefore, fails and is accordingly dismissed. Sd/-A.K.JAYASANKARAN NAMBIAR JUDGE