Taxc/36/2013 Of Income Tax Officer Tds Raipur v. Naya Raipur Deve. Autho

RHITFHATTIAHTIL CQRAM:HON'BLE SHRI [ SINGH;][ C.J.]‘ HON'BLE SHRI GOUTAM BHADURI, J. TxNoof1income [Tax][ Officer](TDS)[Raipur][ CG.],wNaya Ra'lpur[Development][ Authority] Anpelw mpmldemt. ctionAoFteInmTxA1 Apgearange:Shri Anand Dadariya,[counsel][ For][ the][ Appellant/] Department. Shri S Rajeshwar[Rao,][ counsel][ For][ the][ Respondent/]ASSESSQE. . WT2014)(11thJuly, 1.The only point[involved][ here][ is,] ‘Whetherthelandacquiredby agreementbytheAssesseeunder the Chhattisgarh[Nagar][ Tat'na][ Gram][ Nivesh][ Adhiniyam,]i973(theNivesh—Act)iscompulsoryacquisitionwithinthe(themeaning[of][ section][ 194][ LA][ of][ the][ income Tex][ Act,][ 1961]lT—Act) or not?‘ it arises[in] this[tax][ case][ that][ is][ Filed][ against][ the][ order][ OF][ the][ Income][ Tax]Appellate[Tribunal,][ Raipur][ Bench,][ Raipur][ (the][ Tribunal)][ dated][ 19.07.2013]allowing the[appeal][ OF][ the][ Naya][ Raipur][ Development][ Authority,][ Raipur]2008—09.(the[Assessee)][ For][ the][ Assessment][ Year][ (the][ AY)] THE FACTS tobuilda2.Raipuris the capital oF[Chhattisgarh.][ The][ State][ decided]capitalcityadjacenttotheexistingRaipur andForthispurpose,anauthority in[the][ name][ OF][ Raipur][ Capital][ Area][ Development][ Authority][ was]constituted[under][ section][ 64][ OF][ the][ Nivesh—Act.][ It][ vvas][ later][ on re-named]as Naya Raipur[Development][ Authority,](the[Assessee).] 3.The Assessee[acquired][ land][ within][ its][ area][ in][ the][ AY][ 2007-2008][ and]paid[consideration][ to][ the][ land][ owners.][ However,][ no][ tax][ was][ deducted][ at]source (the[TDS).] 4. The AssessingOfficer(the[AO)]issuednoticestothe Assessee on05.11.2007ForFurnishinginformationregardingdeductionofTDS'amou‘ntas per the provisions of section 194 LA of the IT-Act. 5. The Assessee filed its return denying[its][ liability] to deduct TDS as[well]as applicability of section 194 LA of the iT-Act. 6. The AO rejected the claim of the Assessee and held that: The property acquired by the Assessee was not anagriculturalproperty;property; The acquisition was a compulsory acquisition; and Section 194 LA of the lT—Act[is] applicable. 7. On the basis of the aforesaid finding, the AO held the Assessee to be[ in]defaultundersection201oftheiT-Act.TheTDStaxliabilitywasassessedto ?6,94,77,403/- alongwith interest under section 201(1A) ofthe IT—Act of ?76,42,51 4 (total ?7,71,1 1,91[ 8).] 8. Aggrieved by the aforesaid order, the Assessee[filed]an[appeal][ before]the Commissioner of Income Tax (Appeals) (the CIT—A).it was dismissedon 20.10.2008 affirming the findings as well as[ liability] recorded by theAO. 9. Aggrieved by the aforesaid order, the Assessee filed an appeal beforethe Tribunal.lt was allowed on19.07.2013holdingthat there was nocompulsory acquisition and as such section 194 LA of the IT—Act was notapplicable. 10.In view of the aforesaid finding, the Tribunal did not decide the otherquestion[namely,][ whether][ the]property[was][ agricultural]property[or][ not.] d 11.Aggrieved by the order of the[Tribunal,][ the][ Income][ Tax][ Department](the[Department)][ has][ Filed][ the]present[appeal][ under][ section][ 260A][ OF][ the]'IT-Act. POINTS INVOLVED 12. We have heard counsel For the parties.This appeal was admitted on 14.05.2014 on the Following two substantial questions[oF][ law:] (i)Whether in the Facts and circumstances [ the][ case,][ the][ acquisition]bytheNayaRaipurDevelopmentAuthorityisacompulsoryacquisition or not;bytheNayaRaipurDevelopmentAuthorityisacompulsoryacquisition or not; (ii)[Whether][ in][ the][ Facts][ and][ circumstances][ oF][ the][ case,][ section][ 194][ LA]oF the Income Tax Act, 1961is applicable or not.oF the Income Tax Act, 1961is applicable or not. However, the basic questionin this appealis mentionedin the openingparagraphoFthe judgement.incaseitisdecidedinFavouroFtheDepartment, then the matter[ is] to be[sent][ back][ to][ the][ Tribunal][ to][ decide]the question whether the property[was][ agricultural]property[or][ not.] THE DECISION 14.05.2014 on the Following two substantial questions[oF][ law:] (i)Whether in the Facts and circumstances [ the][ case,][ the][ acquisition]bytheNayaRaipurDevelopmentAuthorityisacompulsoryacquisition or not;bytheNayaRaipurDevelopmentAuthorityisacompulsoryacquisition or not; (ii)[Whether][ in][ the][ Facts][ and][ circumstances][ oF][ the][ case,][ section][ 194][ LA]oF the Income Tax Act, 1961is applicable or not.oF the Income Tax Act, 1961is applicable or not. However, the basic questionin this appealis mentionedin the openingparagraphoFthe judgement.incaseitisdecidedinFavouroFtheDepartment, then the matter[ is] to be[sent][ back][ to][ the][ Tribunal][ to][ decide]the question whether the property[was][ agricultural]property[or][ not.] THE DECISION 13. The word['compulsory]acquisition'is not deFined in the IT Act or Forthat matter in any other statute.[However,][ it is][ expropriation][ or][ is][ done][ in]exercise OF['eminent]domain‘ the word,[which][ was][ coined][ by][ 17th][ century]jurist[Grotius.] 14.Halsbury's LawsoF England, Volume8(1),4t“ Editionexplainsthat'Where land or an interest in landis purchased or taken under statutorypowersiwithout the agreement oF the own’erzitis saidto have beencompulsorily acquired3'. / lSeeegth‘eLandClausesConsolidationAct1845.518;theCompulsoryPurchase Act 1965[s] 5(as amended); [and]para[100]post.[See][ also][ the][ Acquisition]OF Land Act 1981 s[2;] and para 34 post2 Even where there is power to acquire land compulsorily the acquisition may beeFFectedbyagreement.Astowhenanacquisitionamountstoonebyagreement, and whenit amounts to compulsory purchase, see para[93][ et][ seq]post.Purchase Act 1965[s] 5(as amended); [and]para[100]post.[See][ also][ the][ Acquisition]OF Land Act 1981 s[2;] and para 34 post2 Even where there is power to acquire land compulsorily the acquisition may beeFFectedbyagreement.Astowhenanacquisitionamountstoonebyagreement, and whenit amounts to compulsory purchase, see para[93][ et][ seq]post.3 Where, howeverthere is a purchase OF the whole[or][ any]part[oF][ any][ statutory]undertaking unde'r any enactment[ in][ that][ behalF]prescribing[the][ terms][ on][ which]the purchaseis to be eFFected,th‘e provisions oF the Land Compensation[Act]undertaking unde'r any enactment[ in][ that][ behalF]prescribing[the][ terms][ on][ which]the purchaseis to be eFFected,th‘e provisions oF the Land Compensation[Act] 15.[In][ Sunder][ vs.][ Union][ of][ India][ {(2001)][ 7][ SCC][ 211Ythe][ question]liable[ involved]topaybefore[the]Supreme[Court][ was,][ whether][ the][ State][ was]oftheLandundersection23(2)envisagedinterestontheamountthis question,Acquisition[Act,][ 1894][ (the][ LA—Act)][ or][ not.][ While][ deciding] the[court][ observed,]thelandowneris‘[I}nthecompulsoryacquisitiondeprived[of][ the»][ right][ and][ opportunity][ to][ negotiate][ and]theon[what]‘[I}nthecompulsoryacquisitiondeprived[of][ the»][ right][ and][ opportunity][ to][ negotiate][ and]theon[what]lt[depends]forthesaleprice.bargaincollector[or][ the][ court][ fixes][ as][ perthe][ provisions][ of][ the]LA-Act‘collector[or][ the][ court][ fixes][ as][ perthe][ provisions][ of][ the]LA-Act‘ d i6,lt ls[clear][ that][ in][ a][ case][ of][ compulsory][ acquisition,][ the][ seller][ has][ no]option.[He][ can][ neither][ refuse][ to][ sell][ his][ land][ nor][ can][ he][ negotiate][ the]price.[The][ price][ is][ fixed][ by][ the][ statute][ itself.][ The][ conditions][ that][ must][ be]satisfied[before][ a][ purchase][ can][ be][ said][ to][ be][ compulsory][ acquisition][ are]as[follows:] The[seller][ has][ no][ option][ but][ to][ sell][ the][ land;](i)(ii)[The][ seller][ can not][ negotiate][ the][ price.][ it is][ fixed][ by][ the][ statute][ or]determined[under][ the][ principles][ mentioned][ therein.](ii)[The][ seller][ can not][ negotiate][ the][ price.][ it is][ fixed][ by][ the][ statute][ or]determined[under][ the][ principles][ mentioned][ therein.] d i6,lt ls[clear][ that][ in][ a][ case][ of][ compulsory][ acquisition,][ the][ seller][ has][ no]option.[He][ can][ neither][ refuse][ to][ sell][ his][ land][ nor][ can][ he][ negotiate][ the]price.[The][ price][ is][ fixed][ by][ the][ statute][ itself.][ The][ conditions][ that][ must][ be]satisfied[before][ a][ purchase][ can][ be][ said][ to][ be][ compulsory][ acquisition][ are]as[follows:] The[seller][ has][ no][ option][ but][ to][ sell][ the][ land;](i)(ii)[The][ seller][ can not][ negotiate][ the][ price.][ it is][ fixed][ by][ the][ statute][ or]determined[under][ the][ principles][ mentioned][ therein.](ii)[The][ seller][ can not][ negotiate][ the][ price.][ it is][ fixed][ by][ the][ statute][ or]determined[under][ the][ principles][ mentioned][ therein.] 17.[There][ are][ many][ examples][ of][ such][ statutes.][ The][ Zamindari][ Abolition]Acts,[Ceiling][ Acts,][ Nationalisation][ Acts][ are][ examples][ of][ such][ compulsory]acquisition[but][ the][ most][ prominent][ law][ regarding][ compulsoryacquisition]is the[LA-Act.]of[immovable][ property]L ofLit[has](s[36(1));][ and]/toadidnot[amount]i961beenasheld[to][ compulsory]thattransfer[ acquisitions]of[industries]Hudson[ of]to[ land]public&[ are]Co Ltdownership[ excluded]v Kirkness(inspectorof[Taxes)]ofcompulsory[1954]Taxes)v.1John‘AllpurchaseERHudson29, [1954]or&Act[sale]CoLtd11961(JohnWLR[1955140,s36,2CA;All‘statutoryaffdER[345.]subHL).nomundertaking‘'Enactment‘For[Kirkness]thepurpose(/nspectorincludesmeansoftheananLandundertakingCompensationestablishedunderanyenactment:ActofParliaments 36(2).andanorder,rule,andenactmentregulation,byelawinanyorlocalschemeorprivatemadeActunder1961anActtoofany)Parliamentenactment(s[39(1));]areanytootherbereferenceinLandCompensationto[that]enactmentasamendedby[or][ under]referencesconstrued[as]landfromcompulsoryenactmentAsto[as][ amended]theexclusion[ by][ or][ under]ofstatutory[ any][ other]undertakers'1981 [ enactment][see][ s][ 16;][ (s]and[ 39(9).]para[41]post,ofLand[Act]undertheAcquisitionpurchase 18.The first law[For][ compulsory][ acquisition][ of][ immovable][ property][ was]containedinBengalRegulationiof1824.Similarly,theBuildingAct>'<XVlIl-of 1839[as][ well][ as]Act XX of 1852 provide[compulsory][ acquisition]of land[in] Bombay[as][ well][ as][ in][ Madras][ Presidency.] 19. The aforesaid[enactments][ were][ replaced][ by][ the][ Act][ VI][ of][ 1857.][ This]wassupplementedbyActXXIIof1863.Thesestatuteswereconsolidatedandreplacedby theAct10of1870,whichinturn wasreplaced by the[LA—Act.] 'to amend20.The preamble of[the][ LA-Act][ explains][ that][ it][ was][ enacted]the law of[the][ acquisition][ of][ land][ needed]for public purposes[and]forCompanies and[for][ determining][ the][ amount][ of][ compensation][ to][ be][ made]on account of[such][ acquisition'.] 21.Section4oftheLA-Actprovidespublidationofpreliminarynotification[for][ intention][ to][ acquire][ the][ land.][ After][ conducting][ an][ enquiry]and deciding[the][ objections,][ final][ notification][ is][ published][ under][ section]6 of the LA-Act. 22. The Collector[fixes][ the][ compensation][ under][ section][ 11][ of][ the][ LA—Act.]He can take possession[after][ award][ is][ made][ and]the property[vests][ in][ the]State without[any][ encumbrances][ under][ section][ 16][ of][ the][ LA—Act.] 23.ln case of emergency,[the][ Collector][ may][ take][ possession][ before an]awardis made andthen the property[vests]inthe Statefree fromallencumbrances[under‘section][ 17][ of the][ LA—Act.] 24. The compensationrequiredtobegivenunder theLA—Actisthemarketvalueoftheproperty[on]thedateofthenotificationundersection 4.lt is to be calculated[by][ the]principles[mentioned][ under][ section]23 of the LA-Act./_ x g4 25.Incase,aperson,[whose]landis acquired,disputes the amount OFcompensation, then it is to be referred to the civil court. 26. Under the LA-Act, thereis no discretion oF a person not to seil thelandor tonegotiatetheprice.[The]priceisFixedunder theprinciplesmentioned under the LA—Act. This is a compulsory acquisition. 23.ln case of emergency,[the][ Collector][ may][ take][ possession][ before an]awardis made andthen the property[vests]inthe Statefree fromallencumbrances[under‘section][ 17][ of the][ LA—Act.] 24. The compensationrequiredtobegivenunder theLA—Actisthemarketvalueoftheproperty[on]thedateofthenotificationundersection 4.lt is to be calculated[by][ the]principles[mentioned][ under][ section]23 of the LA-Act./_ x g4 25.Incase,aperson,[whose]landis acquired,disputes the amount OFcompensation, then it is to be referred to the civil court. 26. Under the LA-Act, thereis no discretion oF a person not to seil thelandor tonegotiatetheprice.[The]priceisFixedunder theprinciplesmentioned under the LA—Act. This is a compulsory acquisition. 27.in the present case, the property was not acquired under the LA—Actbut under the Nivesh-Act.Here, the seller had no.0ption but to sell theproperty[to][ the][ Assessee: the][ First][ condition][ is][ satisfied][ but]the questionis whether the second condition OF price being Fixed is satisFied or not. 28. Chapter'Vill oF the Nivesh-Act is titled as['Special]Areas‘. Section 64 isin this chapter andis titled as[‘Constitution]OF Special areas'.it is underthis section that the Assessee was constituted. 29. Under section 66 oF the oF theNivesh—Act,the Assesseeis a bodycorporate with perpetual succession and a common seal and has powerto acquire, hold and dispose oF property.corporate with perpetual succession and a common seal and has powerto acquire, hold and dispose oF property. 30. Section 69 OF the Nivesh—Act is titled as['Powers'.]Under this section,the Assessee, while acquiring any land exercises the powers and Followsthe procedure which a Town and Country Development Authority has orFollows For acquiring any land. 'Town31.ChapterVIIoFtheNivesh-ActistitledasandCountryDevelopmentAuthority‘.Section56isinthischapter.itistitledas‘AcquisitionoFlandFor Town andCountry Development AuthorityorHousing and Urban Development Authority oF Chhattisgarh'.It providesthat the Town and Country Development Authority can acquire the landbyagreement andincaseoFFailureoF agreement,thenitistobeacquired under the LA—Act (For section see below)“. 4 Section 56 OF the Chhattisgarh NagarTatha Gram Nivesh Adhiniyam, 1973 is asFollows: Section 56 OF the Chhattisgarh NagarTatha Gram Nivesh Adhiniyam, 1973 is asFollows: KW'F 32.TheAssesseeacquiresthelandundersectionsection56OFtheNivesh—Act read with section 69 of the Nivesh-Act.. 33. Section 56 of the Nivesh-Act provides two different procedures foracquisition of land. One is by agreement and[in] failure of the same,[ it is] tobe done under the LA-Act. 34. There is no dispute between the parties that[ in] the present[case,][ the]property[was][ not][ acquired][ under][ the][ LA—Act][ and]it was acquired only byagreement. 35. In case the property is acquired by agreement, then the price[is][ not]fixed by the statute:it is settled by the parties.The second condition ofcompulsory acquisition is not satisfied. The acquisition of the property[by]the Assessee cannot be said to be a compulsory acquisition. 36. The fact that after the mutual agreement between the parties,[the]price[was][ stated]inanotificationby the Assessee, does not makeit acompulsoryacquisition.Noonewasboundbythat.incaseofdisagreement, the Assessee had to proceed under the LA-Act.Here, thiswas not done:all agreed to pay the price fixed by mutual agreement. / 34. There is no dispute between the parties that[ in] the present[case,][ the]property[was][ not][ acquired][ under][ the][ LA—Act][ and]it was acquired only byagreement. 35. In case the property is acquired by agreement, then the price[is][ not]fixed by the statute:it is settled by the parties.The second condition ofcompulsory acquisition is not satisfied. The acquisition of the property[by]the Assessee cannot be said to be a compulsory acquisition. 36. The fact that after the mutual agreement between the parties,[the]price[was][ stated]inanotificationby the Assessee, does not makeit acompulsoryacquisition.Noonewasboundbythat.incaseofdisagreement, the Assessee had to proceed under the LA-Act.Here, thiswas not done:all agreed to pay the price fixed by mutual agreement. / 56.Acquisitionoflandfor TownandCountryDevelopmentAuthorityorHousingandUrbanDevelopmentAuthorityofChhattisgarh.-TheTownandCountryDevelopmentAuthorityorHousing andUrban Development Authority of Chhattisgarh may[ at] anytime after the date of publication of the[ final]town[development][ scheme]under section 50but notlater thanthree yearstherefrom,proceedtoacquire by agreement thelandrequiredfor the implementation of thescheme and, on its failure so[to][ acquire,] the State[Government][ may,][ at][ the]request of the Town and Country Development[Authority][ or][ Housing][ and]Urban Development Authority of Chhattisgarh,proceedto acquire suchland under the provisions of the Land[Acquisition][ Act,][ 1894](No.1[of][ 1894)]and onthe payment of compensation awarded under that[Act][ and][ any]other charges incurred by the State Government[ in][ connection][ with][ the]acquisition,thelandshall vestinthe TownandCountryDevelopmentAuthority or Housing and Urban Development[Authority][ of][ Chhattisgarh]subject to such terms and conditions[as] may be prescribed.AuthorityorHousingandUrbanDevelopmentAuthorityofChhattisgarh.-TheTownandCountryDevelopmentAuthorityorHousing andUrban Development Authority of Chhattisgarh may[ at] anytime after the date of publication of the[ final]town[development][ scheme]under section 50but notlater thanthree yearstherefrom,proceedtoacquire by agreement thelandrequiredfor the implementation of thescheme and, on its failure so[to][ acquire,] the State[Government][ may,][ at][ the]request of the Town and Country Development[Authority][ or][ Housing][ and]Urban Development Authority of Chhattisgarh,proceedto acquire suchland under the provisions of the Land[Acquisition][ Act,][ 1894](No.1[of][ 1894)]and onthe payment of compensation awarded under that[Act][ and][ any]other charges incurred by the State Government[ in][ connection][ with][ the]acquisition,thelandshall vestinthe TownandCountryDevelopmentAuthority or Housing and Urban Development[Authority][ of][ Chhattisgarh]subject to such terms and conditions[as] may be prescribed. CONCLUSIONS 37. Our conclusions are as Foilows: AIn case OF compulsory acquisition the seller has neither option toopt out of the acquisition nor can he negotiate the price.It is Fixedbythestatuteorisdeterminedundertheprinciplesstatedtherein;In the present case, price was neither Fixed by the statute nor bytheprinciplesstatedthereinbutwasagreedbythemutualnegotiation;opt out of the acquisition nor can he negotiate the price.It is Fixedbythestatuteorisdeterminedundertheprinciplesstatedtherein;In the present case, price was neither Fixed by the statute nor bytheprinciplesstatedthereinbutwasagreedbythemutualnegotiation; TheTribunalhasrightlyheldthattherewasnocompulsoryacquisition; andacquisition; and Section 194 LA of the Income Tax Act, 1961 was not applicable. In view of our conclusions, the tax case has no merit. it is dismissed. ‘ I sci/-lGouta‘m[Bhaduri]lIJudge Sd/-Chief Justice I‘K HEADLINES Acquisitionby agreement under CNTGN Adhiniyamisnot computsoryacquisition ”9/Sdl- Wu\