Wa/192/2007 Of Srinivasaiah v. Income Tax Officer

IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE O0 DAY OF OCTOBER, 2012. PRESENT THE HON’BLE MR.JUSTICE K. SREEDHAR RAO| AND THE HON’BLE MR.JUSTICE B.V.PINTO WA NO.1923 OF 2007 BE TW B 1.SRINIVASAITAH AGKD ABOUT 65 YRBARS 9/O CHIKKAHYDAITAH @ CHUBINAIAH| 2.GOVINDAIAH AGKD ABOUT 70 YEARS »/O CHIKKAHYDAIAH @ CHUBINAIAH 3.VITTALAIAH AGED ABOUT 60 YBARS|»/O CHIKKAHYDAIAH |@ CHUBINAIAH»/O CHIKKAHYDAIAH |@ CHUBINAIAH 4.NAGANNAAGED ABOUT 43 YEARS.AGED ABOUT 43 YEARS. 9/O VENKATESHAIAH AND GRANDSON| OF CHIKKAHYDAIAH @ CHUBINAIAH 5.PREMA AGKD ABOUT 55 YBARSD/O CHIKKAHYDAIAH @ CHUBINAITAHD/O CHIKKAHYDAIAH @ CHUBINAITAH ALL ARE R/O BELAGOLA VILLAGE SRIRANGAPATNA TALUK MANDYA DISTRICT ... APPELLANTS (BY SRI. P S MANJUNATH, ADV.) ANT 1.INCOME TAX OFFICERTDs, INCOME TAX DEPARTMENTSHILPASHREE NO.595/1OPP STERLING TALKIES.MYSORKHTDs, INCOME TAX DEPARTMENTSHILPASHREE NO.595/1OPP STERLING TALKIES.MYSORKH 2.SPECIAL LAND ACQUISITION OFFICER,KARNATAKA INDUSTRIAL AREA DEVELOPMENTBOARD, ZONAL OFFICE, METAGALLI INDUSTRIALAREA,NEAR VIKRANTH TYRES, KST ROADMYSORE —570 016 |KARNATAKA INDUSTRIAL AREA DEVELOPMENTBOARD, ZONAL OFFICE, METAGALLI INDUSTRIALAREA,NEAR VIKRANTH TYRES, KST ROADMYSORE —570 016 | ... RESPONDENTS. (BY SRI K.V.ARAVIND, ADV. FOR R1 AND ©oORI BASAVARAJ V SABARAD, ADV. FOR R2) THIS WRIT APPEAL IS FILED U/S 4 OF THE)KARNATAKA HIGH COURT ACT PRAYING TO SEI ASIDETHE.ORDERPASSED.IN-THE.WRIT|PRTITIONNo.16240/2006 DATED 19/12/2006. THIS APPEAL IS COMING ON FOR FINAL HEARINGTHISDAY,SREEDHARRAO|J.>.DBLIVEREDTHERRKFOLLOWING:JU DBGMENT The appellants are the land owners, whose land isacquired by KIADB tor a specific project and thecompensation is awarded by the KIADB. The KIADBdeducted 10% of the compensation towards income tax. | The appellants — land owners aggrieved by the saidorder, filed the writ petition. The learned single Judgehas found that if there is no tax liability on thelandowner, he can seek refund by filing the returns. —The appellants being aggrieved by the said order hasfiled this appeal. 2. The provisions of Section 2(14)(i11) and Section 194 LA of the Income Tax Act, reads thus:-| Section 2(14)(ut) — Agricultural land inIndia, not being land situate — (a)in any area which is comprised within the|jurisdictionof|(Omunicipality(whetherknown)as|(Omunicipality,municipalcorporation, 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 according to the last preceding|census of which the relevant figures have|been published before the first day of the|previous year; orjurisdictionof|(Omunicipality(whetherknown)as|(Omunicipality,municipalcorporation, 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 according to the last preceding|census of which the relevant figures have|been published before the first day of the|previous year; or (b)in any area within such distance, not being|more than eight kilometres, from the local|limits of any municipality or cantonment|board referred to in item (a), as the Central|Government may, having regard to the|extent of, and scope for, urbanisation of that|more than eight kilometres, from the local|limits of any municipality or cantonment|board referred to in item (a), as the Central|Government may, having regard to the|extent of, and scope for, urbanisation of that| area and other relevant considerations,|specify in this behalf by notification in theOfficial Gazette.| section 194LA ofIncome Tax Act :- (b)in any area within such distance, not being|more than eight kilometres, from the local|limits of any municipality or cantonment|board referred to in item (a), as the Central|Government may, having regard to the|extent of, and scope for, urbanisation of that|more than eight kilometres, from the local|limits of any municipality or cantonment|board referred to in item (a), as the Central|Government may, having regard to the|extent of, and scope for, urbanisation of that| area and other relevant considerations,|specify in this behalf by notification in theOfficial Gazette.| section 194LA ofIncome Tax Act :- Any person responsible for paying to a resident|any sum, being in the nature of compensationOYtheenhancedcompensation Ortheconsideration or the enhanced consideration onaccount of compulsory acquisition, under anylaw for the time being in force, of anyimmovable property (other than agriculturalland), shall, at the time ofpayment of such sum|in case or by issue of a cheque or draft or byany other mode, whichever is earlier, deduct anamount equal to ten percent of such sum asincome-tax thereon: Provided| that no deduction shall be madeunder this section where the amount of suchpayment or, as the case may be, the aggregate|amount of such payments to a resident duringthe financial year does not exceed _ [twohundred thousand rupees.| Explanation. — For the purposes of this section, - (1)“agricultural land” means agriculturalland in India including land situate in anyarea referred to in items (a) and (b) of sub-clause (it) of clause (14) of section 2;|land in India including land situate in anyarea referred to in items (a) and (b) of sub-clause (it) of clause (14) of section 2;| !99$“ammovable property” means any land(other than agricultural land) or anybuilding or part of a building.(other than agricultural land) or anybuilding or part of a building. The provision of Section 194LA of the I.T.Act, 1961declares that any compensation paid on acquisition,except in case of agricultural land, 10% of thecompensation has to be deducted towards income tax. |The explanation (i) of the Section 194LA defines thatagricultural land includes the agricultural land asreterred to in Clause 14 of Section 2. The above said|provision of law makes it clear, whether the agriculturalland situated within the municipal or corporation limitsor otherwise when acquired, there is no need to deduct10% from the compensation amount towards TDs.)Therefore, any deduction of the amount from thecompensation would be illegal and contrary to Section194LA of Income Tax Act, 1961. The Circular issued bythe Income Tax Department vide Annexure R4 is inrespect of the agricultural land situated within themunicipal and municipal corporation or notified areaswithin specified distance. 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