Wider In Scope Than Any Of The Tax Exemptions Provided Under Provisions Of The Income-Tax Act, 1961. Referring To A Decision Of The High Court Of Andhra Pradesh v. Madaparabil Varkey Varghese

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM & THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN MONDAY, THE 11TH DAY OF NOVEMBER 2019 / 20TH KARTHIKA, 1941 WA.No.2219 OF 2019 AGAINST THE JUDGMENT IN WP(C) 1908/2019(K) OF THIS COURT APPELLANTS/RESPONDENTS 1 & 2: 1THE ASSISTANT COMMISSIONER OF INCOME TAXNON CORPO. CIRCLE -1 (11), CENTRAL REVENUE BUILDING, I.S. PRESS ROAD, KOCHI - 682 018NON CORPO. CIRCLE -1 (11), CENTRAL REVENUE BUILDING, I.S. PRESS ROAD, KOCHI - 682 018 2THE COMMISSIONER OF INCOME TAXCENTRAL REVENUE BUILDING, I.S. PRESS ROAD, KOCHI- 682 018CENTRAL REVENUE BUILDING, I.S. PRESS ROAD, KOCHI- 682 018 BY ADV. SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT RESPONDENT/PETITIONER/RESPONDENT NO.3: 1MADAPARABIL VARKEY VARGHESE MADAPARAMBIL, HOUSE, K.P VALLON ROAD, KADAVANTHRA, KOCHI - 682 020 2UNION OF INDIAREPRESENTED BY ITS SECRETARY, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, NORTH BLOCK, NEW DELHI - 110 001 R1 BY ADV. SRI.ABRAHAM JOSEPH MARKOS R1 BY ADV. SRI.ISAAC THOMAS R1 BY ADV. SHRI.VIPIN ANTO H.M. R1 BY ADV. SHRI.ALEXANDER JOSEPH MARKOS R1 BY ADV. SHRI.SHARAD JOSEPH KODANTHARA OTHER PRESENT: SCGC-SRI. P.VIJAYAKUMAR THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON11.11.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: -:2:- C.K. ABDUL REHIM, J. &ANU SIVARAMAN, J. ----------------------------------------------------- W.A. No. 2219 OF 2019 ------------------------------------------------------- Dated this the 11[th] day of November, 2019 J U D G M E N T Abdul Rehim, J. Question arising for consideration in this writ appeal filed under Section 5 of the Kerala High Court Act is, whether thecompensation received with respect to acquisition of an asset,the value of which is calculated under depreciable method, willbe covered under Section 96 of the Right to Fair Compensationand Transparency in Land Acquisition, Rehabilitation andResettlement Act, 2013(for short, 'Act 30 of 2013'). 2.Respondents in W.P.(C) No.1908/2019 are the appellants herein, challenging judgment of the Single Judgedated 31[st] May, 2019. The respondent herein is the writ W.A. No.2219/2019 petitioner. 3.Ext.P8 order of assessment and Ext.P9 demandnotice were under challenge in the writ petition. Issue relates toacquisition of properties belonging to the respondents for thepublic purpose of establishing Kochi Metro Rail Project. Byvirtue of an Award passed by the Acquisition Officer on30.10.2015 under Act 30 of 2013, the compensation payablewas fixed at `7,54,24,705/-. During the relevant assessmentyear, the respondent received 80% of the compensationdetermined by virtue of the Award passed during theassessment year 2016-2017. The assessing authority includeda portion of the receipt of compensation as taxable income bymaking an interpretation to Section 96 of the Act 30 of 2013 onfollowing words; “The main intention of the section isto spare the poor farmer the further,burden of Income-tax, who has alreadysuffered loss of livelihood, replacement, emotional trauma etc. This is clear fromthe concluding lines of the Section 96. Itsays that “no person claiming under anysuch award or agreement shall be liableto pay fee for a copy of the same.” TheAct here envisages a poor agriculturist, forwhom even paying a few rupees ofcopying fees, which cannot possiblyexceed Rs.100/- considering the numberof pages, shall be a huge economicburden. From the above discussion, it can clearly be seen that compensation on adepreciable asset cannot be said to becovered by Section 96 of the RFCTLAARAct.” 4.While considering the challenge raised against the order of assessment, the learned Single Judge observed that, Section 96 does not draw any distinction betweencompensation received for compulsory acquisition based on thenature of the asset acquired. But the exemption provided is From the above discussion, it can clearly be seen that compensation on adepreciable asset cannot be said to becovered by Section 96 of the RFCTLAARAct.” 4.While considering the challenge raised against the order of assessment, the learned Single Judge observed that, Section 96 does not draw any distinction betweencompensation received for compulsory acquisition based on thenature of the asset acquired. But the exemption provided is W.A. No.2219/2019 wider in scope than any of the tax exemptions provided underprovisions of the Income-tax Act, 1961. Referring to a decisionof the High Court of Andhra Pradesh in C. Nanda Kumar v.Union of India in W.P.(C) No.7874 of 2016, the learned Judgehad referred to the Circular issued by the Central Board ofDirect Taxes(CBDT), Circular No.36/2016, dated 25.10.2016,which had clarified that the compensation received under anAward is exempted from levy of Income-tax under Section 96 ofAct 30 of 2013 and shall not be taxable, even if there is nospecific provision for exemption provided under the Income-taxAct. The learned Single Judge also referred to the impact ofSection 194 LA introduced in the Income-tax Act, to hold thatthere is no ambiguity under Section 96 of Act 30 of 2013. It washeld that, the exemption is complete if the compensation is paidunder the Award passed under Act 30 of 2013. The observationcontained in the impugned judgment is to the effect that, if theexemption is granted by the Parliament, the court is not to deny W.A. No.2219/2019 such exemption by adopting an impermissible interpretation.Hence the impugned assessment was quashed. It is aggrievedby the said judgment, that the Revenue had filed the above writappeal. 5.We are of the considered opinion that Section 96 ofthe Act 30 of 2013 is clear and unambiguous in its literalmeaning and does not require any interpretation by a court oflaw. The dictum contained in the decision of the High Court ofAndhra Pradesh in C. Nanda Kumar(supra) is reiterated by theDivision Bench of this court in the judgment in Writ AppealNo.1528 of 2016 dated 8[th] August, 2016(The Commissionerof Income-tax(TDS) v. Pramod and others. It is held thereinthat Section 96 of Act 30 of 2013 clearly discloses that noincome tax or stamp duty shall be levied on any Award orenhancement made under the said Act, except under Section46. Hence it is clear that the exemption is provided from levyingincome-tax and stamp duty. Therefore the assessment of tax W.A. No.2219/2019 -:7:- made on such compensation received is not sustainable. 6.In view of the position remaining settled, coupled with the terms of the CBDT Circular, as well as introduction of the proviso to Section 194 LA in the Income-tax Act, there exists noambiguity that the compensation received under Act 30 of 2013is in no manner liable to be taxed under any of the provisions ofthe Income-tax Act. Therefore the writ appeal deserves no merit and the sameis accordingly dismissed. SD/- C.K. ABDUL REHIM, JUDGE. SD/- ANU SIVARAMAN, JUDGE. ul/-