ARAVINDAKSHAN V. UNION OF INDIA

WP(C)/15821/2013

AI Insights

The case involves Aravindakshan, the petitioner, who contested the denial of an income tax exemption claim related to a property transaction. The property was subject to a compulsory acquisition notification under the Land Acquisition Act 1894 by the government. The petitioner argued that the sale deed (Ext.P7) should exempt him from capital gains tax under Section 10(37) of the Income Tax Act, 1961, as the land was used for agricultural purposes and was acquired compulsorily. However, the court referenced the case of Info Park Kerala v Assistant Commissioner of Income Tax, which established that such transactions post-notification are considered negotiated sales, not compulsory acquisitions, thus not qualifying for the exemption under Section 10(37).

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 722430 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 11-07-2013
• Assessment Year: misc
• Other Referred Cases: Info Park Kerala v Assistant Commissioner of Income Tax 2008 (4) KLT 782
• Laws Referred To: Income Tax Act 1961, Land Acquisition Act 1894
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: P NAIR; JOSE JOSEPH; SOBHA EAPEN
• Assessee Lawyers: T K KRISHNAN
• Keywords: Capital Gains; Compulsory Acquisition; Income tax exemption; Negotiated sale
• Section: 10(37); 194-LA

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE V.CHITAMBARESH THURSDAY, THE 11TH DAY OF JULY 2013/20TH ASHADHA, 1935 WP(C).No. 15821 of 2013 (C) ---------------------------- PETITIONER: -------------------- ARAVINDAKSHAN, S/O.MADHAVAN, ARAYICKAL VEEDU, KALLINGAL ATTIPRA VILLAGE, THIRUVANANTHAPURAM. BY ADV. SRI.T.K.ANANDA KRISHNAN RESPONDENTS: ------------------------- 1. UNION OF INDIA, REPRESENTED BY CENTRAL GOVERNMENT STANDING COUNSEL SECRETARY FINANCE DEPARTMENT, NEW DELHI. 2. JOINT COMMISSIONER INCOME TAX RANGE-I, KOWDIAR, THIRUVANANTHAPURAM. 3. INCOME TAX OFFICER, WARD-1(1), KOWDIAR, THIRUVANANTHAPURAM. 4. THE SPECIAL TAHSILDAR(LA), THIRUVANANTHAPURAM. R1 BY SRI.P.PARAMESWARAN NAIR,ASG OF INDIA R2 -R3 BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX R4 BY GOVERNMENT PLEADER SMT. SOBHA ANNAMMA EAPEN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 11-07- 2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 15821 of 2013 (C) ---------------------------- APPENDIX PETITIONER(S)' EXHIBITS EXHIBIT -P1 CERTIFICATE ISSUED BY THE ATTIPRA VILLAGE OFFICE BEARINGN N0.646/2009 EXHIBIT-P2 CERTIFIFICATE ISSUED BY THE ATTIPRA VILLAGE OFFICE BEARING NO.643/2009 EXHIBIT-P3 THE TRUE COPY OF THE NOTIFICATION DATED 1.10.2005 ISSUED BY THE GOVT.OF KERALA FOR THE COMPULSORY ACQUISITION OF PROPERTY. EXHIBIT-P4 TRUE COPY OF NOTICE IN FORM.NO.10B IN LA(C)198/2006 ISSUED BY THE 4TH RESPONDENT . EXHIBIT-P5 TRUE COPY OF NOTICE IN FORM NO.10B IN LA(C) 162/2006 ISSUED BY THE 4TH RESPONDENT . EXHIBIT-P6 TRUE COPY OF NOTICE IN FORM NO.10B IN LA (C)8/2006 ISSUED BY THE 4TH RESPONDENT . EXHIBIT-P7 TRUE COPY OF SALE DEED NO.2020/2008 0F KAZHAKKOOTTOM SUB REGISTRY OFFICE. EXHIBIT-P8 TRUE COPY OF NOTICE SALE DEED NO.2842/2008 OF KAZHAKKOOTTOM SUB REGISTRY OFFICE. EXHIBIT-P9 TRUE COPY OF THE SALE DEED NO.2841/2008 OF KAZHAKKOOTTOM SUB REGISTRY OFFICE. EXHIBIT-P10 TRUE COPY OF THE INCOME TAX RETURN OF THE PETITIONER FOR THE ASSESSMENT YEAR 2009-10. EXHIBIT-P11 TRUE COPY OF THE NOTICE ISSUED BY THE 3RD RESPONDENT U/S148 OF THE INCOME TAX ACT 1961. EXHIBIT-P12 TRUE COPY OF THE REPRESENTATION SUBMITTED BY THE PETITIONER TO THE 2ND RESPONDENT IN REPLY TO EXHIBIT-P11. EXHIBIT-P13 THE TRUE COPY OF THE ORDER ISSUED BY THE 2ND RESPONDENT. RESPONDENT(S)' EXHIBITS: NIL /TRUE COPY/ P.A. TO JUDGE SKV V.CHITAMBARESH,J ------------------------------------- W.P.(C).No.15821 OF 2013 ----------------------------------------- Dated this the 11th day of July, 2013 JUDGMENT The issue is covered by Info Park Kerala v Assistant Commissioner of Income Tax 2008 (4) KLT 782 which was affirmed in Writ Appeal No.2243/2008. Therefore the transaction evidenced by Ext.P7 sale deed after Ext.P3 notification under the Land Acquisition Act 1894 can only be a negotiated sale. It may be true that no deduction under Section 194 LA of the Income Tax Act 1961 need be done since the sale price was fixed by negotiation. But the petitioner cannot escape from the liability to pay income tax under the head 'capital gains' in the Income Tax Act 1961. Section10(37) (iii) of the Income Tax Act 1961 applies only when the transfer is by way of compulsory acquisition in regard to a land being used for agricultural purposes only. 2. The second respondent was therefore right in denying the claim for exemption under Section10(37) of the Income Tax Act,1961 by Ext.P13 order. The Writ Petition fails and is dismissed. Sd/- V.CHITAMBARESH, JUDGE. SKV "