Karnataka Industrial Area Development Board, Dharwad V. ITO, Hubli

ITA 1375/BANG/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1509 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 14-09-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 30-09-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GNANA PRAKASH
• Assessee Lawyers: ASHOK KULKARNI
• Keywords: Retrospective amendment; Non-deduction of tax

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL BANGALORE BENCH B, BANGALORE BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER ITA NO.1375(B)/2013 (ASSESSMENT YEAR : 2011-12) KARNATAKA INDUSTRIAL AREA DEVELOPMENT BOARD, DHARWAD. APPELLANT PAN NO.BLRS22764A VS THE INCOME-TAX OFFICER, TDS WARD, DHARWAD RESPONDENT ASSESSEE BY : SHRI ASHOK KULKARNI, ADVOCATE REVENUE BY : SHRI GNANAPRAKASH, CIT DATE OF HEARING : 14-09-2015 DATE OF PRONOUNCEMENT : 23-09-2015 O R D E R PER SHRI ABRAHAM P GEORGE, AM: IN THIS APPEAL FILED BY THE ASSESSEE AGAINST AN OR DER DATED 31-07- 2013 OF CIT(A), HUBLI, IT HAS TAKEN THE FOLLOWING G ROUNDS; 1. THE ORDER OF THE CIT(A), HUBLI IS OPPOSED TO LA W AND FACTS OF THE CASE. 2. THE CIT(A) OUGHT TO HAVE HELD THAT THE PROVISIO NS OF SEC.201 AND 201(!A) ARE NOT APPLICABLE IN THE FACT S AND CIRCUMSTANCES OF THE CASE. ITA NO.1375(BANG)2013 2 3. THE CIT(A) OUGHT TO HAVE HELD THAT THERE WAS NO STATUTORY OBLIGATION ON THE ASSESSEE TO DEDUCT THE TAX ON THE COMPENSATION PAID TO THE NO-AGRICULTURAL LAND OWNER S. 4. WITHOUT PREJUDICE AND IN THE ALTERNATIVE, ASSUM ING THERE WAS A DEFAULT ON THE PART OF THE ASSESSEE, THE ACT OF NON- DEDUCTION IS ATTRIBUTABLE TO A BONA-FIDE ERROR ON T HE PART OF THE ASSESSEE. 5. THE CI(A) OUGHT TO HAVE APPRECIATED THAT THERE WERE SERIOUS AMBIGUITIES, CONFUSION AND DOUBT REGARDING LIABILITY TO DEDUCT TAX NECESSITATING LEGISLATIVE INTERFERENCE. 6. ALTERNATIVELY AD WITHOUT PREJUDICE THE CIT(A) O UGHT TO HAVE REDUCED TO THE EXTENT OF THE AMOUNT COLLECTED FROM THE LAND OWNERS AND REMITTED TO THE GOVERNMENT ACCOUNT AND A LSO TO THE EXTENT OF INCOME DECLARED B Y THE LAND OWNERS IN TH EIR RETURN OF INCOME. 7. THE QUANTIFICATION OF LIABILITY U/S 201 AND 201 (1A) IS NOT IN ACCORDANCE WITH LAW. 2. THE ASSESSEE HAS ALSO FILED SET OF ADDITIONAL G ROUNDS WHICH READS AS UNDER; 1. THE ABOVE NAMED ASSESSEE CRAVES FOR LEAVE TO AD D THE FOLLOWING ADDITIONAL GROUNDS; A) FROM THE TENOR AND CONTENTS OF THE IMPUGNED ORD ER IT IS CLEAR THAT THE AO HAS PROCEEDED AGAINST THE KARNATA KA INDUSTRIAL AREA DEVELOPMENT BOARD REPRESENTED BY TH E SLAO AND LEVIED PENALTY AND INTEREST UNDER SECTION 201(1 ) & 201(1A) ITA NO.1375(BANG)2013 3 ON THE SPECIFIC GROUND THAT THE KARNATAKA INDUSTRIA L AREA DEVELOPMENT BOARD HAS CLEARLY VIOLATED THE PROVISIO NS OF 194LA WHEREAS THE LAND HERE IN QUESTION IS AS PER THE PRO VISIONS OF THE KARNATAKA INDUSTRIAL ARAS DEVELOPMENT ACT AND THE S ECTIONS THERE UNDER AND THE NOTIFICATIONS ISSUED FOR THE PU RPOSE OF ACQUISITION, PAYMENT OF COMPENSATION WERE ALL MADE BY THE STATE GOVERNMENT AND THEREFORE, THE ORDER IS UNSUST AINABLE. 2. THIS ADDITIONAL GROUND IS ONLY AMPLIFICATION BY WAY OF ABUNDANT CAUTION TO GROUND NO.2. 3. THE FAILURE TO ADOPT THESE GROUNDS IN THE ORIGI NAL WAS NEITHER WILLFUL NOR DELIBERATE. IT DOES NOT REQUI RE ANY FRESH INVESTIGATION INTO FACTS APART FROM LOOKING INTO TH E MATERIAL ALREADY ON RECORD. PRINCIPLES FOR ADMISSION OF ADD ITIONAL GROUNDS HAVE BEEN LAID DOWN REPEATEDLY BY COURTS AN D WE MAY REFER ONLY TO FEW OF THOSE DECISION IN 229 ITR 383 (SC), 187 ITR 688(SC) 199 ITR 351 (BOM.FB) 193 ITR 624 (KER.) . BEING UNAWARE OF THE CORRECT POSITION IN LAW AND THE SAME HAS NOT BEEN BROUGHT TO MY KNOWLEDGE BY MY COUNSELS. WE MAY ADD HERE THAT THE VERY ADDITIONAL AGROUND NO.3 IS ONLY AN ALTERNATIVE GROUND. HENCE, IT IS PRAYED THAT THE ABOVE GROUND MAY BE ENTERTAINED AND DISPOSED OF IN ACCORDANCE WI TH LAW. 3. FACTS APROPOS ARE THAT THE ASSESSEE A STATE GOV ERNMENT UNDERTAKING WAS SUBJECT TO A SURVEY PROCEEDING UNDE R THE ACT. DURING THE COURSE OF SURVEY PROCEEDINGS, IT WAS NOTICED THAT T HE ASSESSEE HAD ACQUIRED CERTAIN PIECES OF LAND FROM NON-AGRICULTURAL LANDOW NERS AND EFFECTED PAYMENT WITHOUT DEDUCTING TAX AT SOURCE, AS REQUIRE D U/S 194LA OF THE IT ACT, 1961. A NOTICE WAS ISSUED TO THE ASSESSEE WHE REUPON SHRI ITA NO.1375(BANG)2013 4 H.D.NAGAVI, MANAGER APPEARED BEFORE THE AO. IT W AS EXPLAINED BY THE ASSESSEE THAT DEDUCTION U/S 194 LA OF THE IT ACT, W AS NOT MADE BY IT ON DISBURSEMENTS EFFECTED FOR ACQUIRING NON-AGRICULTUR AL LAND IN AND AROUND THE VILLAGE TARIHAL. AS PER THE ASSESSEE THE ACQU ISITION WAS FOR AIRPORT AUTHORITY OF INDIA ( AAI ), HUBLI. FOR NON-DEDUCTION OF TAX, ASSESSEE HAD RELIED ON CIRCULAR ISSUED BY THE REVENUE DEPARTMENT OF BANGALORE, ON 20- 05-2008. AS PER THE ASSESSEE IT HAD NOT DEDUCTED TA X ON COMPENSATION PAID DURING THE PERIOD MAY 2010 TO APRIL 2011. THE AO WAS OF THE OPINION THAT RELIANCE PLACED BY THE ASSESSEE ON THE CIRCULA R ISSUED BY THEIR HIGHER AUTHORITIES WOULD NOT ABSOLVE IT FROM ITS DUTY TO D EDUCT TAX AT SOURCE. HE HELD THAT THE ASSESSEE HAD FAILED TO DEDUCT TAX AT SOURCE U/S 194LA OF THE IT ACT, ON COMPENSATION OF RS.144,48,16,687/- PAID TO VARIOUS PERSONS FOR ACQUIRING THE NON-AGRICULTURAL LAND AND THE ASSESSE E WAS TREATED AS ONE IN DEFAULT AND ALSO HELD LIABLE FOR INTEREST U/S 201( 1A) OF THE IT ACT, 1961. 4. AGGRIEVED THE ASSESSEE MOVED IN APPEAL BEFORE T HE CIT(A). AS PER THE ASSESSEE THE CIRCULARS FROM ITS HEAD OFFICE, CL EARLY INDICATED THAT THERE WAS NO LIABILITY TO DEDUCT TAX AT SOURCE ON AMOUNTS PAID FOR ACQUISITION OF NON-AGRICULTURAL LAND DURING THE PERIOD MAY 2010 TO APRIL 2011. AS PER THE ASSESSEE THE OBLIGATION TO DEDUCT TAX AT SOURCE WAS ON THE PERSON RESPONSIBLE FOR DEDUCTING SUCH TAX. THE PERSON RES PONSIBLE WAS DEFINED U/S 204 OF THE ACT. AS PER THE ASSESSEE, PERSO N RESPONSIBLE FOR PAYING IN ITS CASE WAS THE STATE GOVERNMENT AND NOT THE AS SESSEE. RELIANCE WAS ITA NO.1375(BANG)2013 5 ALSO PLACED ON AMENDMENT TO SEC.204 OF THE IT ACT, EFFECTIVE FROM 01-07- 2012, THROUGH WHICH DRAWING & DISBURSEMENT OFFICER (DDO) OF A STATE GOVERNMENT OR CENTRAL GOVERNMENT WAS INCLUDED IN TH E DEFINITION OF PERSON RESPONSIBLE FOR PAYING. 5. HOWEVER, THE LEARNED CIT(A) WAS NOT IMPRESSED BY THE ABOVE ARGUMENT. ACCORDING TO HIM, THE CIRCULAR ISSUED BY THE HIGHER AUTHORITIES OF THE ASSESSEE BOARD, WAS IRRELEVANT WHEN IT WAS N OT IN ACCORDANCE WITH SEC.194LA OF THE IT ACT. FURTHER, AS PER THE LEA RNED CIT(A) THAT ASSESSEE S VIOLATED THE SAID SECTION AND THE EXPLANATION GIV EN BY THE ASSESSEE WAS NOT TENABLE. HE CONFIRMED THE ORDER OF THE AO. 6. NOW BEFORE US, LEARNED AR STRONGLY ASSAILING TH E ORDERS OF THE CIT(A), SUBMITTED THAT THE ACQUISITIONS WERE MADE B Y THE STATE GOVERNMENT AND THE ASSESSEE WAS ONLY A CONDUIT. IT WAS THE ST ATE GOVERNMENT WHICH WAS RESPONSIBLE FOR MAKING THE PAYMENTS FOR THE ACQ UISITION OF THE LAND. JUST BECAUSE AN OFFICER OF THE ASSESSEE MADE THE PA YMENTS AS PER THE LEARNED AR, ASSESSEE COULD NOT BE VISITED WITH THE OBLIGATIONS STIPULATED U/S 194LA OF THE IT ACT, 1961. RELYING ON SEC.2(2 ) OF THE KARNATAKA INDUSTRIAL AREAS DEVELOPMENT ACT, 1966 (KIADA) LEAR NED AR SUBMITTED THAT THE BOARD MEANT INDUSTRIAL AREA DEVELOPMENT BOARD E STABLISHED UNDER THE SAID ACT. RELYING ON SEC.5 OF THE KIADA ACT, THE LE ARNED AR SUBMITTED THAT THE BOARD WAS A BODY CORPORATE WITH PERPETUAL SUCCE SSION AND COMMON SEAL. AS PER THE LEARNED AR U/S 28(1) OF KIADB AC T, THE STATE COULD ITA NO.1375(BANG)2013 6 ACQUIRE LAND WHEN THE STATE WAS OF THE OPINION THAT LAND WAS REQUIRED FOR THE PURPOSE OF DEVELOPMENT BY THE ASSESSEE BOARD. THE LAND VESTED WITH THE STATE GOVERNMENT AND NOT WITH THE BOARD. RELYI NG ON SUB-SECTION OF 8 OF SEC.28, THE LEARNED AR SUBMITTED THAT THE STATE GOVERNMENT AFTER IT HAD TAKEN POSSESSION OF THE LAND ACQUIRED BY IT, TRANSF ERRED THE LAND TO THE BOARD, ONLY WHERE SUCH LAND WAS REQUIRED BY THE BOA RD. AS PER THE LEARNED AR SEC.29 OF THE KIADB ACT, CLEARLY SPECIFI ED THAT IT WAS FOR THE STATE GOVERNMENT TO PAY FOR THE ACQUISITION. AS PE R THE LEARNED AR WHERE THE COMPENSATION WAS DETERMINED BY AGREEMENT BETWEE N THE STATE GOVERNMENT AND OWNER OF THE LAND, IT CEASED TO BE C OMPULSORY ACQUISITION. ONLY IN THOSE CASES WHERE AN AGREEMENT COULD NOT BE REACHED BETWEEN THE PARTIES, THE QUESTION OF COMPULSORY ACQUISITION ARO SE. RELIANCE WAS PLACED ON AN ENGLISH TRANSLATION OF AN AGREEMENT EXECUTED BY ONE SMT.SUMITRA SHIVANAND KEELIPUTTI, PLACED AT PAPER BOOK PAGE NOS .49 -51 WHICH READS AS UNDER; THIS AGREEMENT HAS BEEN EXECUTED ON THIS DAY OF .APRIL, 2011 BY ME NAMELY SMT. SUMITRA SHIVANAND KEELIPUTTI BEING THE OWNER, BENEFICIARY, LEGAL HEIR, SUCCESSOR AND RIGHT HOLDER OF LAND SITUATED UNDER T HE SURVEY NO.636B, PLOT NO.16, SQUARE AREA, 0.01.03.75 SITUAT ED AT UNKAL VILLAGE TALKUK HOBALI IN DHARWAD DIST. AS PER THE DIRECTIONS ISSUED ON BEHALF OF THE HONBLE GOVERNOR OF KARNATAKA IN FAVOUR OF AUTHORITIES INCLUDING THE FO LLOWING TERMS AND CONDITIONS OF THE SAID AGREEMENT WHICH AR E AS UNDER; ITA NO.1375(BANG)2013 7 1. SUBJECT TO MY BELOW MENTIONED RIGHT, THE LAND SITUATED UNDER SURVEY NO.636B, PLOT NO.16, SQUARE A REA: 0.01.03.75 SITUATED AT UNKAL VILLAGE TALUK HOBALI I N DHARWAD DIST. HAS BEEN ACQUIRED IN FULL OR PART UND ER KARNATAKA INDUSTRIAL AREA DEVELOPMENT BOARD ACT, 19 66 OR THE PURPOSE OF INDUSTRIAL DEVELOPMENT. 2. ACCORDING TO THE SEC.28(6) OF THE SAID ACT, THE GOVT. HAS ACQUIRED THE SAID LAND & IN THIS REGARD THE NOT ICE HAS BEEN SERVED TO THE LAND OWNERS & RIGHT HOLDERS & TO SUCCESSORS & TO US TO MAKE PAYMENT OF LAND COMPENSA TION AMOUNT U/S 29(2) & ACCORDINGLY FURTHER THE LAND COMPENSATION AMOUNT HAS ALSO BEEN FIXED & DETERMINE D & THEREBY, WE THE LAND OWNERS & THE GOVT. HAVE MUTUAL LY AGREED FOR PAYMENT OF LAND COMPENSATION TO US & ACC ORDINGLY I AM BEING THE HOLDER OF THE LAND & BENEFICIARY FOR THE LAND COMPENSATION AMOUNT, HAVE SUBMITTED AN APPLICATION FOR CLAIMING LAND COMPENSATION AMOUNT. THEREFORE, I HAVE AGREED AS A LAND OWNER TO RECEIV E THE LAND COMPENSATION AMOUNT TO BE PAID TO THE SUCH OWN ERS FIXED BY THE KIADB & TO BE COLLECTED FROM THE SAID BOARD OF RS.920791/- IN FULL BY EXECUTING THE INDEMNITY BOND . 3. AS PER THE SAID AGREEMENT THE TOTAL COMPENSATIO N AMOUNT OF RS.9,20,791/-(RS.NINE LAKH TWENTY THOUSAN D SEVEN HUNDRED & NINETY ONE ONLY) (INCLUDING LAND COMPENSATION, BUILDING & OTHER OWNERSHIP RIGHTS AND RELINQUISHMENT OF RIGHT COMPENSATION AMOUNTS) HAS B EEN PAID TO ME & I HAVE RECEIVED THE SAME. FURTHER, I HAVE NOTED THAT THERE IS A PREVENTION TO MAKE APPEAL TO THE CIVIL C OURT FOR ITA NO.1375(BANG)2013 8 HIGHER COMPENSATION AMOUNT OVER AND ABOVE THE COMPENSATION AMOUNT PAID TO ME. I AM ALSO BOUND B Y & I HAVE AGREED THAT THE LAND COMPENSATION AMOUNT INCLU DED FOR ALL THE OWNERSHIP RIGHTS & BUILDING SITUATED IN THE SAID LAND. 4. IN CASE, IN FUTURE, IF IT IS PROVIDED THAT I AM NOT THE TRUE & ORIGINAL OWNER OF THE ACQUIRED LAND, THEN I AM BOUND BY AND OMITTED TO REFUND THE ENTIRE COMPENSATION AM OUNT OBTAINED BY ME & I WILL INDEMNIFY THE LOSSES AND CO ST TO THE BOARD OR TO THE GOVT. IMMEDIATELY. 5. FURTHER, IN CASE THE COMPENSATION AMOUNT IS NOT REFUNDED BY ME TO THE GOVT. OR TO THE TRUE & ORIGIN AL LAND OWNERS & IF I RETAINED THE COMPENSATION AMOUNT ILLE GALLY, THEN, THE SAID AMOUNT MAY BE RECOVERED FROM ME LEGA LLY AS LAND REVENUE ARREARS AS AGREED UNDER THIS SAID AGRE EMENT. I WITNESS THEREOF, I HAVE SIGNED THIS AGREEMENT IN CLUDING ABOVE TERMS & CONDITIONS, BEFORE THE FOLLOWING WIT NESSES. SD/- S.S.KEELIPUTTI LAND OWNERS 7. LEARNED AR SUBMITTED THAT THE CONSIDERATION FOR LAN D WAS FIXED U/S 29(2) OF THE ACT. AS PER THE LEARNED AR ALL THE AG REEMENTS THROUGH WHICH LAND WAS ACQUIRED WERE TYPICALLY WORDED AS THE ONE REPRO DUCED ABOVE, NONE OF THE ACQUISITION COULD BE TERMED AS COMPULSORY ACQUISITI ON. ITA NO.1375(BANG)2013 9 8. IN ANY CASE, ACCORDING TO HIM, PERSON RESPONSIB LE FOR PAYING AS DEFINED IN SEC. 204 DID NOT INCLUDE THE DISBURSING OFFICER OR A PERSON ACTING ON BEHALF OF THE CENTRAL GOVERNMENT OR STATE GOVERN MENT PRIOR TO 01-07- 2012. HENCE, ACCORDING TO HIM, EVEN IF IT WAS HEL D THAT SEC.194LA OF THE ACT, APPLIED TO THE ASSESSEE, THE MACHINERY PROVISIONS F OR MAKING IT EFFECTIVE, VIZ. SEC.204 COULD NOT BE APPLIED TO IT. THUS, ACCORDIN G TO HIM, ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE U/S 194LA OF THE IT ACT, 1961. RELIANCE WAS PLACED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF SUNDAR VS UNION OF INDIA AIR 2001 SUPREME COURT 3516 AND T HAT OF HONBLE CHATTISGARH HIGH COURT IN THE CASE OF NAYA RAIPUR D EVELOPMENT AUTHORITY, RAIPUR (TCA 36-2013 DATED 11-07-2014. 9. PER CONTRA, LEARNED DR STRONGLY SUPPORTED THE O RDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT CLAUSE-IV ADDE D TO SEC.204 BY FINANCE ACT, 2012 WAS CLARIFICATORY IN NATURE AND THIS WAS EXPLICITLY STATED IN THE MEMORANDUM EXPLAINING THE PROVISIONS IN THE FINANCE BILL, 2012. BEING CLARIFICATORY, ACCORDING TO THE LEARNED AR IT HAD T O BE GIVEN RETROSPECTIVE EFFECT. FURTHER, AS PER THE LEARNED DR, THE BOARD WAS ONLY AN ARM OF THE STATE AND HENCE, THE ASSESSEE WAS TRYING TO WRIGGLE OUT OF IT S LIABILITY TO DEDUCT TAX U/S 194LA OF THE IT ACT, CITING TECHNICALITIES. THE B OARD WAS ESTABLISHED ONLY FOR FACILITATING THE ACQUISITION OF LAND FOR INDUSTRIAL DEVELOPMENT AND THEREFORE, TO SAY THAT PAYMENT EFFECTED BY SUCH BOARD FOR ACQUISI TION OF LAND WOULD NOT COME WITHIN THE PROVISIONS OF SEC.194LA OF THE IT A CT, WAS INCORRECT. ITA NO.1375(BANG)2013 10 10. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. THERE IS NO DISPUTE THAT ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE ON PAYMENT EFFECTED BY IT FOR ACQUISITION OF NON-AGRICULTURAL LAND DURING THE MONTHS OF MAY 2010 TO APRIL, 2011. ARGUMENTS OF THE ASSESSEE CAN BE DIVIDED IN TO TWO. THE FIRST LIMB OF ARGUMENT IS THAT DEFINITION OF PERSON RESPONSIBLE FOR PAYING GIVEN IN SEC.204, AS IT STOOD AT THE RELEVANT POINT OF TI ME DID NOT INCLUDE AN OFFICER OF THE CENTRAL GOVERNMENT OR STATE GOVERNMENT AND H ENCE, COMPUTATION PROVISION FAILED. THE SECOND LIMB OF ITS ARGUMENT I S THAT THE ACQUISITIONS FOR WHICH PAYMENT WERE EFFECTED WERE NOT COMPULSORY IN NATURE. 11. WE DEEM IT APPROPRIATE TO FIRST TO DEAL WITH T HE SECOND LINE OF ARGUMENT TAKEN BY THE ASSESSEE. SECTION 194LA OF T HE IT ACT, IS REPRODUCED HEREUNDER; ANY PERSON RESPONSIBLE FOR PAYING TO A RESIDENT ANY SUM, BEING IN THE NATURE OF COMPENSATION OR THE ENHANCE D COMPENSATION OR THE CONSIDERATION OR THE ENHANCED CONSIDERATION ON ACCOUNT OF COMPULSORY ACQUISITION, UNDER ANY LAW FOR THE TIME BEING IN FORCE, OF ANY IMMOVABLE P ROPERTY (OTHER THAN AGRICULTURAL LAND) SHALL, AT THE TIME OF PAYME NT OF SUCH SUM IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO TEN PERCENT OF SUCH SUM AS INCOME-TAX THEREON. PROVIDED THAT NO DEDUCTION SHALL BE MADE UNDER THI S SECTION WHERE THE AMOUNT OF SUCH PAYMENT OR, AS THE CASE MA Y BE, THE ITA NO.1375(BANG)2013 11 AGGREGATE AMOUNT OF SUCH PAYMENTS TO A RESIDENT DUR ING THE FINANCIAL YEAR DOES NOT EXCEED. (TWO) HUNDRED THOUS AND RUPEES. EXPLANATION.FOR THE PURPOSE OF THIS SECTION,- I) AGRICULTURAL LAND MEANS AGRICULTURAL LAND IN INDIA INCLUDING LAND SITUATE IN ANY AREA REFERRED TO IN I TEMS (A) AND (B) OF SUB-CLAUSE(III) OF CLAUSE(14) OF SECTION 2; II) IMMOVABLE PROPERTY MEANS ANY LAND (OTHER THA N AGRICULTURAL LAND) OR ANY BUILDING OR PART OF A BUI LDING).. 12. A READING OF THE ABOVE SECTION CLEARLY INDICAT ES THAT IT APPLIES ONLY WHEN THERE IS A COMPULSORY ACQUISITION UNDER LAW. HONBLE APEX COURT HAD AN OCCASION TO CONSIDER WHAT COULD BE A COMPULSORY ACQUISITION IN THE CASE OF SUNDER VS UNION OF INDIA (SUPRA). THE QUESTION BEFO RE THE HONBLE APEX COURT WAS WHETHER SOLATIUM ON ACCOUNT OF COMPULSORY ACQUI SITION FORMS PART OF COMPENSATION. AT PARA-22 OF ITS JUDGMENT THEIR LORD SHIPS EXPLAINED WHAT COULD BE CONSIDERED AS COMPULSORY ACQUISITION IN TH E FOLLOWING WORDS; 22. COMPULSORY NATURE OF ACQUISITION IS TO BE DIS TINGUISHED FROM VOLUNTARY SALE OR TRANSFER. IN THE LATTER, THE LAND OWNER HAS THE WIDEST ADVANTAGE IN FINDING OUT A WOULD BE BUYE R AND IN NEGOTIATING WITH HIM REGARDING THE SALE PRICE. EVEN IN SUCH NEGOTIATIONS OR HAGGLING NORMALLY NO LANDOWNER WOUL D BARGAIN FOR ANY AMOUNT IN CONSIDERATION OF HIS DISINCLINATI ON TO PART WITH THE LAND. THE MERE FACT THAT HE IS NEGOTIATIN G FOR SALE OF THE LAND WOULD SHOW THAT HE IS WILLING TO PART WITH THE LAND. THE OWNER IS FREE TO SETTLE TERMS OF TRANSFER AND C HOOSE THE BUYER AS ALSO TO APPOINT THE POINT OF TIME WHEN HE WOULD BE RECEIVING CONSIDERATION AND PARTING WITH HIS TITLE AND ITA NO.1375(BANG)2013 12 POSSESSION OVER THE LAND. BUT IN THE COMPULSORY ACQ UISITION THE LAND OWNER IS DEPRIVED OF THE RIGHT AND OPPORTUNITY TO NEGOTIATE AND BARGAIN FOR THE SALE PRICE. IT DEPENDS ON WHAT THE COLLECTOR OR THE COURT FIXES AS PER THE PROVISIONS OF THE ACT . THE SOLATIUM ENVISAGED IN SUB-SECTION (2)IN CONSIDERATION OF TH E COMPULSORY NATURE OF THE ACQUISITION IS THUS NOT THE SAME AS DAMAGES ON ACCOUNT OF THE DISTINCTION TO PART WITH THE LAND AC QUIRED. 13. HOW FAR THE ABOVE MEANING COULD BE APPLIED IN RELATION TO INTERPRETATION OF SEC.194LA OF THE IT ACT, 1961 HA D COME UP BEFORE THE HONBLE CHATTISGARH HIGH COURT IN THE CASE OF NAYA RAIPUR DEVELOPMENT AUTHORITY (SUPRA). THE QUESTION BEFORE THE LORDSH IP WAS AS UNDER; WHETHER THE LAND ACQUIRED B Y AGREEMENT BY THE AS SESSEE UNDER THE CHATTISGARH NAGAR TATHA GRAM NIVESH ADHIN IYAM, 1973 (THE NIVESH-ACT) IS COMPULSORY ACQUISITION WIT HIN THE MEANING OF SEC.194LA OF THE INCOME-TAX ACT, 1961 (T HE IT ACT) OR NOT?. THEIR LORDSHIP HELD AS UNDER, AT PAGE-32 OF ITS JUD GMENT; 13. THE WORD COMPULSORY ACQUISITION IS NOT DEFI NED IN THE IT ACT OR FOR THAT MATTER IN ANY OTHER STATU TE. HOWEVER, IT IS EXPROPRIATION OR IS DONE IN EXERCISE OF EMINENT DOMAIN THE WORD, WHICH WAS COINED BY 17 TH CENTURY JURIST GROTIUS. 14. HALSBURYS LAWS OF ENGLAND, VOL.8(1), 4 TH EDITION EXPLAINS THAT WHERE LAND ON AN INTEREST IN LAND IS PURCHASED OR TAKEN UNDER STATUTORY POWERS WITHOUT THE AGREEMENT OF THE OWNER. IT IS SAID TO HAVE BEEN COMPULSORILY ACQUIR ED. ITA NO.1375(BANG)2013 13 15. IN SUNDER VS UNION OF INDIA (2001) 7(SCC 211) THE QUESTION INVOLVED BEFORE THE SUPREME COURT WAS WHETHER THE STATE LIABLE TO PAY INTEREST ON THE AMOUNT ENVISAGE D UNDER SECTION 23(2) OF THE LAND ACQUISITION ACT, 1894 (LA ACT) OR NOT. WHILE DECIDING THIS QUESTION, THE COURT OBSERVED, (1) IN THE COMPULSORY ACQUISITION THE LAND OWNER IS DEPRIVED OF THE RIGHT AND OPPORTUNITY TO NEGOTIATE AND BARGAIN FOR THE SALE PRICE. IT DEPENDS ON WHAT THE COLLECTO R OR THE COURT FIXES AS PER THE PROVISIONS OF THE LA ACT. 16. IT IS CLEAR THAT IN CASE OF COMPULSORY ACQUISI TION, THE SELLER HAS NO OPTION. HE CAN NEITHER REFUSE TO SELL HIS LAND NOR CAN HE NEGOTIATE THE PRICE. THE PRICE IS FIXED BY T HE STATUTE ITSELF. THE CONDITIONS THAT MUST BE SATISFIED BEFORE A PURC HASE CAN BE SAID TO BE COMPULSORY ACQUISITION ARE AS FOLLOWS; (I) THE SELLER HAS NO OPTION BUT TO SELL THE LAND. (II) THE SELLER CANNOT NEGOTIATE THE PRICE. IT IS FIXED BY THE STATUTE OR DETERMINED UNDER THE PRINCIPLES MENTIONE D THEREIN. 17. THERE ARE MANY EXAMPLES OF SUCH STATUTES. THE ZAMINDARI ABOLITION ACTS, CEILING ACTS, NATIONALISM ACTS ARE EXAMPLES OF SUCH COMPULSORY ACQUISITION BUT THE MOS T PROMINENT LAW REGARDING COMPULSORY ACQUISITION OF IMMOVABLE P ROPERTY IS THE LA ACT. 14. THUS, IT IS CLEAR THAT FOR AN ACQUISITION TO B E CONSIDERED COMPULSORY THE PRICE HAS TO BE FIXED BY THE STATUTE AND THERE SHOULD BE NO ROOM FOR NEGOTIATION. THE COMPENSATION THAT IS TO BE GIVEN I S CONFINED TO THE MARKET VALUE OF THE PROPERTY ON THE DATE OF NOTIFICATION U NDER THE LAND ACQUISITION ACT. ITA NO.1375(BANG)2013 14 AT THIS JUNCTURE, IT IS REQUIRED TO RE-PRODUCE PARA -2 OF THE AGREEMENT ENTERED BY THE ASSESSEE WITH SMT.SUMITRA SHIVANAND KEELIPUT TI WHICH HAS REPRODUCED BY US AT PARA-6 ACCORDING TO THE SEC.28(6) OF THE SAID ACT, THE GOVT. HAS ACQUIRED THE SAID LAND & IN THIS REGARD THE NOTICE HAS BEEN SERVED TO THE LAND OWNERS & RIGHT HOLDERS & TO SUCC ESSORS & TO US TO MAKE PAYMENT OF LAND COMPENSATION AMOUNT U/S 29(2) & ACCORDINGLY FURTHER THE LAND COMPENSATION AMOUNT HA S ALSO BEEN FIXED & DETERMINED & THEREBY WE HE LAND OWNERS & THE GOVT. HAVE MUTUALLY AGREED FOR PAYMENT OF LAND COMP ENSATION TO US & ACCORDINGLY I AM BEING THE HOLDER OF THE LA ND & BENEFICIARY FOR THE LAND COMPENSATION AMOUNT, HAVE SUBMITTED AN APPLICATION FOR CLAIMING LAND COMPENSATION AMOUN T. 15. IT IS CLEAR FROM THE ABOVE THAT THE COMPENSATI ON WAS FIXED IN ACCORDANCE WITH SEC.29(2) OF THE KIA ACT. SEC.29 OF THE KIA ACT IS RE-PRODUCED HERE UNDER; 29. COMPENSATION : (1) WHERE ANY LAND IS ACQUIRED BY THE STATE GOVERN MENT UNDER THIS CHAPTER, THE STATE GOVERNMENT SHALL PAY FOR SUCH ACQUISITION COMPENSATION IN ACCORDANCE WITH THE PRO VISIONS OF THIS ACT. (2) WHERE THE AMOUNT OF COMPENSATION HAS BEEN DETERMINED BY AGREEMENT BETWEEN THE STATE GOVERNMEN T AND THE PERSON TO BE COMPENSATED, IT SHALL BE PAID IN A CCORDANCE WITH SUCH AGREEMENT. ITA NO.1375(BANG)2013 15 (3) WHERE NO SUCH AGREEMENT CAN BE REACHED, THE STA TE GOVERNMENT SHALL REFER THE CASE TO THE DEPUTY COMMI SSIONER FOR DETERMINATION OF THE AMOUNT OF COMPENSATION TO BE PAID FOR SUCH ACQUISITION AS ALSO THE PERSONS TO WHOM SU CH COMPENSATION SHALL BE PAID (4) ON RECEIPT OF A REFERENCE UNDER SUB-SECTION (3 ), THE DEPUTY COMMISSIONER SHALL SERVE NOTICE ON THE OWNER OR OCCUPIER OF SUCH LAND AND ON ALL PERSONS KNOWN OR B ELIEVED TO BE INTERESTED HEREIN TO APPEAL BEFORE HIM AND STATE THEIR RESPECTIVE INTERESTS IN THE SAID LAND. IT IS CLEAR THAT THE QUESTION OF COMPULSORY ACQUISI TION WILL ARISE ONLY WHERE THE COMPENSATION CANNOT BE DETERMINED BY AGREEMENT. SU B-SEC.3 & 4 WILL COME INTO PLAY ONLY WHEN THERE IS A FAILURE TO DETERMINE THE COMPENSATION THROUGH NEGOTIATION BETWEEN STATE GOVERNMENT AND THE LAND O WNERS. IN OTHER WORDS WHEN THE COMPENSATION IS BASED ON AN AGREEMENT BETW EEN STATE GOVERNMENT AND OWNER OF THE LAND, NO MORE CAN WE SAY THAT IT I S A COMPULSORY ACQUISITION. ESPECIALLY SO, IN VIEW OF THE ELUCIDATION OF LAW BY THE HONBLE CHATTISGARH HIGH COURT IN THE CASE OF NAYA RAIPUR DEVELOPMENT AUTHOR ITY. ONCE THE ACQUISITION IS NOT CONSIDERED AS COMPULSORY, SEC.19 4LA OF THE IT ACT WILL NOT BE APPLICABLE. THUS, IN OUR OPINION, IF THE COMPE NSATION PAID BY THE ASSESEE FOR ACQUISITION OF LAND WERE ALL THROUGH AGREEMENTS SIMILAR TO THE ONE ENTERED BY THE ASSESSEE WITH SMT.SUMITRA SHIVANAND KEELIPUT TI, PERTINENT PARTS OF WHICH HAVE BEEN RE-PRODUCED BY US ABOVE, THEN THESE WOULD NOT FALL WITHIN THE ITA NO.1375(BANG)2013 16 DEFINITION OF COMPULSORY ACQUISITION. HOWEVER, WE ARE OF THE OPINION, THAT THE ACQUISITION WHETHER THE ACQUISITIONS FOR WHICH ASSE SSEE HAD NOT DEDUCTED TAX AT SOURCE WERE BASED ON AGREEMENTS SIMILAR TO THE O NE PRODUCED BY THE ASSESSEE BEFORE US OR IN OTHER WORDS WHETHER IN ALL SUCH COMPENSATION AMOUNTS WERE FIXED IN ACCORDANCE WITH SEC. 29(2) OF THE KIA ACT REQUIRE VERIFICATION BY THE LOWER AUTHORITIES. WE THEREFOR E, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND REMIT THE ISSUE BACK TO THE F ILE OF THE AO FOR VERIFYING THE AGREEMENTS TO REACH A CONCLUSION WHETHER ACQUIS ITIONS FELL UNDER COMPULSORY ACQUISITION OR NOT. LEARNED AO SHALL P ROCEED AS PER LAW DECLARED BY HONBLE APEX COURT AND ELUCIDATION GIVEN BY HON BLE CHATTISGARH HIGH COURT WHICH WE HAVE REPRODUCED ABOVE. SINCE WE HAV E REMITTED THE QUESTION REGARDING NATURE OF ACQUISITION BACK TO THE FILE OF THE AO, THE OTHER QUESTION AS TO THE FAILURE OF MACHINERY PROVISION FOR APPLYING SEC.194LA IS KEPT OPEN AT THIS JUNCTURE. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23-09-2015. SD/- (ASHA VIJAYARAGHAVAN) SD/- (ABRAHAM P GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE: D A T E D : 23-09-2015 AM* ITA NO.1375(BANG)2013 17 COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER AR, ITAT, BANGALORE