Koditham SrinivaSulu V. Union of India,

WP/4019/2016

AI Insights

The case revolves around a writ petition filed by Koditham Srinivasulu and two others against the Union of India and other respondents, challenging the deduction of income tax from compensation awarded for acquired agricultural land. The petitioners argued that the deductions were contrary to the Income Tax Act and specific circulars exempting agricultural land from such taxes. The respondents contended that the land was non-agricultural, justifying the tax deductions. The court examined precedents and statutory provisions, ultimately deciding in favor of the petitioners by setting aside the tax deductions and directing the full payment of the compensation amount.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 731608 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 15-11-2022
• Assessment Year: misc
• Other Referred Cases: C. Nanda Kumar V. Union of India, Union of India V. Hari Singh, Nalini V. Deputy Collector
• Laws Referred To: Income Tax Act, 1961, Land Acquisition Act, 1894, Fair Compensation in Land Acquisition, Rehabilitation and Resettlement Act, 2013
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: B REDDY
• Assessee Lawyers: M REDDY
• Keywords: Agricultural Land; Income tax deduction; Land Acquisition; Writ of Mandamus; Decretal Amounts
• Section: 96; 2(14)(iii); 197; 226; 194

Judgement Text

" HIGH COURT OF ANDHRA PRADESH AT AMARAVATI Writ Petition No.4019 of 2016 Between: Koditham Srinivasulu and 2 others .. Petitioners Vs. Union of India, Represented by its Director Land Reforms, Ministry of Rural Development, Development of Land Resources, Nirman Bhavan, New Delhi and others .. Respondents DATE OF JUDGMENT PRONOUNCED: 15.11.2022 SUBMITTED FOR APPROVAL: THE HON'BLE SRI JUSTICE VENKATESWARLU NIMMAGADDA 1. Whether Reporters of Local newspapers Yes/No may be allowed to see the Judgments? 2. Whether the copies of judgment may be Yes/No marked to Law Reporters/Journals? 3. Whether Their Ladyship/Lordship wish to Yes/No see the fair copy of the Judgment? __________________________________ VENKATESWARLU NIMMAGADDA, J 2 W.P. No.4019 of 2016 NV, J *THE HON'BLE SRI JUSTICE VENKATESWARLU NIMMAGADDA +Writ Petition No.4019 of 2016 % 15-11-2022 W.P.No.4019 of 2016 # Koditham Srinivasulu and 2 others .. Petitioners Vs. $ Union of India, Represented by its Director Land Reforms, Ministry of Rural Development, Development of Land Resources, Nirman Bhavan, New Delhi and others .. Respondents HEAD NOTE: ! Counsel for petitioners : Sri M. Subba Reddy ^ Counsel for respondent No.1. : Sri B. Narayana Reddy Counsel for respondent No.2. : The Government Pleader for Irrigation Counsel for respondent No.3. : The Government Pleader for Revenue Counsel for respondent Nos.4 & 5 : The Government Pleader for Land Acquisitions. ^ Counsel for respondent No.6 : The Standing Counsel for Income Tax ? CASES REFERRED : 1) 2017 SCC OnLine Hyd 55 : (2017) 3 ALD 726(DB) : (2017) 396 ITR 21 : (2017) 29 CTR 454 2) (2001) 6 SCC 496 3) 2006 SCC OnLine Ker 444 : (2006) 4 KLT 87 : (2007) 294 ITR 423 : (2007) 213 CTR 601 3 W.P. No.4019 of 2016 NV, J THE HON'BLE SRI JUSTICE VENKATESWARLU NIMMAGADDA WRIT PETITION NO.4019 OF 2016 ORDER: The present writ petition is filed under Article 226 of the Constitution of India for the following relief: “....pleased to issue Writ of Mandamus to declare the proceedings of the 2nd respondent issued in G.O.Rt.No.525 Water Resources (LAA2) Dept., dated 13.08.2015 so far as directing the 4th and 5th respondents to deduct Income tax from the decretal amounts of the petitioners in O.P. Nos.543/2003, O.P. No.544/2003 and O.P. No.545/2003 on the file of the Learned Principal Senior Civil Judge, Nandyal, Kurnool District as illegal, arbitrary, discriminatory and contrary to the circular dated 13.04.2011 issued by the 1st respondent and consequently to direct the 4th and 5th respondents to deposit the entire decretal amounts of the petitioners in their accounts in O.P. No.543/2003, O.P.No.544/2003 and O.P. No.545/2003 on the file of the learned Principal Senior Civil Judge, Nandyal, Kurnool District to the tune of Rs.4,89,65,362/- without deducting Income tax and pass such other order or orders...” 2. The brief facts of the case are that the 4th respondent herein had acquired the properties of the petitioners as mentioned above and also passed an award vide No.34/2001-02 dated 03.12.2001. It is the further case of 4 W.P. No.4019 of 2016 NV, J the petitioners that against the award, the petitioners sought for reference under Section 18 of the Land Acquisition Act. The said application was numbered as L.A.O.P. No.543/2003 of the petitioners herein, in which the award amount was enhanced by the Court below. Against the said application, the 5th respondent preferred the first appeals. Thereafter, the cross-appeals filed by the petitioners herein are allowed and appeals filed by the respondents were set aside vide common judgment dated 26.9.2008, in which the award amount is enhanced to Rs.4,00,000/- per acre from Rs.2,78,000/- per acre by the Court below. Against the same, the 5th respondent preferred Special Leave Petition before the Hon'ble Apex Court. The said SLP was ended by way of dismissal vide orders dated 14.11.2014. At last, the 2nd respondent issued G.O.Rt.No.525 Water Resources (LA.A2) Department, dated 13.08.2015, in which an amount of Rs.4,89,65,362/- was sanctioned as decretal charges out of 3 cases of the petitioners. It is further the case of the petitioners that while depositing the said amount, respondent Nos.4 and 5 are directed to deduct income tax at the rate of 10.3% against 5 W.P. No.4019 of 2016 NV, J the decretal amount as stated above. It is the further case of the petitioners that the said deduction is against the provisions of the Income Tax Act, 1961. Hence, the writ petition. 3. The learned counsel for the petitioners would submit that the amount which was paid towards the acquisition of agricultural land of the petitioners is not a capital asset as defined under Section 2 (14)(iii) of the Income Tax Act and therefore, the said amount is not liable for deduction of Tax under the provisions of the Income Tax Act. The other contention of the petitioners is that Section 194 of the Fair Compensation in Land Acquisition, Rehabilitation and Resettlement (Act 30 of 2013) Act, 2013 specifically envisages that no tax can be levied against the rates of agricultural lands under land acquisition proceedings. Then, the other contention of the petitioners is that even though there is no specific provision under the provisions of the old Land Acquisition Act, 1894, but there is no specific authorization under the provisions of the Income Tax Act authorizing the respondents herein for deduction of tax from 6 W.P. No.4019 of 2016 NV, J the land acquisition proceeds against the agricultural lands. It is further contended that there is a specific bar under Act 30 of 2013 for imposing any tax from the acquisition proceeds in respect of agricultural lands. Therefore, the same analogy can be drawn even for the acquisition proceedings which were initiated under the provisions of Act, 1894. The learned counsel for the petitioners also relied upon a judgment rendered by this Hon'ble Court in C. Nanda Kumar V. Union of India1 wherein para Nos.34 and 40 read as follows: \"34. Therefore, in cases other than those covered by Section 46 of the 2013 Land Acquisition Act, the levy of income tax is barred by Section 96, and as a consequence, the deduction or collection under Section 194LA of the Income Tax Act, 1961, is impermissible.\" \"40. Therefore, in fine, the writ petitions are allowed, and there shall be a direction to the respondents not to deduct tax at source whenever any compensation is paid for the acquisition of a land under the 2013 Land Acquisition Act, except those covered by Section 46 of the 2013 Act. In cases where by way of an interim order, the tax deducted at source was directed to be kept in a Fixed Deposit in the name of the Registrar (Judicial) of this 1 2017 SCC OnLine Hyd 55 : (2017) 3 ALD 726(DB) : (2017) 396 ITR 21 : (2017) 298 CTR 454 7 W.P. No.4019 of 2016 NV, J Court, the Registry shall either liquidate the deposit and transfer the funds to the account of the petitioners or makeover/transfer the Fixed Deposit in the name of the concerned petitioners to enable them to encash the same. The miscellaneous petitions, if any, pending in these writ petitions shall stand closed. No costs.” 4. He also relied upon a judgment rendered by the Apex Court in Union of India V. Hari Singh2, wherein para No.7(i) reads as follows: \"The respondents shall file appropriate returns before the Assessing Officer(s) in respect of Assessment Years in question within a period of two months from today in case they feel that the compensation in respect of land belonging to them which had been acquired was agricultural land, and claim a refund of the tax which was deducted at source and deposited with the Income Tax Department. On the filing of these returns, the Assessing Officer(s) shall go into the aforesaid question, and wherever it is found that the compensation was received in respect of agricultural land, the tax deposited with the Income Tax Department shall be refunded to these respondents.\" 5. It is further contention of the learned counsel for the petitioners that the subject land under acquisition is purely agricultural land and not converted into non-agriculture as 2 (2018) 15 Supreme Court Cases 201 8 W.P. No.4019 of 2016 NV, J required under the provisions of the Andhra Pradesh Agricultural Land (Conversion for Non-Agricultural Purpose) Act, 2006 for such conversion. But, it may be a potential land since it is abutting to the habitation, and the acquisition was also taken place in terms of the acres only, which is the measurement for agricultural land. Therefore, the contention of the respondents that the present land under acquisition is not agricultural land, since the compensation awarded by the Courts is very high, at a rate other than for agricultural lands, cannot be weighed, for the reason that even though it is an agricultural land, but it is a potential land since it is abutting to habitations. 6. On the other hand, the learned Government Pleader for Land Acquisition would submit that the subject land under acquisition is not agricultural land, for the reason that the amount paid towards land in the acquisition is at the rate for non-agriculture land. The petitioners claimed before the Courts below that this land is not meant for agriculture and it is abutting to the habitations, and they claimed the amount at a high rate meant for non- 9 W.P. No.4019 of 2016 NV, J agricultural land only. The other contention of the learned Government Pleader is that Kerala High Court rendered a judgment in Nalini V. Deputy Collector3, dated 25.08.2006, wherein it is held the petitioners claim the exemption from the liability to pay income tax on the ground that, as per the revenue records, the land acquired was agricultural land. The land Acquisition Court has no jurisdiction to decide that issue, and that is a matter to be decided by the Income Tax Officer. So the order passed by the Court below is correct. The remedy available to the petitioners is to get the Tax Deduction Certificate from the Land Acquisition Officer and claim a refund from the Income Tax Officer. Later the said judgment is also upheld by the Hon'ble Apex Court. 7. In view of the said judgment, the petitioners are liable to approach the Income Tax Officer under Section 197 of the Income Tax Act, 1961. 8. Heard the contentions submitted by the learned counsel for the petitioners as well as the learned 3 2006 SCC OnLine Ker 444 : (2006) 4 KLT 87 : (2007) 294 ITR 423 : (2007) 213 CTR 601 10 W.P. No.4019 of 2016 NV, J Government Pleader for Land Acquisition and also Smt. Kiranmayee, learned Standing Counsel for the Department of Income Tax, voluntarily assists the Court. That the petitioners contend that the subject land under acquisition is agricultural land and not converted into non-agricultural land as per the Act 2006, but it is a potential land due to abutting to the habitation is sustainable in the absence of any specific proceedings issued by the authorities to disprove the contention of the petitioners. The other contention of the petitioners is that Section 194 LA of the Income Tax Act specifically envisages that no tax can be levied against the acquisition proceeds arising out of acquisition to be payable for the acquisition of agricultural land is also to be considered. The other contention of the petitioners is related to the analogy laid down by this Hon'ble Court and the Hon’ble Apex Court under Section 96 of Act 30 of 2013, under which the exemption from Income Tax was granted against the acquisition proceeds in respect of the agricultural lands should be applied. Even in the present case on hand, it should be considered. 11 W.P. No.4019 of 2016 NV, J 9. On the other hand, the contention of the learned Government Pleader for the respondents is that since the petitioners were paid at higher rates as non-agricultural lands, the petitioners cannot claim for exemption from the Income tax in the absence of any proceedings regarding the conversion of land from agricultural land into non- agricultural purpose is not sustainable. 10. The other contention of the learned Government Pleader is that the petitioners shall approach the income tax authorities under Section 197 of the Income Tax Act for issuance of TDC to claim the reduction of the amount is also not tenable for the reason that the present case in hand, no amounts were paid and no amounts were deducted at all. 11. In view of the foregoing discussion, the proposed action of the respondents in so far as the deduction of income tax from the land acquisition proceeds regarding agricultural land of the petitioners proposed vide Circular, Ministry of Rural Development, Department of Land Resources (Land Reforms Division), dated 13.04.2011 is set aside, and the respondent authorities are directed to release 12 W.P. No.4019 of 2016 NV, J the amount which was sanctioned pursuant to the G.O.R.T.No.525 Water Resources (LA.A2) Department, dated 13.08.2015, without making any deductions towards income tax, to the petitioners within a period of three (3) months from the date of receipt of a copy of this order. It is needless to observe that the respondent authorities may initiate appropriate steps to recover whatever amount is to be recovered other than income tax, if any. Moreover, the petitioners are entitled to interest accrued upon the deposited amount in accordance with the law. 12. Accordingly, the writ petition is disposed of with the above-mentioned observations. Consequently there to, all the miscellaneous petitions are closed. ____________________________________________ JUSTICE VENKATESWARLU NIMMAGADDA 15.11.2022. ASH 13 W.P. No.4019 of 2016 NV, J THE HON'BLE SRI JUSTICE VENKATESWARLU NIMMAGADDA WRIT PETITION NO.4019 OF 2016 15.11.2022 ASH "