Commissioner of Income Tax [TDS] V. Sri VAraha Laxmi Nrusimha Swamy DEvastanam

ITTA/517/2015

AI Insights

The case involves an appeal by the Income Tax Department against the order of the Income Tax Appellate Tribunal, which had ruled in favor of a religious endowment that paid compensation for the eviction of illegal occupants from its land. The core issue was whether the compensation paid fell under the purview of Section 194LA of the Income Tax Act, which pertains to tax deduction at source for compensation related to compulsory acquisition of immovable property. The Tribunal and the High Court found that the compensation was not related to any compulsory acquisition but was merely for the eviction of encroachers, thus not attracting the provisions of Section 194LA.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 717844 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 01-06-2016
• Assessment Year: misc
• Other Referred Cases: Naya Raipur Development Authority vs. ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Respondent
• Court: HIGH COURT
• Department Lawyers: B SARMA
• Keywords: Compensation; Eviction; Illegal occupation; Income Tax; Tax deduction at source; Religious Endowment
• Section: 201(1); 260A; 194LA; 201(1A); 206C(7); 206C

Judgement Text

" THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN AND THE HON’BLE SRI JUSTICE M.SATYANARAYANA MURTHY I.T.T.A.No.517 of 2015 ORDER: (per Hon’ble Sri Justice Ramesh Ranganathan) This appeal under Section 260A of the Income Tax Act (for short ‘the Act’) is preferred against the order passed by the Income Tax Appellate Tribunal, Visakhapatnam Bench, in ITA.No.375/Vizag/2012 dated 04.03.2015. The respondent-assessee is a religious endowment. It paid compensation to evict some persons who had illegally occupied and were enjoying the lands belonging to them. On the ground that the respondent-assessee did not deduct tax at source, and had thereby violated Section 194LA of the Act, the assessing authority passed an order under Section 201(1)/201(1A) and Section 206C/206C(7) of the Act. Aggrieved thereby, the respondent-assessee carried the matter in appeal, and the Commissioner of Income Tax (Appeals) upheld the action of the assessing authority in raising the demand under Section 201(1)/201(1A) of the Act. The respondent-assessee carried the matter in further appeal to the Income Tax Appellate Tribunal (for short ‘the Tribunal’). In the order under appeal, the Tribunal noted that the compensation paid by the assessee was for the private houses constructed on their land; the persons to whom compensation was paid did not have title over the said land; there was no legislation passed for acquiring any property; the Government had issued G.O.Ms.No.413 dated 01.04.2006 constituting a committee for shifting the residents of all the houses uphill to an area downhill, and to make payments to such residents; Section 194LA of the Act applied only to cases of compulsory acquisition under a law for the time being in force; and, as there was no compulsory acquisition of any immovable property by the assessee, Section 194LA of the Act was not applicable. Sri B.Narasimha Sarma, learned Senior Standing Counsel for the Income Tax Department, would contend that as compensation was paid for the structures, albeit on the land belonging to the respondent- assessee, it must be presumed to be acquisition of such buildings; and consequently the respondent assessee was obligated to comply with the requirements of Section 194LA of the Act. We must express our inability to agree. Section 194LA of the Act applies only where compensation is paid to a resident on account of “compulsory acquisition under any law for the time being in force of any immovable property”. While the buildings, for which compensation was paid, no doubt constitute immovable property, the compensation paid by the assessee to those who had raised these illegal and unauthorised structures was neither for compulsory acquisition nor is such compensation referable to any law relating to compulsory acquisition of immovable property. It is not in dispute that the lands, on which houses were illegally constructed by encroachers, belonged to the respondent-assessee. The compensation paid by the assessee to the encroachers was only to have them evicted from their lands at the earliest. Such payment of compensation cannot be equated to acquisition of immovable property much less compulsory acquisition under any law for the time being in force. While the submission of Sri B.Narasimha Sarma, learned Senior Standing Counsel for the Income Tax Department, that the order of the Bilaspur Bench of ITAT in the case of Naya Raipur Development Authority vs. ITO[1] is inapplicable, has considerable force, we are satisfied that the conclusion of the Tribunal that Section 194LA of the Act is not attracted is in accordance with law. No substantial question of law arises for consideration in this appeal necessitating our interference. The appeal fails and is, accordingly, dismissed. The miscellaneous petitions pending, if any, shall also stand dismissed. There shall be no order as to costs. _____________________________ RAMESH RANGANATHAN, J ___________________________________ M. SATYANARAYANA MURTHY, J Date: 01.06.2016 v v [1] (2014) 61 SOT 244 "