TaxTMI 
TaxTMI 
2008 (10) TMI 638
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.... Ext.P4. Ext.P4 is issued to the CEO of the petitioner advising the petitioner to take immediate steps to ensure compliance with the statutory provisions for deduction of tax at source and remittance of the same to the Government account. 2. Petitioner is a Society established under the Travancore Cochin Societies Registration Act, 1955. It is managed by a Board nominated by the Government of Kerala and it is set up with the objective of development of Information Technology Parks. Briefly put the case of the petitioner is as follows: As and when the land is identified, which is suitable for the project, Government issues notification under Section 4 of the Land Acquisition Act, 1894 notifying the lands. A notification is also issued under Section 6(1) of the Survey and Boundaries Act, 1961. The price of the land is determined by the District Level Purchase Committee, which consists of District Collector as Chairman. There is an assessment of the replacement value of the land and the recommendation of the District Level Purchase Committee is forwarded to the Empowered Committee for approval. The Empowered Committee consists of the Chief Secretary of the State as the Cha....
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....roject) is being done on the strength of the notification issued by the Government. The mode of execution may have been through sale deeds after reaching a negotiated agreement on the amount to be paid as compensation, but the proceedings are carried out as a consequence of notification issued under the Land Acquisition Act, 1894, to acquire the specified land area. Once a particular area has been notified by Government for acquisition for a specified purpose, there is no option for the owners but to sell. The only difference in this case is that it has been brought under Fast Track Procedure to expedite the process of land acquisition, and consideration/compensation is decided through the medium of District Level Purchase Committee and Grievance Redressal Committees. This being the case, even if sale deeds are executed, it is, in effect, compulsory acquisition of land within the meaning of Section 194LA, and tax should therefore be deducted on all such payments. In respect of payments already made without deducting tax at source, proceedings under Section 201(1)/201(1A) are separately being initiated." Consequently advice is given to act in accordance with the statu....
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....ument used to transfer the property. There would be no hardship to the petitioner to deduct tax at source. The fact that the project is of prime importance does not absolve the concerned authorities from dispensing their duty to deduct tax at source from payments covered by Section 194 LA. Respondents have also produced an annexure to the counter affidavit. 4. Reply affidavit is also filed, wherein it is inter alia stated as follows: Sale deeds satisfied the requirements of a contract distinct from a compulsory acquisition. The price is agreed on the basis of negotiation. There is negotiation and the price is finally arrived at and the sale deed is executed on the basis of the agreed price. These situations are completely lacking in a compulsory acquisition. Reference is placed on the guidelines. The mere issuance of notification does not necessarily result in the subsequent steps being taken particularly in so far as there are a number of further steps to be taken to complete the process of compulsory acquisition even after the issuance of the notification. The sale deed cannot be equated to a compulsory acquisition. Even without a notification, there could have been a....
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....s lands are frozen. If he does not negotiate and sell the land by way of transfer, certainly his lands would come to be acquired under the Land Acquisition Act. To call a transaction sale, there must be a real choice available to the owner of the land in the first place as to whether he wishes to sell the land to anyone. He submits that in a case as the present, where a notification is issued under the Land Acquisition Act, the land owners may have entered into sale deeds in the shadow and the threat of the land acquisition proceedings being taken to their logical conclusion. Even if the land owner may have had the freedom in the matter of the price of the land and may have negotiated, he is unlike a land owner, who has the freedom either to sell the land or not to sell the land. This fundamental factor may not be lost sight of , it is submitted. In this context, he relied on the decision of the Calcutta High Court in the decision reported in Calcutta Electric Supply Corporation Ltd. v. Commissioner of Income-Tax (Vol.XIX ITR 406). He also submits that Section 194 LA is a provision geared to collection of amounts towards tax payable and also he submits that the petitioner has....
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....law for the time being in force." No doubt, the words 'any person' supports the case of the Department that Section 194 LA would apply even to the petitioner at first blush. But I find myself unable to accept the interpretation canvassed by the department on considering the other parts of the section. The sum payable must be in the nature of compensation or enhanced compensation or the consideration or enhanced consideration on account of compulsory acquisition. The words 'compensation' and 'enhanced compensation' are concepts which are apparently taken from the provisions of the Land Acquisition Act. Section 9 of the Land Acquisition Act provides that the Collector shall give notice in regard to claims to compensation for all interests in such land may be made to him. Sub section (2) also referred to the word 'compensation'. Section 11 also referred to the word 'compensation'. Section 11 enjoins that the Collector must hold an inquiry and pass an award. The award must provide for the compensation which, in his opinion shall be allowed for the land. Sub-section (3) speaks about determination of the compensation. Section 15 speaks about matter....
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....nsation awarded by him to the persons interested entitled thereto according to the award, and shall pay it to them unless prevented by some one or more of the contingencies mentioned in the next sub-section. xxxxx xxxxx (3) Notwithstanding anything in this section, the Collector may, with the sanction of the appropriate Government, instead of awarding a money compensation in respect of any land, make any arrangement with a person having a limited interest in such land, either by the grant of other lands in exchange, the remission of land revenue on other lands held under the same title, or in such other way as may be equitable having regard to the interest of the parties concerned. (4) Nothing in the last foregoing sub-section shall be construed to interfere with or limit the power of the Collector to enter into any arrangement with any person interested in the land and competent to contract in respect thereof." Section 34 speaks about payment of interest on compensation which is not paid or deposited on or before taking of possession. Section 54 provides for appeals to the High Court from the award or from any part of the award of the court. It is also impo....
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....sting in the Central Government of the shares of the Oil Company and also the right, title and interest of each specified Company in terms of its undertaking in India. Likewise, Section 6 of the Banking Companies Act also provide for payment of amount in respect of the transfer as was specified in such schedule. 14. I notice that both these Acts are much prior to the insertion of Section 194LA of the Income Tax Act. I notice that both the words 'compensation' and 'consideration' as also 'enhanced compensation' and 'enhanced consideration must be payable on account of compulsory acquisition under any law. The words 'consideration' and 'enhanced consideration' are to be read along with the words compulsory acquisition under a law. The examples of legislation canvassed by the petitioner though anterior in time, in my view provide the answer to the question as to the import of the words. In other words 'consideration' and 'enhanced consideration' mean amounts payable under any law providing for compulsory acquisition. 15. The contention of the Standing Counsel would appear to be that there is no sale even though sale dee....
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....ice." It has also been defined as an exchange of a thing for a price. Making over anything for a price or exchanging it for a price suggests that the act is voluntary. The ordinary conception of "sale" is that something is handed over for a price as the result of negotiation and agreement. There is an agreement between the parties whereby one person known as the seller hands over a thing or property to the other person known as the buyer for a consideration usually in terms of money which has been agreed between the parties. That is the ordinary English conception of a "sale". xxxxx xxxxx It seems to me quite clear that the acquisition of this plant by the Government could never be said to be a "sale" as that word is ordinarily used in the English language. There was nothing voluntary about the transaction. Against the wishes of the assessees Government requisitioned this property. The assessees asked Government to stay their hand and cancel the order depriving them of their property. But Government refused to do so and stated that they would determine the amount payable and they were paying Rs. 5,00,000/- on account. In short, the order of requisition deprived the asse....
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....r of Income-Tax, Delhi ((1959) 36 ITR 411) is also relied on by the counsel for the respondents. The question which arose was whether there was a sale within the meaning of Section 10(2) (vii) of the Income Tax Act, 1922. The assessee in the said case carried on business of generation and supply of electricity. Under the terms of its licence, a clause empowered the Government to exercise its option to purchase the undertaking. The price paid by the Government was in excess of the written down value of the assets. Therein the court proceeded to hold that a transaction which amounts to compulsory acquisition does not come within the purview of Section 10(2)(vii) of the Income Tax Act. I have already extracted Section 10(2)(vii) of the Income Tax Act. The court proceeded to hold that if a transaction amounts to compulsory acquisition, then the transaction does not come under Section 10(2)(vii) of the Income Tax Act. They proceeded to hold as follows: "The question arises whether the present transaction does or does not amount to compulsory acquisition. The contention raised on behalf of the assessee company is that it is acquisition because section 7 itself describes the transactio....
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....nsaction amounted to sale under Section 10(2)(vii) of the Income Tax Act. In the course of the judgment, the court proceeded to repel the stand of the Company that the element of mutuality is lacking in the case holding that the rules show that a draft licence has to be sent by an applicant for licence containing definite and specific terms on which the licence is sought, which amounts to an offer, which the Government accepts or rejects and the licence itself amount to a contract between the parties. 17. In Matajog v. H.C. Bhari (AIR 1956 Sc 44) one of the questions which arose was whether there was implied power to remove the obstruction caused to the discharge of his duties by the officer under the Taxation on Income (Investigation Commission) Act. The court proceeded to hold as follows: "Where power is conferred or a duty imposed by statute or otherwise, and there is nothing said expressly inhibiting the exercise of the power or the performance of the duty by any limitations or restrictions, it is reasonable to hold that it carries with it the power of doing all such acts or employing such means as are reasonably necessary for such execution." Learned counsel for....
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.... headed by the District Collector fixed a value of Rs. 84,268/- ( Eighty four thousand two hundred sixty eight) in respect of 2.40 ares of land described in the schedule which has got tarred road access, which was approved by the Government by G.O.(MS) 26/06 vi.sa.va dated 22.12.2006 and this was fully agreed to by us. In order to rehabilitate the 42 residents from the acquired land the Government issued orders on 20.4.2007 to assign 5 cents each free of cost. But not being satisfied with this, when the evacuees including us resorted to agitational methods and legal action, the District Collector submitted a new rehabilitation package to the State Level Empowered Committee (SLEC) to acquire land under Fast Track Scheme and the SLEC after discussions, submitted the same for the consideration of the Cabinet and the Government after examining the Scheme, canceling the earlier order to assign 5 cents to the 42 residents, issued order as per M.S. 12/07 vis.a.va dated 29.6.2007 wherein it was ordered to assign 6 cents of land each free of cost to 59 residents including the 41 residents including us and the 18 nuclear families residing with them and to allow grant of Rs. 1 Lakh each to su....
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....cquisition under the law for acquisition of immovable property. As already noticed, there was no divesting of the title of the land owners under Section 16 of the Land Acquisition Act, namely, passing of an award, and possession being taken thereunder or by possession being taken earlier under the urgency clause, namely Section 17. The mere issuance of notification under Section 4(1) does not have the effect of divesting of title of the land owner. Only if there were such divesting of the title of the land owner, and amounts were paid either as compensation or as enhanced compensation, could it be said that there is compulsory acquisition under the law for the time being in force. It may be true that when the notification under Section 4 was issued, the choice of action of the land owners became limited. Faced with the notification under Section 4 of the Land Acquisition Act, there are three courses of action, which can be contemplated. Land owner may prefer writ petition challenging the notification itself. Instead if he is so advised, he may decide to transfer his right to the Government. If neither of the two happens and the Government does not decide to withdraw from the ....
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....bring back S.4 notification which was wiped away and ceased to exist when order under S.48(1) of the Act was passed. The position under the law is that an order under S.48 of the Act has the result of withdrawing the notification issued under Section 4. This means that there is a clear slate and if subsequently the Government wants to acquire the land it must start from the stage of issuing a fresh notification under Section 4 of the Act." Once a notification under Section 4 is effaced by way of withdrawal, the only way it can restart the acquisition proceedings, if so advised, is to issue a fresh notification. This means, in the facts of this case, that even though Government started out by issuing a notification under Section 4 of the Land Acquisition Act, it became unnecessary to proceed with the acquisition as the land owners had executed sale deeds in favour of the petitioner. It is not in dispute that the Government adopted Ext.P1 guidelines relating to the fast track procedure and in keeping with the fast track procedure in one stream of cases, where land owners were agreeable with the negotiations, the sale deeds were executed. The other stream where negotiations did not....