TaxTMI 
TaxTMI 
2015 (11) TMI 180
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....e 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) ought to have reduced to the extent of the amount collected from the land owners and remitted to the Government account and also to the extent of income declared b y the land owners in their 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 grounds which reads as under; "1. The above named assessee craves for leave to add the following additional grounds; a) From the tenor and contents of the impugned order it is clear that the AO has proceeded against the Karnataka Industrial Area Development Board represented by the SLAO and levied penalty and interest under section 201(1) & 201(1A) on the specific ground that the Karnataka Industrial Area Development Board has clearly violated the provisions of 194LA whereas the land here in question is as per the provisions of the Karnataka Industrial Aras Development Act and the Sections there under and t....
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.... 1961. 4. Aggrieved the assessee moved in appeal before the CIT(A). As per the assessee the Circulars from its Head Office, clearly 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 responsible was defined u/s 204 of the Act. As per the assessee, person responsible for paying in its case was the State Government and not the assessee. Reliance was 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 the 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 not in accordance with Sec.194LA of the IT Act. Further, as per the learned CIT(A) that assessee s violated the said section and the explanation given by the assessee was not tenable. He co....
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....ch are as under; 1. Subject to my below mentioned right, the land situated under Survey No.636B, Plot No.16, Square Area: 0.01.03.75 situated at Unkal Village Taluk Hobali in Dharwad Dist. Has been acquired in full or part under Karnataka Industrial Area Development Board Act, 1966 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 Notice has been served to the land owners & right holders & to successors & to us to make payment of land compensation amount u/s 29(2) & accordingly further the land compensation amount has also been fixed & determined & thereby, we the land owners & the Govt. have mutually agreed for payment of land compensation to us & accordingly 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 receive the land compensation amount to be paid to the such owners 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....
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.... authorities below and submitted that clause-iv added 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 to 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 its liability to deduct tax u/s 194LA of the IT Act, citing technicalities. The Board was established only for facilitating the acquisition of land for industrial development and therefore, to say that payment effected by such Board for acquisition of land would not come within the provisions of Sec.194LA of the IT Act, was incorrect. 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 time....
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....e fact that he is negotiating 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 choose the buyer as also to appoint the point of time when he would be receiving consideration and parting with his title and possession over the land. But 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 Collector or the Court fixes as per the provisions of the Act. The solatium envisaged in sub-section (2)"in consideration of the compulsory nature of the acquisition" is thus not the same as damages on account of the distinction to part with the land acquired". 13. How far the above meaning could be applied in relation to interpretation of Sec.194LA of the IT Act, 1961 had come up before the Hon'ble Chattisgarh High Court in the case of Naya Raipur Development Authority (Supra). The question before the Lordship was as under; " Whether the land acquired b y agreement by the assessee under the Chattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973 (The Nivesh-Act) is compulsory acquisition within the meaning of Sec.194LA of the ....
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....in this regard the Notice has been served to the land owners & right holders & to successors & to us to make payment of land compensation amount u/s 29(2) & accordingly further the land compensation amount has also been fixed & determined & thereby we he land owners & the Govt. have mutually agreed for payment of land compensation to us & accordingly I am being the holder of the land & beneficiary for the land compensation amount, have submitted an application for claiming land compensation amount". 15. It is clear from the above that the compensation 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 Government under this Chapter, the State Government shall pay for such acquisition compensation in accordance with the provisions of this Act. (2) Where the amount of compensation has been determined by agreement between the State Government and the person to be compensated, it shall be paid in accordance with such agreement". (3) Where no such agreement can be reached, the State Government shall refer the case to the Deputy Commissioner for determination of th....