AI Drafter 
TaxTMI 
TaxTMI 
2016 (8) TMI 164
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....ench of this Court in the case of Maganlal Morarbhai vs. Commissioner of Income Tax reported in (1979) 118 ITR 224." 2. Brief facts are as under. The respondent Special Land Acquisition Officer, Surat, represents the State Government as an assessee. For the assessment year 2008-2009, the question of requirement of depositing tax at source under section 194LA of the Income Tax Act, 1961 ("the Act" for short) arose in the backdrop of land acquisition proceedings instituted by the State Government for acquiring certain parcels of lands for and on behalf of M/s. Essar Steels Ltd., a public limited company. The Special Land Acquisition Officer passed a common judgement and separate awards concerning different landowners whose lands were under acquisition. In one such award dated 21.1.2008, he awarded compensation to different landowners which basically included three elements. (1) compensation for land; (2) compensation for buildings situated on the land; (3) compensation for trees. 3. All lands were divided into non irrigated agricultural lands and Kharaba lands. Agricultural lands were compensated at a uniform rate of Rs. 300 per sq. mtrs., Kharaba lands received compensation at....
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....farmers and compensation for such buildings would be chargeable to tax. 7. The assessee carried the matter in appeal and argued that the lands were agricultural lands so shown in the revenue records. The compensation was worked out on such basis. There was nothing on record to suggest that the lands were not being put to cultivation. 8. CIT(Appeals) however, observed that the revenue records in this respect would not be conclusive. The real test would be whether the lands are being put to agricultural use or it is possible to put to agricultural use. He referred to the letter dated 16.6.2004 issued by the Agricultural Officer in which it was recorded that in parts of the land, sea water at the time of high tide ingressed. Part of the land was covered by grass and wild trees. There is no irrigation facility in any of the lands and only Kharif crops would grow. Of the total land, portion of land giving good yield is very small. On the basis of the contents of the said letter of the District Agricultural Officer, the CIT (Appeals) confirmed the view of the Assessing Officer holding that the lands in question cannot be stated to be agricultural lands and therefore, not excluded f....
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....sioner of Income-tax v. Madhabhai H. Patel reported in (1994) 208 ITR 638(Guj) and on the decision of the Supreme Court in case of Commissioner of Income-tax v. Gemini Pictures Circuit Private Ltd. reported in (1996) 220 ITR 43(SC). 12. On the other hand, learned counsel Shri Soparkar represented the respondent Special Land Acquisition Officer and raised the following contentions : 1) The lands were shown as agricultural lands in the revenue records and that is how the compensation was awarded by the Special Land Acquisition Officer. For the purpose of deducting tax at source, these were sufficient indications that the lands were agricultural lands. It is always open for the Revenue to make a detailed inquiry while considering the tax liability of the owners of the land. 2) There was nothing on record to suggest that the lands were not or were not capable of being put to agricultural use. Personal inquiry by the Assessing Officer many years later would be futile since by then the land was already acquired and handed over to the company who would have changed the character of the land. 3) So far as the trees are concerned, there is no provision under section 194LA of the....
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....me) or a cantonment board and which has a population of not less than ten thousand; or [(b) in any area within the distance, measured aerially,- (I) not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh; or (II) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or (III) not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh. Explanation-For the purposes of this subclause, "population' means the population according to the last preceding census of which the relevant figures have been published before the first day of the previous year]]" 15. As is well known section 201 of the Act provides for consequences for failure to deduct tax at source. 16. Section 194LA thus casts a duty on a person responsible for paying compensation on account of compulsory a....
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....ore we advert to these aspects, we may refer to the decision of this Court in case of Madhabhai H. Patel(supra). In the said case, the question whether the land was agricultural land or not arose in the background of the provision of capital gain upon sale of land. The Court after referring to various tests laid down in case of Commissioner of Income tax v. Siddharth J Desai reported in (1983) 139 ITR 628 (Guj), observed as under : "13. Even in that decision, this court has again emphasised that if the land is classified in the revenue records as agricultural land, then it would raise a rebuttable presumption and would furnish good prima facie evidence to show that it is an agricultural land. This court also emphasised that if land is also used for agricultural purpose till the date of the sale, then, unless there is some cogent evidence to indicate otherwise, the land should be treated as agricultural land. 14. In our opinion, what is required to be considered is : Was it agricultural land when it was sold ? If the land is recorded as agricultural land in the revenue records and if till the date of its sale it is used and exploited as agricultural land, and if the owner of t....
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....the relevant factors and also the decision of the Supreme Court in CWT v. OfficerinCharge (Court of Words), Paigah [1976] 105 ITR 133, wherein the Supreme Court has held that the expression, "agricultural land" for the purpose of the Wealthtax Act would mean the land actually used for agricultural purpose, has held that the land in question is an agricultural land. It is, therefore, not possible to accept the contention raised on behalf of the Revenue that the Tribunal committed an error in holding that the land in question was agricultural land. In this view of the matter, we answer the question in the affirmative, that is, against the Revenue and in favour of the assessee. No order as to costs." 20. The Supreme Court in case of Gemini Pictures Circuit Private Ltd. (supra) observed that each case would depend on its peculiar facts and no two cases would be identical. The tests evolved by the Courts are in the nature of guidelines and no hard and fast rules can be laid down in the matter. The observations of this Court in case of Gordhanbhai Kahandas Dalwadi v. Commissioner of Income Tax reported in (1981) 127 ITR 664 (Guj) were noted with approval. In the said case, the land wa....
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....land on which the owners continue to pay the land revenue year after year. 24. In this context, we have noticed that the Revenue authority placed heavy reliance on two factors, One was the personal visit by the Assessing Officer and the other was the certificate issued by the District Agricultural Officer dated 16.6.2004. The visit, as correctly pointed out by the counsel for the respondent, would have taken place few years after the acquisition was completed and possession of the land was handed over to the company for whose benefit the acquisition was carried out. The character of the land also would have undergone major changes. It would be highly unsafe to rely on a spot visit by the Assessing Officer of such circumstances to overrule the initial presumption available from the revenue records that the lands were agricultural lands. Likewise, the certificate of the Agricultural Officer was also general in nature and did not pinpoint whether and what portion of the land was totally uncultivable. The award does segregate the Kharaba land for compensation at a much lower rate of Rs. 1 per Are as against the Jirayat land which were compensated at the rate of Rs. 300 per sq. mtrs.....
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....paid to the farmers on account of buildings was not a compensation for buildings, but was higher amount of compensation for acquisition of the lands. 28. These observations are not borne out from the awards, copies of which are placed on record, or from any other contemporaneous material suggesting any adjustment on part of the State Government in determining the market value of the land. We do not find on what basis the Tribunal was prompted to make such observations. In any case, being dehors the evidence on record, we discard such conclusion of the Tribunal. 29. What therefore, emerges from the record is that the Land Acquisition Officer bifurcated his award by awarding separate compensation for the land, for the building and for the trees. The compensation for the building comprised substantial portion of total compensation so worked out. For example, in the award dated 21.1.2008, against compensation of Rs. 36.95 crores for the land, compensation of Rs. 24.56 crores was assessed for building. Likewise, in other award, against value of land of Rs. 30.08 crores, cost of construction inclusive of trees was shown to be Rs. 26.18 crores. 30. There is nothing on record to s....