AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (8) TMI 532
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....cal verification is permissible/desirable at the end of assessing officer to ascertain the nature of land whether it is agricultural or non agricultural? (ii) Whether General law can override the provisions of Income Tax Act when the Special Act defines agricultural land, Agricultural income and provisions of Chapter-XVII and intends to Tax the land on which no agricultural operation are carried out as per mandate of Sections 2 (1A), 2(14), 2(24), 2(31), 10(1A) and 194 LA" 4. Counsel for the appellant while arguing the matter has taken us to the material on record and more particularly the observations made by the AO which reads as under:- "4.6. In order to gather information regarding actual use of land so acquired, the assessee was requested vide this office letter dated 24.10.2013 to submit Girdawari reports. Letters were also issued to Tehsildars (appointed by the state government) vide letters dated 12.09.2013, 14.10.2013, 06.12.2013 and 31.12.2013 in whose jurisdiction the land acquired by the assessee, was lying. Information was called for from the Tehsildars of Jaipur, Amer and Sanganer and they were asked to submit copies of the Girdawari report for the respective Kha....
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....land claimed to be agricultural land to the department. In view of above and discussion in the preceding para, as to what constitutes agricultural land, the submission of assessee that it had sufficient evidence in its possession that the land was agricultural land, before any compensation was made is not acceptable." 5.3.3.Now the contention of the assessee that detailed discussion was done with the Income Tax Department at various levels and based on that various documents were collected and no TDS was deducted on agricultural lands. The department had asked the assessee to collect all necessary evidences to be satisfied that it is really agriculture land and produce before the department whenever called for. However, as is evident from discussion in preceding paras, no such evidences were collected to ensure that land was agriculture and being used for agricultural purposes. Further, evidences gathered by the department from Tehsildars, and on the basis of physical verification of such land as mentioned in Table 1, it is seen that the land are not agricultural land nor have they been used for agricultural purposes. 5. He has also taken us to the observations made by the CIT(....
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.... Planning Scheme. (3) It has been sold to a non-agriculturist for a non-agricultural purpose. It is sold to a cooperative housing society for constructing house and buildings. (4) It is sold at a per sq. yds. basis at Rs. 23 per sq.yd. on May 30, 1969. (5) No agricultural operations such as growing of wheat, Bajra, Juwar, rice, groundnuts or cotton crop have been carried on for the last 4 years. Only grass for fodder is grown in the last year. (6) An application for permission to sell the land to a housing society under Section 63 of the Land Revenue Code was made in August 1968 some nine months before the actual sale effected in May 1969, and it was granted on February 24,1969, about a month prior to the actual sale. 13. The first decision of this Court which considered the meaning of the expression "agricultural land" is in Commissioner of Income Tax v. Raja Benoy Kumar Sahas Roy 32 I.T.R. 466. But the question there was whether the income from forest land derived from sal and piyasal trees, 'not grown by human skill and labour' constitutes agricultural income? The decision that directly considered the issue, though under the Wealth Tax Act, is in C.W.T., Andhra....
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....ng the facts of the case from the said point of view, the Bench held that the agreement entered into by the assessee with the Housing Society is the crucial circumstance since it showed that the asses-see agreed to sell the land to Housing Society admittedly for utilisation for nonagricultural purposes. The sale-deeds were executed four months after the agreement of sale and even if any agricultural operations were carried on within the said span of four months, - the Bench held - it was evidently in the nature of a stop-gap arrangement. On the date the land was sold, the Bench held, the land was no longer agricultural land which is evident from the fact that the assessee had obtained permission even in August 1966 to convert the said land to non-agricultural purposes. 20. Now, we may consider the various circumstances appearing for and against the appellant's case. The facts in their favour are: land being registered as agricultural land in the Revenue records; payment of land revenue in respect thereof till the year 1968-69; absence of any evidence that it was put to any nonagricultural use by the appellants; that the land was actually cultivated till and including the agri....
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....tended that the respondents assessee was required to deduct TDS as it is an agriculture land. 9. Counsel for the appellant has also relied on the judgment rendered by the Constitutional Bench of Supreme Court in the case of Commissioner of Wealth Tax, Andhra Pradesh Vs. Officer-In-Charge (Court of Wards) Paigah reported in 1976 SCC(3) 864 which reads as under:- "We also think that the Full Bench was not correct in adopting view expressed in Sarojini Devi's case (supra) by the Madras High Court where it was held that it was enough to show that the land under consideration was capable of being used for agricultural purpose This erroneous view also seems to us to have affected the conclusion of the Full Bench on what was essentially a question of fact. It has led the Full Bench into giving excessive weight to consider- ations which had a bearing only on potentialities of the land for use for agriculture purposes. For the reasons already given, we do not think that the term "agr cultural land" had such a wide scope as the Full Bench appears have given it for the purposes of the Act we have before us. We agree that the determination of the character of land, according to the purpo....
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.... given in Section 2(14)(iii)(a) and (b) of the Income Tax Act and not with reference to the tenure of the land shown in the land revenue records. A combined reading of Section 194LA and the definition of agricultural land given under Section 2(14)(iii)(a) and (b) makes it abundantly clear that the competent authority to decide whether any compensation awarded is exigible to income tax is the Income tax officer. So it is clear that the remedy available to the party is either to approach the competent authority under Section 197 of the Income Tax Act or pay the income tax and get it refunded. 7. The learned Counsel appearing for the petitioner has argued that at present there is no practice of giving notice to the party regarding his liability to pay income tax from the amount of compensation awarded by the Land Acquisition Officer. It is argued that the parties are not even aware of any such deduction and there is no practice of issuing Tax Deduction Certificate by the Land Acquisition Officer under the relevant rules. It is argued that even when the enhanced compensation is awarded by the court the parties are not informed about the quantum of income tax deducted and also no cert....
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....ax deducted at source. Rule 31 of the Income-tax Rules deals with certificate of tax deducted at source or tax paid under Sub-section (1A) of Section 192. Rule 31 of the Income-tax Rules reads as follows: (1) The certificate of deduction of tax at source or, the certificate of payment of tax by the employer on behalf of the employee, under Section 203 to be furnished by any person deducting tax in accordance with the provisions of- (a) ... (b) Sections 193, 194, 194A, 194B, 194BB, 194C, 194D, 194E, 19 4EE, 194F, 194G, 194I, 194J, 194K, 194LA, 195, 196 A, 196B, 196C and 196D shall be in Form No. 16A. (2)... (3) The certificate mentioned in Sub-rule (1) shall be furnished within a period of one month from the end of the month during which the credit has been given or the sums have been paid or, as the case may be, a cheque or warrant for payment of any dividend has been issued to a shareholder. 20 In the case at hand, the petitioner claims 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 decide....
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....consideration. Admittedly, the property was not divided and/or subdivided. Admittedly, before transfer of the property, the parties were fully aware about the nature of the land which includes rocky area, use and usable area for agricultural, purpose number of trees, plants growing or in existence for so many years, apart from certain plantations. Being the ancestral agricultural property, the families were using the agricultural produce for their own consumption. 13. Here, at this stage, it is relevant to note the definition of the term "agriculture" as reproduced above. This definition, in our view, ought not to have been overlooked, while taking any action against the assessees. The definition itself provides that expression "agriculture" means raising of useful or valuable products which derive nutriment from the soil with the aid of human labour. This inclusive definition, no where provides and/or takes away rights of the assessee to treat such land as an agricultural land which they had been using before transfer and/or till the date it came to be transferred as an "agricultural land". There is nothing to prevent them from using such land for deriving nutriment from the soi....
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....ion or inaction, in no way is sufficient to prove such tax liability (Long term capital gain) upon the original vendor, who sold the property as the ancestral agricultural property." 14. He has also relied on the decision of Patna High Court in the case of Commissioner of Income Tax Vs. Dumraon Cold Storage Refrigeration Service (P.) Ltd. Reported in 1983 141 ITR 700 regarding the question of agricultural land. The Patna High Court has observed as under:- 7. "In the case of CWT v. Officer-in-Charge (Court of Wards), Paigah [1976] 105 ITR 133 (SC), while trying to define an "agricultural land", it was observed by the Supreme Court as follows (p. 136): "We think that this must be land which could be said to be either actually used or ordinarily used or meant to be used for agricultural purposes. In other words, 'agricultural land' must have a connection with an agricultural user or purpose." 8. If on the materials it is established that the land which is the subject-matter of controversy has actually been used for agricultural purposes then merely because such land is near a railway station or within a municipality is not of much consequence. Similarly, what is the pur....
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....Precisely the same thing has happened insofar as these appeals are concerned. The revenue has accepted the primary orders passed by the Tribunal on 14-7-2003 and 14-6-2004 but has chosen to challenge the orders passed by the Tribunal in the present appeals which merely follow these primary orders. There is no reason given by the revenue for this pick and choose attitude or this attitude of accepting favorable orders in respect of one assessed but not accepting the same favorable order in respect of another assessed, without there being any distinction between their cases. Consequently, in view of the arbitrary manner of proceeding in the matter, we do not think that it will be proper or in the interest of justice to allow the revenue to seek to recover tax from one assessed while declining to recover tax from another assessed on identical facts. 9. Following the decisions of the Supreme Court as well as of his Court, we dismiss these appeals and hold that no substantial question of law has arisen for our consideration." 16. He has also relied on the decision of the Gujarat High Court in the case of Commissioner of Income tax (TDS) Vs. Special Land Acquisition Officer reported i....
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....r 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. Like-wise, 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. The observations of the Assessing Officer that there was no facility of irrigation and that part of the land, suffered from ingress of saline water, would not indicate that the entire parcel of land or at any rate substantial portion thereof was either not put to agricultural use or was not capable of so ....
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....nly for the limited purposes of deduction of TDS in compulsory acquisition, therefore, as held by the Kerala High Court the definition is given in s. 2(14) cannot be imported for the purpose of s. 194 LA. As regard the contention of the learned DR that the question whether the land acquired is an agricultural land has to be decided by the Income tax authority is concerned, we find that the decision relied upon by the learned DR are in respect of the order passed by the land Acquisition Court and the Hon. High Court has held that this question has to be decided by the Income Tax Authority and not by the Land Acquisition Authority. There is no quarrel on this point that when there is a dispute about the question of whether the land acquired is a agricultural land, the competent authority is the Income Tax authorities. However, in the case in hand, the AO has dealt with the question and the CIT(A) has already considered this question and came to the conclusion that the land in question acquired by the authority is agricultural land and therefore no tax was required to be deducted u/s 194LA. Therefore, the question has been decided by the revenue authorities. Moreover, after consider....
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....g compensation to deduct tax at source is only in respect of payment for immovable property such immovable property does not included agricultural land irrespective of its location- Not the liability of the person distributing the compensation, but the liability of person receiving the compensation amount-Legislature has taken care to levy tax on the income, which is other than agricultural income-Petition allowed." 21. We have heard the counsel for the parties. 22. Before proceeding with the matter, it will not be out of place to mention here that the assessee is the Urban Development Authroity which requires the amount for the purpose of paying compensation to the agriculturists. 23. In view of the observations which are made by the Supreme Court in Sarifabibi (supra) in para 20 which has been reproduced hereinabove, wherein it has been held that on facts, under the Local Act which is a subject matter, the permission was taken and on the date on which, the contract was entered between the parties that too under cooperative society, it was an agriculture land, therefore exemption which was granted was on agriculture land. In that view of the matter, while acquisition done by t....