TaxTMI 
TaxTMI 
2023 (9) TMI 1443
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....ated 21.04.2022 passed in W.P. No. 43206/2018 c/w W.P. No. 53718/2017 (LA-KIADB) by which, while allowing the said writ petitions learned Single Judge granted the following reliefs; (a) quashed the award at Annexure-AC dated 25.10.2018 and at Annexure-AD dated 25.10.2018. (b) quashed the endorsement at Annexure-S dated 19.09.2018 subject matter of W.P. No. 43206/2018. (c) quashed Official Memorandum produced at Annexure-A dated 06.10.2017 subject matter of W.P. No. 53718/2017 and further directed the respondents to refund the tax deducted at source together with applicable interest from the date of deposit till the date of refund. (d) Declared that the respondents are entitled to the compensation under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. (e) Declared that the compensation payable thereof is exempt from payment of income tax and from deduction of tax at source under the Income Tax Act, 1961. (f) The appellants and respondent-authorities herein are consequently directed to pass fresh/modified awards and to do all deeds and things as required under the Act,....
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....Notification dated 03.07.2017 and Final Notification dated 25.05.2017. That no award has been passed. That however, the KIADB had issued a Official Memorandum dated 06.07.2017 directing payment of compensation under the Land Acquisition Act, 1894 (hereinafter referred to as `Act, 1894' for short). 6. The main grievance of the respondent Nos.1 and 2/petitioners in these writ appeals relate to quantum of compensation and deduction of income tax at source on the said compensation without granting any exemption from payment of income tax. 7. It was contended by the respondents 1 and 2/petitioners that they are entitled for the compensation under the provisions of Right to Fair Compensation and Transparency in Land Acquisition Act, 2013 (hereinafter referred to as `Act 2013' for short) which came into force with effect from 01.01.2014. That the act of the appellants granting compensation under Act, 1894 and not paying compensation under Act, 2013 is illegal, arbitrary and discriminatory. That since the payment of Income tax on the compensation is exempted under Section 95 of Act 2013, the deduction of tax at source was illegal, discriminatory and arbitrary and contrary to the ....
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....eld thus learned Single Judge allowed the writ petitions by granting the reliefs as noted hereinabove. 11. Being aggrieved by the same, the present appeals in W.A. No. 890/2012 and W.A. No. 892/2012 are filed by the Bangalore Metro Rail Corporation Limited which was arrayed as respondent Nos.8 in W.P. No. 43206/2018 and respondent No. 9 in W.P. No. 53718/2017 respectively and W.A. No. 1070/2022 has been filed by the Central Board of Direct Taxes who has been arrayed as respondent No. 2 in the above said writ petitions. 12. Though several grounds have been raised by the appellants in W.A. No. 890/2022 and W.A. No. 892/2022, particularly with regard to the effect of amendment to Section 30 of the KIAD Act, in view of the fact that learned Single Judge in the impugned order at paragraph 11.7 having observed that "the question as to whether amendment to Section 30 of KIAD Act is prospective or retrospective has not been gone into in the present writ petition and the same is left open to be decided in the appropriate case", Sri. Dhananjay Joshi, learned Senior counsel appearing for appellants restricted the grounds of appeal to the following propositions by filing a memo dated 03.....
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....mpugned order to the effect that the compensation for acquisition of land under KIAD Act, 1966 ought to be determined under the provisions of Act, 2013 is unsustainable. 13.2 Referring to the Judgment of this Court in the case of Smt. S. Jalaja and others Vs Union of India and others in W.P. Nos. 11209- 11212/2019, learned Senior counsel for the appellant submitted that the same has been passed placing reliance on a resolution passed by KIADB deciding to compensate for acquisition of land in terms of the provisions of the Act, 2013 even in respect of those lands acquired under KIAD Act, 1966 after 01.01.2014, the date on which Act, 2013 was brought into effect. He submitted that there is no determination of the question as to whether KIADB, in fact had power and authority to pass such a resolution determining the compensation for acquisition of land under the KIAD Act, 1966. Referring to Sections 5, 13 and 14 of the Act, 1966 learned Senior counsel submitted that there is no power vested with the KIADB to determine the compensation of acquisition of land under the KIAD Act, 1966 and that it is only the State Government under Section 29 of the KIAD Act, 1966 is vested with the po....
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....di to question the impugned order as the appellant is not the beneficiary of the notification. That even in the notification it is stated that "the properties mentioned in the following schedule are required by the State Government for the purpose of development of Bangalore Metro Rail Project Phase-II by Karnataka Industrial Areas Development Board." Reliance is placed on the judgment of the Apex Court in the case of PEERAPPA HANMANTHA HARIJAN AND OTHERS VS. STATE OF KARNATAKA AND ANOTHER reported in (2015) 10 SCC 469. 14.2 That though there is a separate legislation namely the Metro Railways (Construction of Works) Act, 1978 which is a Central Legislation meant for the purpose of construction works relating to the rail projects in the metropolitan cities, the appellant instead of acquiring the lands under the said Act opted to have recourse through KIAD Act, 1966. Therefore, the compensation to the respondents shall become payable under the provisions of Act, 2013. That since the notifications for acquisition of land in the present case has been issued after 01.01.2014 the date on which Act, 2013 came into force, acquiring authorities cannot be permitted to apply provisions of....
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.... case of K.V. Mahesh and Jemcy Ponnappa which were passed following the decision in the case of Jalaja which in turn had been passed based on the 343rd resolution of the Board, compensation has been paid to the claimants thereunder in terms of Act, 2013. He also submitted that in fact contempt proceedings were also initiated and same was dropped as there was compliance in the nature of payment of compensation under Act, 2013. 14.5 Drawing attention of this Court to the contents of Preliminary Notifications dated 15.10.2015 and 15.02.2018 issued under Section 28(1) of the KIAD Act, 1966 he submitted that even the said notifications make it unequivocally clear that the compensation to the land losers would be paid as per provisions contained under Act, 2013. 14.6 Referring to the clause 12 of the MOU learned Senior counsel submitted that it is the obligation of the State Government to bear the entire cost of Land Acquisition and as such appellant has no obligation in this regard and it is therefore not a beneficiary of the acquisition. 14.7 He further submitted that MOU produced by the appellant cannot be considered to be a contract in the eye of law, as the same is not expr....
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....roviding for exemption from payment of tax and deduction of tax at source submitted that the notifications for acquisition of land in the instant case were issued subsequent to 01.01.2014 that is after coming into force of Act, 2013 and in view of specific provision contained under Section 96 of Act, 2013 there cannot be any question of levying tax on the compensation. He further submits that the CBDT Circular dated 25.10.2016 and amendment to the Income Tax Act, 1961 by inserting Section 194-LA are of no consequences since the compensation payable to the petitioner is under the provisions of Act, 2013 which came into effect on and from 01.01.2014. 17. Sri. Ashok Nayak, learned counsel appearing for respondents -KIADB submitted that since the purpose of acquisition of the property is for the formation of Metro Rail Project, the compensation cannot be paid under the New Act. He submitted that the 343rd Resolution of the Board was made applicable in the cases of Jalaja, Mahesh and Jemcy Ponnappa (supra) as the purpose of acquisition of land under those cases was different than the one in the instant case. Hence, he submitted that the claim of the respondent Nos. 1 and 2 for paymen....
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....tion Officer of KIADB. In that as regards the claim for payment of compensation under the Act, 2013 the only contention put forth is that the consideration of payment of compensation in the cases referred to by the respondents/petitioners is that the acquisition of the lands in the said cases was not for BMRCL project and that in the instant case BMRCL itself had given a package with 100% solatium as per the Act, 2013, which has been rejected by the petitioners insisting for passing of the General Award. 23. Respondent No. 8, which is the appellant in these appeals in its statement of objections contended that it calculated the total package compensation payable in respect of the acquired land including compensation for building and forwarded the same to the respondent No. 7 on 12.09.2018 and 08.09.2018 respectively and that said package compensation was prepared to enable passing of consent award under Section 29(2) of KIAD Act, 1966. That in view of Circular No. 36/2016 dated 25.10.2016 issued by the Central Board of Direct Taxes, Government of India and as per Section 96 of the Act, 2013 the appellant/respondent No. 8 did not deduct the tax at source in the compensation amoun....
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....tions under Section 3(1) and 28(1) of KIAD Act, 1966 have been issued on & after 01.01.2014. 28. The aforesaid resolution has been referred to and relied upon by the KIADB in its statement of objections filed in the cases of Smt. Puttalakshmamma and Smt. Jalaja based on which it was held that the petitioners/ land losers in the said cases were entitled for compensation under Act, 2013. The said orders were carried in appeal in W.A. No. 1105/2019 and connected matters wherein taking note of the submissions made on behalf of the State by the then Advocate General that the land losers would be entitled for compensation under Act, 2013, the said writ appeals were dismissed by the Division Bench of this Court. The said order passed in W.A. No. 1105/2019 and connected matters has been challenged before the Apex Court in SLP(C) No. 20912/2021 and connected matters. However, there has been no challenge with regard to entitlement of the land losers for compensation under Act, 2013. 29. In furtherance to the aforesaid orders passed in Jalaja and other land losers the State has awarded compensation to them as per the award dated 14.06.2019 as per Annexure-AL and similarly Mahesh and oth....
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....essary to refer to Annexure-H a communication dated 21.10.2016 addressed by BMRCL to the Special Land Acquisition Officer- respondent No. 7 with respect to providing package compensation. In that taking into consideration of the Notification dated 21.10.2016 and the value of land, solatium of 100% and the interest at 12% as provided under Section Act, 2013 has been calculated. Based on the said compensation package notices under Section 29(2) of KIADB Act, 1966 has been issued by KIADB and in furtherance thereof, general award as per Annexure-H1 has been passed by KIADB on 29.05.2018 though rejected by the petitioners. 33. That the aforesaid documents at Annexure-H and H1 would indicate that appellant -BMRCL has calculated the package compensation taking into consideration of the provisions of Act, 2013 even as on 21.10.2016. Therefore, though a submission is sought to be made on behalf of the appellant that the appellant is burdened with the liability of meeting the project expenses including payment of compensation is aggrieved by the impugned order directing payment of compensation to the respondents/ writ petitioners under Act, 2013 , in view of Annexure-H dated 21.10.2016 i....
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....urt in the case of M/S. GIRNAR TRADERS VS. STATE OF MAHARASHTRA & ORS reported in (2011) 3 SCC 1 and OFFSHORE HOLDINGS PRIVATE LIMITED VS. BANGALORE DEVELOPMENT AUTHORITY, reported in (2011) 3 SCC 139. 37. Thus, under the above facts and situation of the matter and on principles of parity the respondents/petitioners, as rightly held and declared by learned Single Judge, are entitled for the compensation under Act, 2013. W.A. No. 1070/2022 38. As regards the relief sought for by the appellant for exemption of Tax and exemption of payment of deduction of tax at source, Section 96 of the Act, 2013 reads as under; "96. Exemption from income tax, stamp duty and fee.-No Income Tax or stamp duty can be levied on any award or agreement under Section 46 and no person claiming under any such award or agreement shall be liable to pay any fee for a copy of the same". 39. A Circular dated 25.10.2016 came to be issued by Central Board of Direct Taxes clarifying that the compensation received in respect of award or agreement which has been exempted from levy of income tax, under Section 96 of the Act, 2013 shall not be taxable under the provisions of Income Tax Act, 1961 even....