Rajasthan High Court - Jaipur
C I T Jaipur vs Jaipur Development Authority Jaipur on 3 August, 2017
Bench: K.S.Jhaveri, Inderjeet Singh
HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT
JAIPUR
D.B. Income Tax Appeal No. 183 / 2015
Commissioner of Income Tax (TDS), NCRB, Status Circle, Jaipur
----Appellant
Versus
Jaipur Development Authority, JLN Marg, Jaipur
----Respondent
Connected With
D.B. Income Tax Appeal No. 184 / 2015
Commissioner of Income Tax (TDS)
----Appellant
Versus
Jaipur Development Authority, JLN Marg, Jaipur
----Respondent
D.B. Income Tax Appeal No. 185 / 2015
Commissioner of Income Tax (TDS), NCRB Statue Circle Jaipur
----Appellant
Versus
Jaipur Development Authority, JLN Marg, Jaipur
----Respondent
D.B. Income Tax Appeal No. 159 / 2017
Pr. Commissioner of Income Tax (TDS), Jaipur
----Appellant
Versus
Rajasthan Housing Board, Avas Bhawan, Jyoti Nagar, Jan Path,
Jaipur
----Respondent
_____________________________________________________
For Appellant(s) : Mr. Sameer Jain
For Respondent(s) : Mr. Sanjay Jhanwar
_____________________________________________________
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HON'BLE MR. JUSTICE K.S.JHAVERI
HON'BLE MR. JUSTICE INDERJEET SINGH
Judgment
03/08/2017
1. Since in all these appeals, common questions of law and
facts are involved, they are decided by this common judgment.
2. By way of these appeals, the appellants have challenged the
judgment and order passed by the tribunal whereby the tribunal
has allowed the appeals preferred by the assessee, modifying the
order of the A.O. and the CIT(A) which has dismissed the appeal.
3. This court while admitting the appeals on 27.09.2016 and on
02.06.20107 has framed the following substantial questions of
law:-
(i) Whether the provisions of 194 LA qua the
TDS are to be determined only on the basis of
records furnished by assessee and no inquiry,
investigation, physical 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:-
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"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 Khasra Numbers. The Girdawari reports
were collected by this office from respective
Tehsildars for the period beginning four years before
the date of notification for acquisition of lands so
acquired by JDS. A Girdawari report gives details
regarding actual nature and use of land, such as
crops grown, uses for habitation, etc. From the
Girdawari reports so obtained from Tehsildars, it was
found that majority of land acquired by the assessee
on which no TDS was deducted was either barren
land or land unsustainable for cultivation. Further, as
per Girdawari no cultivation has been undertaken on
such land for a period beginning 4 years before the
date of notification for acquisition. This would mean
that these lands have not been cultivated since last
7-8 years.
5.1.2.The assessee had submitted that land
acquisition and payments thereof were done with
sufficient proof in hand about the land being
agriculture i.e. certificate of Tehsildar (at JDA) and
affidavit from the owner about agriculture being
practiced on land and so it being agriculture land. To
begin with, a cetificate from deductee that the land
being acquired is agricultural land is not any
evidence. The certificate from Tehsildar that was
produced by the assessee was of a person who is
an employee of the assessee. He is only designated
by the assessee was of a person who is an
employee of the assessee. He is only designated as
a Tehsildar for a particular zone and is not the same
as Tehsildar appointed by the State Government.
Now for the internal procedure being followed by the
assessee of having all ncecessary evidence before
compensation is made. It appears that the evidence
in possession of the assessee were only the above
said two documents, i.e. the certificate of their
Tehsildar and affidavit of the deductee. The
Jamabandi was submitted by the assessee to the
department after a period of more than three
months. Further, a Jamabandi is only a statement of
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ownership of a particular land. All land, whether
barren,undulating or cultivable is classified as
agricultural in a Jamabandi. The Jamabandi report
does not give any details as to the actual use of
land. A Girdawari report on the other hand gives
details of land utilisation. During the course of
verification, the assessee was not found in
possession of any Girdawari report. The assessee
has till date not furnished any Girdawari report for
the 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(A) which reads as under:-
Keeping in view the above mentioned facts and
circumstances of this case, I am of the considered
view that the A.O. was right in holding that on
compensation paid on acquiring of these lands; TDS
was to be deducted as per provisions of sec.194 LA
of IT Act. Accordingly, the finding of the AO as also
demand raised u/s.201(1)/201(1A) of IT Act in
respect of Ays 2012-13, 2013-14, 2014-15 is
confirmed."
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6. He has also taken us to the observations made by the
Tribunal which reads as under:-
"In view thereof, we hold that the assessee has
been able to demonstrate from the record that
impugned agricultural land acquired by the
assessee are agricultural land on per records and
in terms of Section 194LA, Explanation (I). There
is no obligation to deduct any TDS thereon. Thus,
there is no question of raising demand against
the assessee u/s 201(1) and 201(1A) of the Act
and hold the assessee to be in default.
Consequently, the orders of the lower authorities
are reversed and the demands raised in question
by the Department are quashed."
7. He has placed reliance on the judgment rendered by the
Supreme Court in the case of Sharifabibi Mohmed Ibrahim and
others Vs. Commissioner of Income Tax, Gujarat 204 IT
631 wherein it has been held as under:-
6. The Income-tax Authorities sought to levy
capital gains tax on the consideration received by
the appellants treating the said land as non-
agricultural land. The appellants contested the
same contending that the land sold is an
agricultural land. The Income-tax Officer rejected
the assessees' claim whereupon they approached
the Appellate Assistant Commissioner by way of
appeals but without success. The appellants then
approached the Tribunal. Their appeals were heard
by a Bench of two members who differed among
themselves whereupon the matter was referred to
third member who held that the said extent of land
is agricultural land and, therefore, no capital gains
tax is leviable thereon. The Revenue then obtained
a reference under Section 256(1) of the Act which
was answered in its favour by a Bench of Gujarat
High Court. The High court set out the following
facts militating against the appellants plea that the
said land was an agricultural land on the date of
sale :
(1) The land is situated a distance of 1 km. from
Surat Railway Station.
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(2) It is within municipal limits and within a Town
Planning Scheme.
(3) It has been sold to a non-agriculturist for a
non-agricultural purpose. It is sold to a co-
operative 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 Pradesh v.
Officer-in-charge (Court of Wards),Paigah
(hereinafter referred to as to 'Begumpet Place case')
reported in (105 I.T.R. 133). It was an appeal from a
Full Bench decision of the Andhra Pradesh High
Court. The High Court had taken the view, following
a decision of the Madras High Court in Sarojini Devi
v. Sri Krishna that the expression "agricultural land "
should be given the widest meaning. It held that the
fact that the land is assessed to land revenue as
agricultural land under the State Revenue Law is a
strong piece of evidence of its character as an
agricultural land. On Appeal, a Constitution Bench of
this Court held that; (a) inasmuch as agricultural
land is exempted from the purview of the definition
of the expression "assets", it is "impossible to adopt
so wide a test as would obviously defeat the purpose
of the exemption given". The idea behind exempting
the agricultural land is to encourage cultivation of
land and the agricultural operations. "In other words
this exemption had to be necessarily given a more
restricted meaning than the very wide ambit given
to it by the Full Bench of the Andhra Pradesh High
Court", (b) What is really required to be shown is
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the connection with an agricultural purpose and user
and not the mere possibility of user of land by some
possible further owner or possessor, for an
agricultural purpose. It is not the mere potentiality
but its actual condition and intended user which has
to be seen for purposes of exemption, (emphasis
added), (c) "The person claiming an exemption of
any property of his from the scope of his assets
must satisfy the conditions of the exemption." (d)
"The determination of the character of land,
according to the purpose for which it is meant or set
apart and can he used, is a matter which ought to
be determined on the facts of each particular case."
(e) The fact that the land is assessed to the Land
Revenue as agr icultural land under the State
Revenue Law is certainly a relevant fact but if is not
conclusive.
18. The Bench observed that to ascertain the true
character and the nature of the land, it must be seen
whether it has been put to use for agricultural
purposes for a reasonable span of time prior to the
relevant date and further whether on the relevant
date the land was intended to be put to use for
agricultural purposes for a reasonable span of time
the future. Examining 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 non-
agricultural 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 non-
agricultural use by the appellants; that the land was
actually cultivated till and including the agricultural
year 1964-65; that there were agricultural lands
abutting the said land and that the appellants had no
other source of income except the income from the
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said land. As against the above facts, the fact
appearing against their case: the land was situated
within the municipal limits - it was situated at a
distance of one kilometer from the Surat railway
station; the land was not being cultivated from the
year 1965-66 until it was sold in 1969; the appellants
had entered into an agreement sale with a Housing
Cooperative Society to sell the said land for an
avowed non-agricultural purposes namely
construction of houses; they had applied in June,
1968 and March, 1969 for permission to sell the said
land for non-agricultural purposes under Section 63 of
the Bombay Tenancy and Agricultural lands Act and
obtained the same on 22nd April; soon after obtaining
the said permission they executed sale-deeds in the
following month i.e., in May 1969; the land was sold
at the rate of Rs. 23 per sq. yd. and the purchaser-
society commenced construction operations within
three days of purchase. What is the inference that
flows from a cumulative consideration of all the
aforesaid contending facts? This question has to be
answered keeping the criteria evolved in Bequmpet
Palace case set out hereinbefore. In our opinion, the
entering into the agreement to sell the land for
housing purposes, the applying and obtaining the
permission to sell the land for non-agricultural
purposes under Section 63 of the Bombay Tenancy
and Agricultural Lands Act an its sale soon thereafter
and the fact that the land was not cultivated for a
period of four years prior to its sale coupled with its
location, the price at which it was sold do outweigh
the circumstances appearing in favour of the
appellants' case. The aforesaid facts do establish that
the land was not an agricultural land when it was
sold. The appellants had no intention to bring it under
cultivation at any time after 1965-66 - certainly not
after they entered into the agreement to sell the
same to a Housing Cooperative Society. Though a
formal permission under Section 65 of the Land
Revenue Court was not obtained by the appellants,
yet their intention is clear from the fact of their
application for permission to sell it for a non-
agricultural purpose under Section 63 of the Bombay
Tenancy and Agricultural Land Act."
8. He contended 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
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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 purpose for which it is meant or set
apart and can be used, is a matter which ought to be
determined on the facts of each particular case What
is really required to be shown is the connection with
an agricultural rural purpose and user and not the
mere possibility of user of land by some possible
future owner or possessor, for an agricultural purpose.
It is not the mere potentiality, which will only affect
its valuation as part of "assets", but its actual
condition and intended use which has to be seen for
purposes of exemption from wealth tax.On the objects
of the exemption seemed to be to encourage
cultivation actual utilisation of land for agricultural
purposes. If there is neither anything in its condition,
nor anything in evidence to indicate the intention of
its owners or possessors, so as to connect it with an
agriculal pur- pose, the land could not be "agricultural
land" for the purses of earning an exemption under
the Act. Entries in revenue ords are, however, good
prima facie evidence. We do not think that all these
considerations were kept in view by the taxing
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authorities deciding the question of fact which was
really for the assessing authorities to determine
having regard to all the relevant evidence and law laid
down by this Court. The High Court should have sent
the case to the assessing authorities for deciding the
question of it after stating the law correctly.
We think that this is a fit case in which we should set
aside the judgment of the Full Bench of the High
Court and hold that the tribute should determine
afresh, from a correct angle, the question of fact
ether any of the lands under consideration were
"agricultural" or t for the purposes of the Act before it.
Accordingly, we allow these peals, set aside the
judgment and order of the Full Bench and send the
cases to the Tribunal for appropriate orders for giving
opporpriate both sides to lead further evidence, if
they so desire, and the decision of the cases in
accordance with the law as declared w by this Court.
The parties will bear their own costs throughout."
10. He has also relied on Single Bench judgment of Kerala High
Court in the case of Nalini Vs. Deputy Collector, Land
Acquisition reported in (2007) 294 ITR 423 (Ker) wherein
the High Court has observed as under:-
6. Whether a particular land is an agricultural land or
not is to be determined with reference to the definition
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 (11 of 23) [ ITA-183/2015] 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 certificate is issued. It is not disputed by the learned Senior Government Pleader that at present no notice is issued by the Land Acquisition Officer to the claimant informing him about the liability to pay income tax, I am of the view that it is only just and proper that the parties are given advance notice regarding the liability to pay income-tax. The Land Acquisition Officer can note this fact also, in the notice issued to the claimant under Section 9 of the Land Acquisition Act. The claimant shall be informed about this fact during award enquiry stage. In the award, the income tax deducted shall be separately shown.
11.It is submitted that a mandatory duty is cast on every deductor to apply for TAN within the specified time.
13.. It is submitted that the failure to pay tax deducted at source is an offence punishable with rigorous imprisonment for a minimum period of three months and maximum seven years. So, the Land Acquisition Officers who are liable to deduct tax at source would follow the provisions of Income Tax Act strictly and deposit the amount collected within one week from the last day of the month in which the deduction is made.
Regarding the present practice of collecting tax Shri Mohan C. Menon, learned Senior Government Pleader has submitted that at present the income tax deducted are deposited to the Central Government Account by using treasury chalans (in triplicate) presented to concerned treasuries under head of account 8658-00- 112-IT. It is further submitted that one copy of the chalan is being forwarded to the Accounts Officer of the Income Tax Department and details of amount collected and furnished to the Accountant General, Kerala. It is further submitted that intra Governmental settlement of the income tax amount are done in between Accountant General, Kerala and concerned Central Government Department. It is also submitted that one copy of the treasury chalan in each and every (12 of 23) [ ITA-183/2015] remittances made under the Income Tax Act are being furnished to the Income Tax Zonal Office by the Treasury Branches. The learned senior Government Pleader has made available a circular issued by the Thrissur District Collector to the Land Acquisition Officers working under him regarding the procedure to be followed regarding deduction of tax at source.
18. Rule 30 of the Income-tax Rules deals with time and mode of payment to Government account of tax 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 decided by the Income-tax Officer. So the order passed by the court below is correct. The remedy available to the petitioner is to get the TDC from the Land Acquisition Officer and claim refund from the Income Tax Officer."
11. In view of the above, counsel for the appellant contended that the appeals deserve to be allowed and order of the Tribunal is required to be quashed and set aside.
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12. Counsel for the respondent Mr. Sanjay Jhanwar has taken us to the judgment rendered by the Supreme Court in Sarifabibi (supra) more particularly para 12 of the judgment which reads as under:-
"12. Whether a land is an agricultural land or not is essentially a question of fact. Several tests have been evolved in the decisions of this Court and the High Courts, but all of them are more in the nature of guidelines. The question has to be answered in each case having regard to the facts and circumstances of that case. There may be factors both for and against a particular point of view. The court has to answer the question on a consideration of all of them- a process of evaluation. The interference has to be drawn on a cumulative consideration of all the relevant facts."
13. He has also relied on the judgment rendered by the Bombay High Court in the case of Shankar Dalal Vs. Commissioner of Income tax, Goa reported in 247 Taxman 170 (Bombay) wherein the court has observed as under:-
12. For the purposes of such transfer of land, in our view, we have to consider the provisions of the Code in question and so also the definition so provided to deal with the concept of "agricultural land". There is no issue that the land owners require to transfer the property within the framework of laws. Under the Code, there is no bar that an agriculturist and/or one who possesses agricultural land cannot transfer such land to any third party who is not agriculturist. Nothing contrary has been pointed out and/or placed on record that any permission and/or formalities are required to be completed before transfer of such lands. Under the Code, a transfer could be made to a non-agriculturist and/or to a person whose activities are not related to agricultural project or purpose. There is no question of raising any objection by third party, if the owner of such land decides to transfer the ancestral agricultural property/land to a third party by a common sale deed.
The assessee had received the consideration. Admittedly, the property was not divided and/or sub- divided. 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 (14 of 23) [ ITA-183/2015] 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 soil with the aid of human labour and skill, which also includes the appellants' own labour and/or skill. Whatever number of trees which are developed and/or grown were planted, developed and grown by the assessees for so many years and/or have been maintaining the same for various activities as, even reported by the Department, through the respective reports. This also is sufficient to support their claim that the land throughout has been used as an "agricultural land". The various trees planted and the fruit products derived from it are being consumed for their private purposes, in no way, can be or should have been the foundation against them to held that it was never used and/or unusable or remained unused for any agricultural activities. The definition of "agriculture" itself permitted, such unused land to be used and utilized even for grazing, horticulture, dairy farming, stock breeding. This is clear terms of the law and so also the intent of the Code which governs such agriculture land and its transfer. The report so submitted and/or referred to by the Department against the assessee, in our view, is unsustainable, unacceptable and contrary to the specific provisions of the Code. All the "agriculture" activities so defined covers the agriculture land in question. Therefore, exemption from the capital gain is the only option, on fact and the law.
15. This Court further requires to consider that a person who wants to use such agricultural land for any non-agricultural purpose, requires to submit an application to the concerned Authority, which is subject (15 of 23) [ ITA-183/2015] to the order/decision and/or permission if sanctioned, such agricultural land can be used and converted into and/or usable for non-agricultural purpose and not otherwise. By any act or inaction of unauthorised use of such agricultural land to non-agricultural purpose, in no way, legally converts such agricultural land to non- agricultural land. It is only subject to penalty and/or charges for such use of agricultural land to non- agricultural purpose. Admittedly, there is nothing on record to show that such application was ever filed at any point of time prior to the date of its transfer and/or even thereafter at least by the assessee or by the third party, after purchase of such property. The owners of such property are always at liberty to convert and/or take action. Even otherwise such subsequent action 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 purpose for which the lands have been sold also is not of much consequence because the stage to consider for the purpose of capital gain is the day the land is sold; what was the nature of the land on that day and not what it would be in future. In the case of (16 of 23) [ ITA-183/2015] Addl. CIT v. Tarachand Jain [1980] 123 ITR 567 (Pat), this court considered a similar question. In that case the ITO had found that, (a) for the last 2 to 3 years no agricultural operation had been carried out on the land, (b) although the land was agricultural land in the past, owing to the development of the town it acquired the character of urban property, and (c) it had been sold for the purpose of construction of a building. This court pointed out that merely because a land has been sold for the purpose of construction of a building or it has been sold at a high price, it cannot be held that the land in question was not an agricultural land, if on materials it is otherwise established that it was an agricultural land on the date it was sold. It was also observed that there may be cases in which for one reason or the other, actual agricultural operations might not have been carried on and yet the owner had always intended to use it for agricultural purposes. In the case of CIT v. Manilal Somnath [1977] 106 ITR 917 (Guj), it was held that in order to determine whether a particular land is agricultural land or not one has first to find out the use to which it is being put. In the case of CED v. V. Venugopala Varma Rajah [1976] 105 ITR 593, the Supreme Court again pointed out that "the question whether a land is an agricultural land" has to be decided on evidence of actual or intended user for which the land may have been prepared or set apart". I have already pointed out above that the Tribunal has pointed out several materials and circumstances which established the fact that whatever may be the position on the day the record of rights was prepared, i.e., in the year 1912, for the last several years before the date of the sale the lands were being used for agricultural purposes, and, as such, they shall be deemed to be agricultural lands for the purpose of determining whether they are subject to capital gain."
15. He has relied upon decision of the Delhi High Court in the case of Commissioner of Income Tax Vs. Moonlight Builders & Developers reported in (2008) 307 ITR 0197 which reads as under:-
8. 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 (17 of 23) [ ITA-183/2015] 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 in (20160 242 Taxman 398 wherein the Court has observed as under:-
"21. Thus the fact that a particular land is treated as an agricultural land in the revenue records and so treated since long and continues to invite land revenue seems to be strong prima facie factors to suggest that the land was agricultural land. The Courts have of- course held that this would be a rebuttal presumption and if in a given case, it is shown that the land was never put to or was capable of being put to agricultural use, the same may still be considered as non agricultural land.
22. In this context, we are prepared to accept the revenue's contention that mere award by the Land Acquisition Officer would not be conclusive. This is so for two reasons. Firstly, the aim and object of passing an award under the Land Acquisition Act, 1894, is to arrive at a just compensation for compulsory acquisition of the property of a citizen. The paramount consideration before the Special Land Acquisition officer at that stage is to ascertain the market value of the land under acquisition as on the relevant date i.e. date of publication of section 4 notification. Quite apart from the very character of the land being (18 of 23) [ ITA-183/2015] agricultural or otherwise, range of other factors would be relevant for such purpose including the non agricultural use potential of the land. On the other hand, the applicability of section 194LA of the Act would depend on whether the compensation which is being paid is for an immovable property which is in the nature of an agricultural land or otherwise. Such question when so needed can be decided only by the Assessing Officer and the view of the Land Acquisition Officer expressed in acquisition award would not be final, binding or conclusive.
23. Nevertheless, at the stage of deciding whether the Special Land Acquisition Officer committed an error in not collecting the tax at source while releasing the compensation, vital question would be, did the Assessing Officer have sufficient materials to ignore the Government land records in which the land is shown as an agricultural 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. 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 using.
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25. We may however, clarify that these are observations made only for the purpose of deciding the applicability of section 194LA of the Act and would not preclude the revenue from pursuing the issue in the context of tax liability of the persons receiving the compensation for the land acquired."
17. He has relied on the decision of the Mumbai Tribunal in the case of Income Tax Officer Vs. Special Land Acquisition Officer reported in (2011) 30 CCH 0221 wherein it has been held as under:-
"The revenue authority acquired land under the category of the agricultural land the compensation was also paid as applicable for acquisition of agricultural land. The various categories as mentioned in 7/12 extract and in the acquisition notification are necessary for the purpose of acquisition of agricultural land because the compensation as well as the acquisition has to be decided on the basis these classes of the agricultural land. Various factors whether the land is under cultivation or Barron/desolated, if the land is thickly habituated and constructed are relevant for the purpose of acquisition. Accordingly these are the various necessary factors have to be taken into account for acquisition of the land. These are categories of the agricultural land itself and does not change the nature and character of the agricultural land itself. The rate of compensation of the agricultural land also depend upon the various classes /categories of the agricultural land if the land is under cultivating, the compensation has to be determined by taking into consideration the land and loss of income of the owner. If the land is not under cultivation the rate of compensation would be without any income or loss of the owner. Moreover, when the land has been acquired as agricultural land and compensation is paid for the agricultural land then there is no scope for doubting the nature of land acquired by the authorities for the purpose of section 194LA. The Explanation provided u/s 194LA clearly manifests that the definition u/s 2(14) of the Act is not relevant because the land situated in the area as referred in the item (a and b) of the (20 of 23) [ ITA-183/2015] clause of the subclause (iii) clause 14 of Section 2 is also included in the term agricultural land.
The definition under s. 2(14) is for the purpose of taxing the capital gain on transfer of the land. Whereas the term use under s. 194LA is only 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 considering the relevant provisions of the Act and particularly section 194LA, we find that the land in question is basically an agricultural land and there is no material either pointed out by the AO or brought before us to show that the land acquired was used for non agricultural purposes by the owners of the land. The AO as well as the learned DR has come out with the arguments that since the land was not under cultivation and it was not fit for agricultural, therefore, it cannot be treated as agricultural land. To our mind it is not a decisive factor when the land itself is agricultural land though may not be used for agricultural purposes but unless and until the same is used for non agricultural purposes it cannot be said that the land cannot be treated as agricultural land for the purposes of section (21 of 23) [ ITA-183/2015] 194LA. Even otherwise these questions are relevant only for deciding the taxability of income in the hands of the owners of the land. The SLAO has already specified certain lands which were non agricultural land and therefore, we do no find any reason to interfere with the order of the CIT(A). Accordingly, the order of the CIT(A) is upheld."
18. In view of the observations made by the Supreme Court in the case of Radhasoami Satsang Vs. Commissioner of Income tax, reported in (1992) 193 ITR 321 (SC), the Supreme Court has held as under:-
"13. We are aware of the fact that strictly speaking resjudicata does not apply to income- tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year."
19. It is contended that the department could not have taken a discriminatory treatment against the assessee having accepted the decision of the Tribunal in one matter.
20. He has relied on the decision of Karnataka High Court in the case of Mysore Urban Development Authority Vs. Income Tax Officer (Tds) reported in (2008) 175 Taxman 307 wherein it has been held as under:-
"main part of s.194LA itself excludes agricultural land from the immovable property covered by s. 194LA- Obligation cast on a person distributing compensation to deduct tax at source is only in respect of payment for immovable property such immovable property does not included (22 of 23) [ ITA-183/2015] 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 the local authority which is statutory authority when they are paying compensation of an agricultural land, we are of the considered opinion that the judgment of Sarifabibi will not apply in the facts of the present case.
25. The second judgment which is sought to be relied upon by the counsel is under Wealth Tax Act the Supreme Court has considered the exemption under the Wealth Tax wherein the agriculture land comes within the purview of the Wealth Tax Act or not.
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26. While interpreting the view, we have to look into that the local authority is acting in the interest of State as a whole or not.
In the present case, for the purpose of taxation, if the interpretation which has been canvassed by the counsel is accepted, it will put loss to the authority and they have to pay higher compensation. In that view of the matter, while considering the payment of compensation, it should be on a lower side and in our considered opinion, the authority has not committed any wrong. They have acted in the interest of the State and it should be considered as an agriculture land as rightly considered by the authority.
27. In that view of the matter, the issues are answered in favour of the assessee.
28. The appeals being devoid of merit, are dismissed.
(INDERJEET SINGH)J. (K.S.JHAVERI)J. Jyoti/-
Item No.95-98