2016 (8) TMI 1185 - HC - Income Tax

Exemption provided from levying income tax and stamp duty - lands lost in the acquisition under the provisions of the Land Acquisition Act, 1894 - Held that - We find that the judgment of the learned Single Judge is just and proper in as much as Section 96 of the Act, 2013 clearly discloses that no income tax or stamp duty shall be levied on any award or agreement made under this Act, except under Section 46. It is not in dispute that Section 46 of the Act, 2013 is not applicable to the facts of this case. Hence, it is amply clear that as per Section 96 of the Act, 2013, exemption is provided from levying income tax and stamp duty. In an identical case, a Division Bench of this Court in K. Sreekumar Versus The District Collector Thiruvananthapuram 2016 (1) TMI 1275 - KERALA HIGH COURT has already concluded that income tax is not liable to be deducted from the compensation payable to similarly placed persons.

Summary

Issues:
1. Interpretation of Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 regarding the levy of income tax on compensation.
2. Applicability of Section 46 of the Act, 2013 to the determination of compensation.
3. Precedential value of a Division Bench judgment in a similar case regarding income tax deduction from compensation.

Analysis:
1. The main issue in this case pertains to the interpretation of Section 96 of the Act, 2013, which deals with the exemption from levying income tax on any award or agreement made under the Act. The Court found that Section 96 clearly states that no income tax shall be levied on awards or agreements under the Act, except under Section 46. Since Section 46 was not applicable to the facts of this case, the exemption from income tax was deemed applicable. The Court relied on this provision to determine that income tax should not be deducted from the compensation payable to the land losers.

2. Another crucial aspect addressed in the judgment is the applicability of Section 46 of the Act, 2013 to the determination of compensation in this case. It was established that Section 46, which deals with the payment of additional compensation in certain cases, was not relevant to the circumstances at hand. Therefore, the Court concluded that the exemption from income tax provided under Section 96 should be upheld, and no deductions should be made from the compensation awarded to the land losers.

3. The judgment also considered the precedential value of a Division Bench decision in a similar case, where it was determined that income tax should not be deducted from the compensation payable to individuals in comparable situations. The Court noted that the Division Bench had already concluded that income tax was not liable to be deducted in such cases. By following the precedent set by the Division Bench and considering the provisions of Section 96 of the Act, 2013, the Court in this case allowed the writ petitions and directed the authorities to pay compensation to the petitioners without deducting any amount towards income tax or stamp duty. The judgment affirmed the validity of the precedent and upheld the decision of the Single Judge accordingly.

In conclusion, the judgment of the High Court in this case affirms the exemption from income tax on compensation as provided under Section 96 of the Act, 2013. It also highlights the importance of precedent in similar cases and ensures that land losers receive their compensation without any deductions for income tax or stamp duty.