2024 (11) TMI 149 - AT - Income Tax

TDS u/s 194L - Demand u/s. 201(1) and 201(1A) on account of failure to deduct TDS on payments were made for acquisition of agricultural lands - determination of the exact nature of the lands - assessee is claiming it to be agricultural in nature v/s AO has held it to be urban - CIT(A) relying on reports of other District Authorities, Kunti held that as per the provisions of the Act, the assessee was not liable to deduct TDS since the impugned lands were agricultural in nature. HELD THAT - As per Section 250 (4) CIT (A) shall, by himself or through an assessing officer, make necessary inquiry before adjudicating any appeal. In the present case, it was incumbent on the ld.CIT(A) to clearly bring on record the basis of their respective claims as made by other all district authorities. Neither any examination of these authorities has been done by him nor any reason cited for brushing aside the report of the Executive Officer, Khunti which has been heavily relied upon the ld.AO. He has considered a one-sided version to be correct which, to our mind is not a judicious approach on his part. In such a situation, the matter needs to be remanded back to the ld.CIT(A) to arrive at a conclusion by examining the authorities concerned, so as to find out the actual basis for their respective contentions. During the hearing, the ld.CIT(DR) expressed satisfaction with a restoration of the matter to the CIT(A) for reconsideration of the issue in hand. Thus, in the in the interest of justice, we deem it appropriate to allow the appeal for statistical purposes, emphasizing the need for a thorough and compliant adjudication process. Appeal of the Revenue are allowed for statistical purposes.

Summary

Issues:
- Non-deduction of TDS under section 194L and interest under section 201(1)/201(1A) of the Income Tax Act, 1961.

Analysis:

Issue 1: Non-deduction of TDS and interest

The appeals by the Revenue stemmed from orders of the ld. CIT(A)/NFAC for different assessment years, concerning the non-deduction of TDS under section 194L and interest under section 201(1)/201(1A) of the Act. The Revenue contested the relief granted by the ld. CIT(A) regarding the deletion of TDS and interest charges. The dispute revolved around the classification of the land in question as either agricultural or urban, determining the applicability of TDS provisions. The ld. CIT(A) relied on reports from District Authorities certifying the land's distance to support the agricultural nature of the land, leading to the deletion of the charges. However, the Revenue argued that the land should be considered urban due to its proximity to the Nagar Panchayat, Khunti, triggering TDS obligations.

Issue 2: Interpretation of relevant provisions

The crux of the matter lay in interpreting the provisions of the Income Tax Act, particularly section 2(14) defining capital assets, including agricultural land, and section 194LA outlining TDS obligations. The Act stipulates conditions under which land can be classified as agricultural or urban, determining the TDS liability. The ld. AO concluded the land was urban based on its proximity to Khunti Nagar Panchayat, falling within the specified distance limits. The ld. CIT(A), however, considered additional evidence supporting the agricultural classification. Discrepancies in reports from government authorities highlighted the need for a thorough inquiry to ascertain the land's nature accurately, as it directly impacted the TDS obligations.

Issue 3: Adjudication process and remand

The Tribunal emphasized the importance of a comprehensive adjudication process, emphasizing the need for a fair and diligent examination of all relevant evidence and authorities involved. The Tribunal noted that the ld. CIT(A) failed to adequately consider and reconcile conflicting reports from District Authorities, leading to an incomplete assessment. Consequently, the Tribunal decided to remand the matter back to the ld. CIT(A) for a more thorough examination and a judicious determination of the land's classification and TDS liability. This decision aimed to ensure a just and compliant adjudication process, allowing both parties a fair opportunity to present their case.

In conclusion, the Tribunal allowed the Revenue's appeals for statistical purposes, stressing the importance of a meticulous and unbiased adjudication process. The remand to the ld. CIT(A) aimed to address the discrepancies in evidence and ensure a well-founded decision based on a comprehensive examination of all relevant factors.