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TMI Blog2014 (11) TMI 638X X X X Extracts X X X X X X X X Extracts X X X X ..... be taken under statutory powers without the agreement of the owner - the surrender of land by owners was voluntary and in exercise of option under a notification laying down conditions for grant of TDR in exercise of powers u/s.14-B of KTCP. BBMP wherever owners did not respond to offer of CDRs, BBMP has resorted to compulsory acquisition proceedings in accordance with the provisions of the Land Acquisition Act, 1894 - the provisions for deducting tax at source and paying it over to the Government on behalf of the recipient of the payment is in the nature of vicarious liability - But where neither there is quantification of the sum payable in terms of money nor actual payment in monetary terms, it would be unfair to burden a person with the obligation of deducting tax at source and exposing him the consequences of such default - the liability to pay tax is that of a third person and not that of BBMP and the spirit behind the provisions of Sec.190 of the Act has been totally lost sight of by the Revenue - the provisions of Sec.194LA of the Act were not applicable because there was no compensation paid towards compulsory acquisition under any law in force and therefore the order u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be governed by KMC. The Corporation was renamed as Bangalore Mahanagara Palike (BMP). New areas in the vicinity of the city of Bangalore also came under the control of BMP and BMP came to be renamed as Bruhat Bangalore Mahanagara Palike. 3. BBMP in discharge of its functions under the KMC has to acquire land for expansion of existing roads or for construction of underpass etc. There are two modes in which it can achieve its purpose. (i) It can compulsorily acquire lands subject to existence of Public Purpose, payment of due compensation and complying with the other procedure requirements under the Land Acquisition Act, 1894; and (ii) by virtue of the powers conferred under the provisions of Sec.14-B of the Karnataka Town and Country Planning Act, 1961, [ KTCP ] as local authority, it can by public notice inform the public purpose for which lands are required, mentioning the location of the land which are required for public purpose and call upon the owners of those lands to avail the benefit of getting DRC s (Development Right s Certificate) in lieu of land that are surrendered of their land. The owner of any site or land which falling within the area so mentioned can surre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 iii Buildable floor area : 500 x1.5 =750 square meters iv Area surrendered :100 square meters v Additional floor area in the form of Development Rights : 150 square meters vi Plot area after surrender :500-100=400square meters vii Buildable floor area in plot area of 400 square meters (after surrender):- (a) If additional floor area is not utilised in the same plot : 750 Sq.Mtrs. (b) If additional floor area is utilised in the same plot : 750+150 = 900 square meters Illustration No.2 In a plot area of 500 square meters at road B , where floor area ratio is 0.75:- i Plot area : 500 square meters ii Permissible floor area ratio : 0.75 iii Buildable floor area : 500 x 0.75 =375 square meters iv Area surrendered :100 square meters v Additional floor area in the form of Development Rights : 150 square meters vi Plot area after surrender : 500-100 = 400square meters vii Buildable floor area in plot area of 400 square meters (after surrender):- (a) If additional floor area is not utilised in the same plot (b) If additional floor area is utilised in the same plot : 375 square meters : 375+150 = 525 square meters Illustration No.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RC s have to be determined by adopting the guidance value for the land acquired fixed by the State Government for the purpose of Stamp Duty and Registration. In coming to the above conclusion the AO, as has been explained by the CIT(A) in the impugned order, drawn inspiration from the provisions of Sec.50C of the Act, (to the extent relevant for the present appeal) which reads thus: Special provision for full value of consideration in certain cases. 50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (hereafter in this section referred to as the stamp valuation authority ) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. (2) .. Explanation-1: Explanation 2. For the purposes of this section, the expression assessable means the price which the stamp valuation authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ode. It was submitted by BBMP that a combined reading of Sec.190 and 194LA of the Act it is necessary that there should accrue income chargeable to tax in the hands of the recipient. By issue of DRC income does not accrue or arise to the recipient of DRC. In this regard the Assessee placed reliance on the decision of the Hon ble Supreme Court in the case of GE India Technology Centre Private Limited Ltd. v. CIT (327 ITR 456) held that the payment made when it did not comprise any element of income, the payer could not be held liable for non-deduction of tax at source. It was pointed out that valuing DRCs by applying the guideline value applicable for registration of documents for the purpose of stamp duty, adopted by the Registrar for registration of documents, is not correct. It was pointed out that DRCs are not issued on the basis of such guideline values and they have no relevance at all. 11. It was further contended that the person making payment should make payment of a sum of money which clearly indicates that the provisions of Sec.194LA of the Act are applicable only when payment is made in terms of money. It was further pointed out that the expression in Sec.194LA, at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per the guideline values fixed by subregistration for stamp duty valuation and registration. The AO also held that acquiring land u/s.14-B of the KMC would be akin to compulsory acquisition under any law in force. The AO also held that the expression any sum means anything in the nature of compensation and issue of DRCs is in the nature of any sum and therefore the provisions of Sec.194LA of the Act are applicable. 13. For the above reasons, the AO held that BBMP was an Assessee in default and determined the tax payable and interest on tax payable u/s.201(1) 201(1A) of the Act respectively in the manner indicated in the chart given as Annexure-1 and 2 respectively to this order for AY 10-11 11-12 respectively. 14. On appeal by BBMP, the CIT(A) confirmed the orders of the AO. Aggrieved by the orders of the CIT(A), BBMP has preferred these appeals before the Tribunal. 15. The learned counsel for BBMP first submitted that provisions of Sec.194LA of the Act will be applicable only when any sum of money is paid as compensation on account of compulsory acquisition under any law for the time being in force. He drew our attention to the order of the AO wherein the AO has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatutory power to take mere possession of the land without the acquisition of any estate or interest in it apart from the possession, it is said to have been requisitioned. (8. Halsbury s laws (4th Edn.) para-1). 16. Though the above meaning is given in contradistinction to what is requisitioning, yet the meaning of the term compulsory acquisition is that land should be taken under statutory powers without the agreement of the owner. He drew our attention to the fact that in respect of some of the schemes for road widening where the owners did not respond to offer of CDRs, BBMP has resorted to compulsory acquisition proceedings in accordance with the provisions of the Land Acquisition Act, 1894. It was his submission that in the case of compulsory acquisition there are procedure for objecting to the acquisition on the ground that the proposed acquisition is not for public purpose, requirement of notice, determination of compensation, payment of compensation and thereafter taking possession and ownership. Such elements are absent when land owners surrender their land to BBMP under the scheme of issue of CDRs. It was his submission that there is no process of quantification or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein, as is clear from the following passage from the said judgment : The components which enter into the concept of a tax are well known. The first is the character of the imposition known by its nature which prescribes the taxable event attracting the levy, the second is a clear indication of the person on whom the levy is imposed and who is obliged to pay the tax, the third is the rate at which the tax is imposed, and the fourth is the measure or value to which the rate will be applied for computing the tax liability. If those components are not clearly and definitely ascertainable, it is difficult to say that the levy exists in point of law. Any uncertainty or vagueness in the legislative scheme defining any of those components of the levy will be fatal to its validity. It is clear that the rate at which the tax is to be imposed is an essential component of tax and where the rate is not stipulated or it cannot be applied with precision, it would be difficult to tax a person. It was pointed out that this very conceptualisation of tax was rephrased in C.I.T, Bangalore v. B.C. Srinivasa Shetty in the following manner:- The character of computation of provisions in ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court clearly acknowledged this basic and long-standing rule of statutory construction:- Tax Statutes . . . should be strictly construed, and, if any ambiguity be found to exist, it must be resolved in favor of the citizen. Eidman v. Martinez, 184 U.S. 578,583; United States v. Wigglesworth, 2 Story, 369, 374; Mutual Benefit Life Ins. Co. v. Herold, 198 F. 199, 201, aff'd 201 F. 918;Parkview Bldg. Assn. v. Herold, 203 F. 876,880; Mutual Trust Co. v. Miller, 177 N.Y. 51,57. Again, in United States v. Merriam, the Supreme Court clearly stated at pp. 187-88: On behalf of the Government it is urged that taxation is a practical matter and concerns itself with the substance of the thing upon which the tax is imposed rather than with legal forms or expressions. But in statutes levying taxes the literal meaning of the words employed is most important, for such statutes are not to be extended by implication beyond the clear import of the language used. If the words are doubtful, the doubt must be resolved against the Government and in favor of the taxpayer. Gould v. Gould, 245 U.S. 151, 153. As Lord Cairns said many years ago in Partington v. Attorney- General: - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tock-in-trade of business of an Assessee. 20. The other submissions made before the AO that Sec.194LA of the Act is applicable only when there is income chargeable to tax and when payment of compensation is in a sum of money i.e., monetary consideration and not otherwise. According to him the expression any sum and these expressions make it clear that the provisions of Sec.194LA of the Act applies only when there are payments of quantified in terms of money. Reliance was placed by him in this regard on the decision of the Hon ble Supreme Court in the case of H.H.Sri Rama Varma Vs. CIT 187 ITR 308 (SC) wherein the expression sum was held to refer to payment of money and not to donations in kind. 21. Our attention was drawn to the provisions of Sec.194B of the Act which imposes obligation to deduct tax, when the payment is made in kind or partly in kind and partly in monetary terms. CBDT in Circular No. F.No.275/42/75-ITJ dated 9.6.1975 wherein the CBDT opined that when payment is in kind there is no obligation to deduct tax at source. Finance Act, w.e.f. 1-6-1997 a proviso was inserted to Sec.194-B of the Act whereby it was laid down that wherever winnings from lottery is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted by him that the question whether there was compulsory acquisition or not can be decided on the facts of the case and there is no need to remand the issue to the lower authorities for fresh consideration as the issue is purely legal. 24. We have given a very careful consideration to the rival submissions. The first issue that arises for our consideration is as to whether provisions of Sec.194LA of the Act are applicable to the facts and circumstances for the present case for the reason that (a) there was no compulsory acquisition; (b) there was no payment of any monetary consideration. 25. On the above issue, we are of the view that submissions made by the learned counsel for the Assessee are acceptable. As rightly submitted by him the application of Sec.194LA of the Act to the facts of the present case is purely a legal issue which can be decided on the basis of facts on record. As rightly contended by him the process of surrender of land for public purpose by owners of land and issue of CDRs has no element of Compulsory Acquisition which is necessary to attract application of the provisions of Sec.194LA of the Act. The meaning of the term compulsory acquisition i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view that on the facts of the present case the provisions of Sec.194LA of the Act were not applicable because there was no compensation paid towards compulsory acquisition under any law in force and therefore the order u/s.201(1) 201(1A) of the Act deserves to be quashed. 26. We are also of the view that the provisions of Sec.194LA of the Act would apply only when there is monetary payment. In this regard we find that provisions of Sec.194LA of the Act applies only when the person making payment should make payment of a sum of money which clearly indicates that the provisions of Sec.194LA of the Act are applicable only when payment is made in terms of money. The expression any sum used in Sec.194LA of the Act is a clear indication that those provisions are applicable only when payment is of consideration in terms of money. The Hon ble Supreme Court in the case of Sri H.H. Rama Varma (supra) had an occasion to examine the meaning of the term sum in the context of the provisions of Sec.80G of the Act. The Assessee in that case donated equity shares of Nirlon Synthetic Fibres and Chemicals Ltd. having a face value of ₹ 12,50,000 to each of two trusts. The assessee cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty but such donations, though convertible in terms of money, do not fall within the scope of s. 80G(2)(a) entitling an assessee to deduction. Donation of shares of a company does not amount to payment of any sum or amount though the shares, on their sale, may be converted into money. But the donation so made does not fall within the ambit of the aforesaid section. Since the expression and language used in s. 80G(2)(a) is plain and clear, it is not open to the Courts to enlarge the scope by its interpretative process founded on the basis of the object and purpose underlying the provision for granting relief to an assessee. 28. Sec.194LA of the Act also uses the expression any sum which clearly indicates that it is only when payment is made in monetary terms that those provisions are attracted. 29. We also agree with his submission that the expression in Sec.194LA, at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode means that payment can be in the mode of giving cash, or by issuing cheque or draft or any other mode like telegraphic transfer or mail transfer, via money order or postal order, bill of exchange, promissory note, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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