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TMI Blog2015 (9) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... ion by ITAT orders. During the course of verification of TDS matters, it was found that the JDA i.e. through its Land Acquisition Officer (for short 'LAO') of JDA is making payments in lieu of the agriculture land acquired by JDA for carrying out its development plans. It was found that in some of the cases, TDS has not been deducted by the LAO u/s 194LA of the I.T. Act in respect of agriculture land without making due verification. These payments in view of AO were liable for TDS. The LAO didn't deduct TDS merely on the basis of affidavit furnished about claim of agricultural land. Though the paper work and affidavits were certified by Tehsildar, JDA were not conclusive as he was not a revenue officer under land revenue code. The other documents in possession of assessee were office orders for land acquired under various schemes, note sheet for lands acquired, financial and administrative approval orders for making payments to various parties etc. which were not sufficient to hold that JDA was not liable for TDS u/s 194LA. During the course of verification proceedings, vide this office letters dated 7-08-2013 and 14-08-2013, the assessee was asked to submit details of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acquisition officers which have the patwari tehsildar and the all land revenue authorities / cell and even after the LAO verification, it is verified by the Secretary JDA, an order of verification as agriculture land was issued in all cases of agriculture land that the land is agriculture land, is used for the agriculture purposes and also the compensation is also paid according to that only. The copy of the office order issued the format in case of agriculture land is also enclosed herewith vide office order copy no. JDA /AO(P)/2011/D-757 dated 22-12-2011. The copy is enclosed herewith." 2.3 The AO made further enquiries and was of the view that the assessee had not given any satisfactory reply as to why the provisions of Section 194LA were not applicable to it. Rejecting the assessee's claim, the AO held that it was liable for deduction of TDS qua the acquisition of such agriculture land and paying into it Govt. Treasury, having default in its obligation, JDA was held to be liable for tax and interest 201(1) and 201(1A) by following observation. "5.1.2 The assessee had submitted that land acquisition and payments thereof were done with sufficient proof in land about the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such land as mentioned in Tabel 1, it is seen that the land are not agricultural land nor have they been used for agriculture purposes. 6.1 In view of discussion above, it is evident that in majority of cases (as per Table1 attached) the land claimed to be agricultural land was in reality barren land on which no cultivation was undertaken in last so many years. In large number of cases, the land was unfit for any cultivation. Hence, the assessee's contention that no TDS was deducted because the land was agricultural land is not acceptable. Further, the assessee's contention that it had sufficient evidences in its possession to derive satisfaction that the land was agricultural land is also not acceptable, as discussed in preceding para. Hence, the assessee was required to deduct TDS u/s 194A of the I.T. Act in all such cases. However, the assessee has failed to deduct TDS and accordingly the assessee is deemed to be an assessee in default u/s 201(1) of the I.T. Act in respect of the amounts not so deducted. Interest u/s 201(1A) is also charged as per law. A detailed chart of party-wise non-deduction is enclosed as Table 2 to this order. In this case, since most of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese facts, the AO was of the opinion that such barren lands and the lands which are not being used for agricultural purposes for the last 6-7 yers cannot be said to be agricultural lands and therefore, TDS was to be deducted u/s 194LA of I.T. Act. The AO also relied on the decision of Hon'ble Kolkata High Court in the case of Tea Estates India (P) Ltd. vs. CIT 59 ITR 482 (WT) in which the Hon'ble Court has held that the agricultural land should be the land connected with the cultivation involving expenditure on human labour skills for the purpose of cultivation or keeping it in a cultivable state. On careful consideration of all above mentioned facts, it may be noted that there is no dispute on the fact that the land which has been acquired and on which payments have made to the land owners were barren land or the lands which are not usable for agricultural purposes or not being used for agricultural purposes. It is also undisputed fact that though before making payment , the appellant has obtained affidavit of the payees as also certificate of the Tehsildar posted in the JDA certifying that these lands were agricultural land but actual use of the land was not ascertained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pment Authority and others vs. ITO, 175 Taxman 307, however, the facts of this case are altogether different inasmuch as in this case the land situated in the Municipal Limits as per provisions of Section 2(14) was treated to be not an agricultural land and accordingly brought under the purview of Section 194LA of I.T. Act. The Hon'ble Court held that for the purpose of Section 194LA even the land situated in Municipal limits is to be treated as agricultural land and these facts are even clear from the provisions of Section 194LA. In this manner in this case law the issue as to whether what should constitute the agricultural land was not the issue. As regards the other case law relied upon the appellant in the case of ITO (TDS - 2) vs. Special Land Range Acquisition Officer, IT Appeal No. 4174 of 2009 (ITAT, Mum.). It may be mentioned that this case law are also different to the facts of the appellant case inasmuch as in this case the land was not cultivated by the owners because it was intended to be for acquisition by the Railways. That means, the land in question was of cultivatable nature on which agricultural operations could have been done but these operations were not do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case may be, the aggregate amount of such payments to a resident during the financial year does not exceed two hundred thousand rupees. Explanation.- For the purposes of this section,- (i) "agricultural land" means agricultural land in India including land situate in any area referred to in items (a) and (b) of sub-clause (iii) of clause (14) of section 2; (ii) "immovable property" means any land (other than agricultural land) or any building or part of a building.]" It is contended by the counsel Shri Shyam Agrawal, FCA that JDA is a payer of compensation under a settled acquisition policy by which lesser compensation is payable for agricultural land and more compensation on commercial land; consequently JDA will not acquire commercial land camouflaging it as agricultural land. A plain reading of Section 194LA provides that Agricultural land means agricultural land in India including land situate in any area as mentioned above. It leads to unambiguous understanding that once the payee produces the prescribed documents about the ownership of the agricultural land for acquisition which fits into meaning as assigned in Explanation (i), no TDS is deductible on such compensation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that the land acquired by the assessee on which no TDS has been deducted is clearly mentioned as agriculture land in Revenue record. Once this finding is arrived then the obligation about deducting TDS doesn't exist. Besides as per the scheme of the I T Act revenue has a remedy to enquire the tax liability in the hands of the payee about their liability for capital gains. (iv) Reliance is placed in the case of ITO .TDA-2 vs. Special Land Acquisition Officer (ITAT Mumbai Bench 'E' (2011) 12 Taxmann.com 49 wherein it has been held that "Moreover, after considering the relevant provisions of the Act and particularly section 194LA, it was found that the land in question was basically an agricultural land and there was no material either pointed out by the Assessing Officer or brought before the Tribunal to show that the land acquired was used for non-agricultural purposes by the owners of the land. The revenue had come out with the argument that since the land was not under cultivation and it was not fit for agricultural, therefore, it could not be treated as agricultural land. It was not a decisive factor when the land itself was agricultural land though may not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utting the presumption in the Court of Land Acquisition Officer against the presumption raised by him. (9)The definition of the agricultural land contained in section 2(14)(iii) (a) & (b ) cannot be imported for determining the land as agricultural land because such definition is separately given in section 194LA. Further, definitions given in section 2(14)(iii)( a) & (b ) are for the purpose of determining whether capital gains would be chargeable or not on the land sold and for that purpose, whether the land in question would be agricultural land or not. That definition can be applied when the question of levy of capital gain arises before the Assessing Officer. A plain and simple reading of Section 194LA as proposed by the assessee has been held by Hon'ble Karnataka High Court in the case of Mysore Urban Development Authority & Ors vs. ITO , High Court of Karnataka, reported in 175 Taxman 307 (2008), 218 CTR (Kar.) 678 (20) wherein it was held that "The very authority also has indicated that the compensation being paid is in respect of agricultural land acquired by the development authority, there is no question of further examination of this aspect on the premise that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be held that assessee is not liable for TDS in respect of acquisition of agricultural land and demand to be deleted. 2.9 We have heard the rival contentions and perused the materials available on record. From the record, it emerges that the assessee demonstrated its case for no liability of TDs before the ACIT -TDS that not only in terms of plain reading of Section 194LA but also furnished the desired information in the proforma and enclosures as advised by the AO to be furnished in the order to hold JDA as notliable under explanation (i) above. Having complied with the requirement, assessee has discharged its onus. Besides in view of the Ahemdabad and Bombay ITAT judgments, the liability of assessee u/s 194LA cannot be extended to go beyond the plain meaning of the letters of section and infuse such conditions which are not mentioned in the provisions. In consideration of the entirety of the facts and circumstances of the case, we are of the view that :- (i) The assessee complied with requirements asked for by the AO. There is no adverse comment on this issue. (ii) Section 194A does not provide any physical verification of the assessee to inspect the fields and find out whet ..... 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