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TMI Blog2017 (8) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... ry 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. 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. - Decided in favour of the assessee. - D.B. Income Tax Appeal No. 183, 184, 185 / 2015, D.B. Income Tax Appeal No. 159 / 2017 - - - Dated:- 3-8-2017 - K. S. Jhaveri And Inderjeet Singh, JJ. For the Appellant : Mr. Sameer Jain For the Respondent : Mr. Sanjay Jhanwar JUDGMENT 1. Since in all these appeals, common questions of law and facts are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 nonagricultural 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w 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 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 purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 ₹ 23 per sq. yd. and the purchasersociety 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimant 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 Gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut 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 to the order/decision and/or permission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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