THE COMMISSIONERR OF INCOME-TAX TDS / THE INCOME TAX OFFICER (TDS) WARD-16(1) v. CHIEF ACCOUNTS OFFICER BRUHAT BANGALORE MAHANAGAR PALIKE
[Citation -2015-LL-0929-71]

Citation 2015-LL-0929-71
Appellant Name THE COMMISSIONERR OF INCOME-TAX TDS / THE INCOME TAX OFFICER (TDS) WARD-16(1)
Respondent Name CHIEF ACCOUNTS OFFICER BRUHAT BANGALORE MAHANAGAR PALIKE
Court HIGH COURT OF KARNATAKA
Relevant Act Income-tax
Date of Order 29/09/2015
Assessment Year 2010-11
Judgment View Judgment
Keyword Tags payment of compensation • compulsory acquisition of land • tds
Bot Summary: To achieve the purpose, it may resort to compulsory acquisition of lands under the provisions of Land Acquisition Act, 1894 or any such other Act relating to compulsory acquisition of land or take land under Section 14B of the Karnataka Town and Country Planning Act, 1961 KTCP Act for short, where the land owner may voluntarily surrender 3 his land free of cost and handover possession of such lands and in lieu thereof, Certificate of Development Rights CDR for short are issued by the Authority, whereby, the owner would be granted CDR rights in the form of additional floor area, which shall be equal to 1 times of area of land surrendered. In the present case, the land has been taken under Section 14B of KTCP Act and not by way of any compulsory acquisition. After quantifying the 4 amount of value of land so surrendered by the land owner in favour of BBMP, the Assessing officer directed that TDS at the rate of 10 under Section 194LA amounting to 2,41,91,128/- was to be deposited by the assessee. The submission of learned counsel for appellants is that since the land was acquired by BBMP, which could be valued in terms of money under Section 50C of I.T. Act, BBMP ought to have deducted 10 of such value and deposited the same, as required under Section 194LA of I.T. Act. The Tribunal has dealt with the issue at length and has recorded a finding that the provisions of Section 194LA would be applicable only in case of compulsory acquisition, whereas, the lands acquired by BBMP was not by way of compulsory acquisition, but had been surrendered by the land owner under Section 14B of KTCP Act. In the present case, neither there is compulsory acquisition of the land, nor there is any process adopted for quantification or determination of value of land acquired by BBMP which is voluntarily surrendered by the land owner, for which CDRs were given to the land owner. Of his land under Section 14B of KTCP Act and thus receives CDRs for 15,000 sq.


1 IN HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS 29TH DAY OF SEPTEMBER 2015 PRESENT HON'BLE MR. JUSTICE VINEET SARAN AND HON'BLE MR. JUSTICE B.MANOHAR I.T.A.NO.94 OF 2015 AND I.T.A.NO.466 OF 2015 BETWEEN: 1. COMMISSIONERR OF INCOME-TAX TDS, NO.59, HMT BHAVAN, 4TH FLOOR, BELLARY RAOD, GANGANAGAR, BANGALORE-560 032. 2. INCOME TAX OFFICER (TDS) WARD-16(1), NO.59, HMT BHAVAN, 4TH FLOOR, BELLARY ROAD, GANGANAGAR, BANGLAORE-560 032. ... APPELLANTS (BY:SRI. K V ARAVIND, ADVOCATE ) AND: CHIEF ACCOUNTS OFFICER BRUHAT BANGALORE MAHANAGAR PALIKE, N R SQUARE, BANGALORE-560 002. PAN:BLRC0 0295B ... RESPONDENT 2 THESE ITAs ARE FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED:14/11/2014 PASSED IN S.P.NO.206/BANG/2014 AND ITA NO.719/BANG/2014, FOR ASSESSMENT YEAR 2010-2011 PRAYING TO: I). FORMULATE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND II) ALLOW APPEAL AND SET ASIDE ORDER PASSED BY ITAT, BANGALORE IN SP NO.206/BANG/2014 AND ITA NO.719/BANG/2014 DATED:14/11/2014 AND CONFIRM ORDER OF APPELLATE COMMISSIONER CONFIRMING ORDER PASSED BY INCOME TAX OFFICER (TDS), WARD- 16(1),BANGALORE. THESE I.T.As COMING ON FOR ADMISSION THIS DAY, VINEET SARAN.J., DELIVERED FOLLOWING: JUDGMENT For discharging of its functions i.e., expansion of existing roads and construction of underpasses, etc. Bruhath Bengaluru Mahanagara Palike [ BBMP for short ] has to acquire lands. To achieve purpose, it may resort to compulsory acquisition of lands under provisions of Land Acquisition Act, 1894 or any such other Act relating to compulsory acquisition of land or take land under Section 14B of Karnataka Town and Country Planning Act, 1961 [ KTCP Act for short], where land owner may voluntarily surrender 3 his land free of cost and handover possession of such lands and in lieu thereof, Certificate of Development Rights [ CDR for short] are issued by Authority, whereby, owner would be granted CDR rights in form of additional floor area, which shall be equal to 1 times of area of land surrendered. 2. In present case, land has been taken under Section 14B of KTCP Act and not by way of any compulsory acquisition. As such, there was no cash transaction or payment made by BBMP to land owner. 3. Invoking provisions of Section 194LA of Income Tax Act, [ I.T.Act for short] Assessing Officer treated respondent BBMP as assessee under default for not having deducted tax at source (TDS) under Section 194LA and deposited same with Income Tax Department. Consequently, after quantifying 4 amount of value of land so surrendered by land owner in favour of BBMP, Assessing officer directed that TDS at rate of 10% under Section 194LA amounting to `2,41,91,128/- was to be deposited by assessee. 4. appeal filed by respondent-BBMP was dismissed by Commissioner of Income Tax (Appeals), which was challenged by BBMP before Tribunal and by detailed and reasoned order dated 14.11.2014, appeal of BBMP has been allowed. Aggrieved by same, Revenue has filed these appeals raising following substantial question of law:- 1. Whether, on facts and circumstances of case, Tribunal is right in law in holding that provisions of section 194LA of I.T.Act are not applicable in facts and circumstances of case without appreciating legal provisions of said section which mandates that income tax has to be deducted at source at time of payment of compensation, whether by cash or by draft/cheque or by any other mode (in instant case it is in form of DRC) attracts deduction of TDS and DRC in hands of owner is valuable property and marketable commodity? 5 5. We have heard Sri K.V.Aravind, learned counsel for appellant Revenue and perused records. 6. submission of learned counsel for appellants is that since land was acquired by BBMP, which could be valued in terms of money under Section 50C of I.T. Act, BBMP ought to have deducted 10% of such value and deposited same, as required under Section 194LA of I.T. Act. 7. Tribunal has dealt with issue at length and has recorded finding that provisions of Section 194LA would be applicable only in case of compulsory acquisition, whereas, lands acquired by BBMP was not by way of compulsory acquisition, but had been surrendered by land owner under Section 14B of KTCP Act. Section 194LA of Act, reads as follows:- 194LA. Any person responsible for paying to resident any sum, being in nature of 6 compensation or enhanced compensation or consideration or enhanced consideration on account of compulsory acquisition, under any law for time being in force, of any immovable property (other than agricultural land), shall, at time of payment of such sum in cash or by issue of cheque or draft or by any other mode, whichever is earlier, deduct amount equal to ten per cent of such sum as income-tax thereon: 8. bare reading of said Section would make it clear that it would be applicable only in case of payment of any sum of money as consideration on account of compulsory acquisition of any immovable property, for which payment is made in cash, cheque, demand draft or any other mode. In present case, neither there is compulsory acquisition of land, nor there is any process adopted for quantification or determination of value of land acquired by BBMP which is voluntarily surrendered by land owner, for which CDRs were given to land owner. As such, we are in agreement with finding recorded by Tribunal 7 that provisions of Section 194LA of I.T. Act would not be attracted in present case. 9. Even otherwise, Tribunal has rightly observed that provisions of deducting tax at source and paying it over to Government on behalf of recipient of payment, is in nature of vicarious liability. When there is neither quantification of sum payable in terms of money nor any actual payment is made in monetary terms, it would not be fair to burden person with obligation of deducting tax at source and exposing him to consequence of such default. 10. We may explain this by way of example. If land owner surrenders 10,000 sq.ft. of his land under Section 14B of KTCP Act and thus receives CDRs for 15,000 sq.ft. floor area, clearly, there would be no monetary transaction in such case. Now, when 8 BBMP has not paid any money to land owner by cash, cheque, demand draft or any other mode, question would be as to wherefrom BBMP has to deposit any amount as tax deduction at source. It is only when certain payment is made to party, then party making payment, deducts particular percentage (which u/s.194LA is 10%), which has to be deducted and deposited with Income Tax Department. 11. If so, for example, `1.00 crore is amount of compensation to be paid to land owner, then instead of paying full amount to land owner, acquiring body would pay `90.00 lakhs to land owner and deduct `10.00 lakhs and deposit same as TDS amount. But, if CDRs for 15,000 sq.ft. floor area is given to land owner, then would BBMP be required to issue 13,500 sq.ft. CDRs to land owner and deposit 10%, i.e., 1500 sq.ft. CDR with Income Tax Department or would BBMP in such situation be 9 required to deposit particular sum equivalent to 1500 sq.ft. CDR, even when entire CDR for 15000 sq.ft. floor area has been given to land owner. 12. concept of tax deduction at source (TDS) and depositing same with Revenue is where payment is made by cash, cheque, demand draft or any other similar mode. When such payment in terms of money is made, deduction is to be made by person responsible to pay, and is to deposit same with Income Tax Department, which would be adjusted and credited to account of person on whose behalf such amount is paid to Income Tax Department, and in such case, such person, who would then be assessee before Department, would be entitled to adjustment of amount so deducted as TDS on behalf of said assessee. When no payment is made by BBMP to land owner in 10 terms of money, such deduction is neither possible nor is conceived under Section 194LA. 13. As such, in view of aforesaid discussion, we are of view that order of Tribunal is perfectly justified in law and no question of law arises in these appeals for determination by this Court. appeals are accordingly dismissed. No order as to costs. Sd/- JUDGE Sd/- JUDGE VGR COMMISSIONERR OF INCOME-TAX TDS / INCOME TAX OFFICER (TDS) WARD-16(1) v. CHIEF ACCOUNTS OFFICER BRUHAT BANGALORE MAHANAGAR PALIKE
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