Punjab & Haryana H.C : Agricultural income shown was nil and assessee was unable to dispute that land was falling within limits of Municipality of Amritsar, it could not be conclusively held that agricultural activities were being carried on land and thus, petitioner was entitled for benefit under section 10(37)

High Court Of Punjab & Haryana

Kanav Khanna vs. CIT – II, Amritsar

Section 10(37), 194LA

Ajay Kumar Mittal And Ms. Anita Chaudhry, JJ.

C.W.P. No. 24902 Of 2013 (O&M)

March  26, 2014

ORDER

CM No.3843 of 2014

Ajay Kumar Mittal, J. – The documents Annexures P.17 to P.19 alongwith the application are taken on record subject to all just exceptions. CM stands disposed of.

CWP No.24902 of 2013

2. Prayer in this petition filed under Articles 226/227 for quashing the orders dated 22.10.2013, 18.9.2013 and 30.3.2013, Annexures P.1 to P.3 respectively passed by the respondent-authorities raising demand of Rs. 1,28,36,480/- against the petitioner. Further prayer has been made for restraining the respondents from taking coercive action for recovery of the amount till the disposal of the appeal of the petitioner before respondent No.4.

3. Briefly, the facts necessary for adjudication of the controversy involved, as available on the record may be noticed. The petitioner is an individual. Return declaring income of Rs. 19,93,025/- was filed on 19.4.2010 which was processed under section 143(1) of the Act on 19.4.2011. The case was selected for scrutiny. Notice under section 143(2) of the Act was issued on 27.8.2011.The assessee is earning income from other sources. He claimed that land measuring 3 kanals 17 marlas bearing Khasra No. 1034/3 and 2 kanals 8 marlas bearing Khasra No. 1444 was acquired by the SDM-cum-competent authority-cum-Land Acquisition Collector, Amritsar and he received payments on account of acquisition of land. The total amount of compensation received was Rs. 8,57,41,680/- on which TDS of Rs. 96,80,881/-was deducted as per provisions of Section 194LA of the Act. In the return, the assessee showed long term capital gain at Rs. 8,32,58,783/- on the amount of compensation received which was claimed as exempt under Section 10 (37) of the Act. According to the petitioner, the capital gains, as per provisions of Section 10(37) of the Act could be treated as exempted if the land acquired was being used for agricultural purposes during the period of two years immediately preceding the date of transfer. The assessment order was passed vide order dated 30.3.2013 creating tax demand of Rs. 1,28,36,480/-. The assessee-petitioner filed an appeal before respondent No.4 against the assessment order on 8.4.2013. The assessee filed an application for stay of demand on 16.8.2013 before respondent No.2. The said application was disposed of vide order dated 18.9.2013, Annexure P.2 by the Deputy Commissioner of Income Tax, Circle V, Amritsar with the direction that the assessee shall deposit a sum of Rs. 64,18,240/- i.e. 50% of total demand of Rs. 1,28,36,480/- by 30th September 2013 and the balance due of Rs. 64,18,240/- through two installments at the rate of Rs. 32,09,120/- each on or before 24.12.2013 and 24.3.2014 respectively. The application for stay of demand before the Commissioner of Income Tax II was dismissed vide order dated 22.10.2013, Annexure P.1. Hence the present petition.

4. We have heard learned counsel for the parties and perused the record.

5. Learned counsel for the petitioner submitted that the Assessing Officer had passed the assessment order raising a huge demand in an arbitrary manner without application of mind. It was also submitted that the respondents had erred in refusing to grant unconditional stay of collection and recovery of the demand contrary to the CBDT instructions. Reliance was placed on judgments in Valvoline Cummins Ltd. v. Dy. CIT [2008] 307 ITR 103/171 Taxman 241 (Delhi), Soul v. Dy. CIT [2010] 323 ITR 305/[2008] 173 Taxman 468 (Delhi), Bhubaneswar Stock Exchange v. Union of India [2006] 283 ITR 562/[2006] 137 Taxman 318 (Orissa) and Rajasthani Sammelan Sarvoday Balika Vidyalaya v. Asstt. DIT (Exemption) [2013] 350 ITR 349/[2012] 209 Taxman 493/21 taxmann.com 238 (Bom.). It was further argued that the petitioner was carrying on agricultural activities on the land which was acquired in respect of which he had received compensation and the said amount was thus exempt under Section 10(37) of the Act. It was urged that in such circumstances, demand of tax raised by the respondents was uncalled for and stay of demand ought to have been allowed by the Assessing Officer and the Commissioner of Income Tax.

6. On the other hand, learned counsel for the respondents besides supporting the impugned order submitted that the petitioner was not entitled for benefit under the provisions of Section 10(37) of the Act.

7. The primary dispute in this case relates to whether in the facts and circumstances of the case, the petitioner-assessee is entitled to the grant of unconditional stay of recovery of demand in view of his claim that he is entitled to benefit under Section 10(37) of the Act on the amount of compensation which was received on acquisition of land.

8. In the present case, the petitioner-assessee received a total amount of Rs. 8,57,41,680/- as compensation out of which TDS of Rs. 96,80,881/- was deducted as per provisions of Section 194LA of the Act. The assessee showed long term capital gain of Rs. 8,32,58,783/- on the amount of compensation in the income tax return. As per provisions of Section 10(37) of the Act, the capital gains could be treated as exempted if the land acquired was being used for agricultural purposes during the period of two years immediately preceding the date of transfer. It may be noticed that from perusal of Annexure P.17, return for the assessment year 2007-08, in Column No.24, agricultural income shown was nil whereas in the computation chart appended alongwith the said Annexure, agricultural income has been shown to be Rs. 4900/- only. Further on a query being put to the learned counsel for the petitioner as to whether the land which was acquired was not capital asset within the meaning of Section 2(14) of the Act, he was unable to dispute that it was falling within the limits of the Municipality of Amritsar. In such a situation, it cannot be conclusively held that agricultural activities were being carried on the land and thus, the petitioner was entitled for the benefit under Section 10(37) of the Act. Moreover, it is a question of fact which is required to be determined on appreciation of material before the appellate authority. In such a situation, we do not consider it a fit case for grant of stay of recovery of entire demand. Accordingly, in the interest of justice, we deem it appropriate to direct that there shall be interim stay of recovery of 50% of the tax liability during the pendency of the appeal, which is stated to be fixed for hearing on 9.4.2014. The judgments relied upon are based on individual fact situation involved therein. Moreover, it may be noticed that with regard to the grant of interim prayer, there is no strict principle of law or precedent.

9. In view of the above, the writ petition stands disposed of in the manner indicated above.

[Citation : 366 ITR 386]