C. Nanda Kumar V

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM & THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN MONDAY, THE 11TH DAY OF NOVEMBER 2019 / 20TH KARTHIKA, 1941 WA.No.2219 OF 2019 AGAINST THE JUDGMENT IN WP(C) 1908/2019(K) OF THIS COURT APPELLANTS/RESPONDENTS 1 & 2: 1 THE ASSISTANT COMMISSIONER OF INCOME TAX NON CORPO. CIRCLE -1 (11), CENTRAL REVENUE BUILDING, I.S. PRESS ROAD, KOCHI - 682 018 2 THE COMMISSIONER OF INCOME TAX CENTRAL REVENUE BUILDING, I.S. PRESS ROAD, KOCHI- 682 018 BY ADV. SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT RESPONDENT/PETITIONER/RESPONDENT NO.3: 1 MADAPARABIL VARKEY VARGHESE MADAPARAMBIL, HOUSE, K.P VALLON ROAD, KADAVANTHRA, KOCHI - 682 020 2 UNION OF INDIA REPRESENTED BY ITS SECRETARY, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, NORTH BLOCK, NEW DELHI - 110 001 R1 BY ADV. SRI.ABRAHAM JOSEPH MARKOS R1 BY ADV. SRI.ISAAC THOMAS R1 BY ADV. SHRI.VIPIN ANTO H.M. R1 BY ADV. SHRI.ALEXANDER JOSEPH MARKOS R1 BY ADV. SHRI.SHARAD JOSEPH KODANTHARA OTHER PRESENT: SCGC-SRI. P.VIJAYAKUMAR THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 11.11.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.A. No.2219/2019 -:2:- C.K. ABDUL REHIM, J. & ANU SIVARAMAN, J. ----------------------------------------------------- W.A. No. 2219 OF 2019 ------------------------------------------------------- Dated this the 11th day of November, 2019 J U D G M E N T Abdul Rehim , J. Question arising for consideration in this writ appeal filed under Section 5 of the Kerala High Court Act is, whether the compensation received with respect to acquisition of an asset, the value of which is calculated under depreciable method, will be covered under Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013(for short, 'Act 30 of 2013'). 2. Respondents in W.P.(C) No.1908/2019 are the appellants herein, challenging judgment of the Single Judge dated 31st May, 2019. The respondent herein is the writ W.A. No.2219/2019 -:3:- petitioner. 3. Ext.P8 order of assessment and Ext.P9 demand notice were under challenge in the writ petition. Issue relates to acquisition of properties belonging to the respondents for the public purpose of establishing Kochi Metro Rail Project. By virtue of an Award passed by the Acquisition Officer on 30.10.2015 under Act 30 of 2013, the compensation payable was fixed at `7,54,24,705/-. During the relevant assessment year, the respondent received 80% of the compensation determined by virtue of the Award passed during the assessment year 2016-2017. The assessing authority included a portion of the receipt of compensation as taxable income by making an interpretation to Section 96 of the Act 30 of 2013 on following words; “The main intention of the section is to spare the poor farmer the further, burden of Income-tax, who has already suffered loss of livelihood, replacement, W.A. No.2219/2019 -:4:- emotional trauma etc. This is clear from the concluding lines of the Section 96. It says that “no person claiming under any such award or agreement shall be liable to pay fee for a copy of the same.” The Act here envisages a poor agriculturist, for whom even paying a few rupees of copying fees, which cannot possibly exceed Rs.100/- considering the number of pages, shall be a huge economic burden. From the above discussion, it can clearly be seen that compensation on a depreciable asset cannot be said to be covered by Section 96 of the RFCTLAAR Act.” 4. While considering the challenge raised against the order of assessment, the learned Single Judge observed that, Section 96 does not draw any distinction between compensation received for compulsory acquisition based on the nature of the asset acquired. But the exemption provided is W.A. No.2219/2019 -:5:- wider in scope than any of the tax exemptions provided under provisions of the Income-tax Act, 1961. Referring to a decision of the High Court of Andhra Pradesh in C. Nanda Kumar v. Union of India in W.P.(C) No.7874 of 2016, the learned Judge had referred to the Circular issued by the Central Board of Direct Taxes(CBDT), Circular No.36/2016, dated 25.10.2016, which had clarified that the compensation received under an Award is exempted from levy of Income-tax under Section 96 of Act 30 of 2013 and shall not be taxable, even if there is no specific provision for exemption provided under the Income-tax Act. The learned Single Judge also referred to the impact of Section 194 LA introduced in the Income-tax Act, to hold that there is no ambiguity under Section 96 of Act 30 of 2013. It was held that, the exemption is complete if the compensation is paid under the Award passed under Act 30 of 2013. The observation contained in the impugned judgment is to the effect that, if the exemption is granted by the Parliament, the court is not to deny W.A. No.2219/2019 -:6:- such exemption by adopting an impermissible interpretation. Hence the impugned assessment was quashed. It is aggrieved by the said judgment, that the Revenue had filed the above writ appeal. 5. We are of the considered opinion that Section 96 of the Act 30 of 2013 is clear and unambiguous in its literal meaning and does not require any interpretation by a court of law. The dictum contained in the decision of the High Court of Andhra Pradesh in C. Nanda Kumar(supra) is reiterated by the Division Bench of this court in the judgment in Writ Appeal No.1528 of 2016 dated 8th August, 2016(The Commissioner of Income-tax(TDS) v. Pramod and others. It is held therein that Section 96 of Act 30 of 2013 clearly discloses that no income tax or stamp duty shall be levied on any Award or enhancement made under the said Act, except under Section 46. Hence it is clear that the exemption is provided from levying income-tax and stamp duty. Therefore the assessment of tax W.A. No.2219/2019 -:7:- made on such compensation received is not sustainable. 6. In view of the position remaining settled, coupled with the terms of the CBDT Circular, as well as introduction of the proviso to Section 194 LA in the Income-tax Act, there exists no ambiguity that the compensation received under Act 30 of 2013 is in no manner liable to be taxed under any of the provisions of the Income-tax Act. Therefore the writ appeal deserves no merit and the same is accordingly dismissed. SD/- C.K. ABDUL REHIM, JUDGE. SD/- ANU SIVARAMAN, JUDGE. ul/-.

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