The Karnataka High Court has held that income tax exemption is available on the compensation paid to land loosers for the acquisition of their lands.
The bench of Justice Krishna S.Dixit and Justice Vijaykumar A.Patil has observed that there is a lot of heart-burn in the class of persons who have lost lands in acquisitions accomplished under the statutes other than 2013 Act. Ordinarily, land-losers in acquisition process, whichever be the statute, do constitute one homogenous class, at least viewed from the angle of recompense.
The bench pointed out that it is high time that the Central Government addresses this aspect of the matter before long and thereby assuages the grievance of land losing farmers, consistent with the policy content & laudable intent enacted in Section 96 of the new Act.
The Commissioner of Income Tax (TDS) has challenged the judgment by a Single Judge by which, land-losers’ W.P.No.103377/2017 c/w other identical cases, having been favoured, they have been relieved off from the levy of income tax on the compensation paid for the acquisition of their lands. This relief, he has granted principally in terms of section 96 of Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.
The department submitted that Section 96 of 2013 Act providing for exemption from income tax on the amount payable as compensation, is invocable only when acquisition of private lands for public purpose has been accomplished under the provisions of this very Act and not under any other statutes such as the Karnataka Highways Act, 1964, to be specific.
The department contended that Section 96 of 2013 Act enacts a part of law relating to Income Tax. The Parliament in its wisdom has exempted from tax the compensation payable for the land acquisition done under the provisions of this Act only, as a matter of policy and that such a provision has to be construed literally, there being no room for its otherwise interpretation.
The department argued that what income should be taxed and what should be exempted are a matter of legislative wisdom; by employing the said wisdom, Parliament has enacted Income Tax Act, 1961 providing for levy on the compensation payable for compulsory purchase of land, done under the provisions of 2013 Act alone and not any other statute. There being no challenge to section 96 of the new Act, court by interpretative process cannot restrict or widen its scope & application.
The land losers contended that the provisions of all local statutes such as the Karnataka Highways Act, 1964, Karnataka Industrial Areas Development Act, 1966, Bangalore Development Authority Act, 1976, Karnataka Urban Development Authorities Act, 1987, etc, stand impliedly repealed by the enactment of 2013 Act and therefore, section 96 of this new Act exempting compensation from the income tax comes to the rescue of his clients, even when the acquisition of their lands was under the local laws.
The landloosers stated that regardless of multiple statutes providing for acquisition of private land for public purpose, all land-losers constitute one homogenous class for bane or benefits and therefore, the exemption from income tax enacted u/s 96 of 2013 Act is available to all of them. If necessary, the provision should be read down to accord with rule of equality constitutionally enshrined in Article 14.
The court allowed the appeals and the orders of the Single Judge are set at naught. The subject Writ Petitions of land-losers are liable to be and accordingly dismissed.
Case Details
Case Title: CIT(TDS) Versus Tushira Industries
Case No.: WA NO.100568/2023
Date: 29/10/2024
Counsel For Petitioner: M. Thirumalesh
Counsel For Respondent: C.M. Chandrashekar
