IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE ACTING CHIEF JUSTICE MR.J.B.KOSHY & THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON THURSDAY, THE 8TH JANUARY 2009 / 18TH POUSHA 1930 WA.No. 2243 of 2008() -------------------------------- AGAINST THE JUDGEMENT/ORDER IN WPC.10316/2008 Dated 06/10/2008 .................... APPELLANT(S): RESPONDENTS: -------------------------- 1. ASSISTANT COMMISSIONER OF INCOME TAX, (TDS) OFFICE OF THE COMMISSIONER OF INCOME TAX, KOCHI, C.R.BUILDING, I.S PRESS ROAD, KOCHI. 2. COMMISSIONER OF INCOME TAX, (TDS) OFFICE OF THE COMMISSIONER OF INCOME TAX, KOCHI, C.R.BUILDING, I.S PRESS ROAD, KOCHI. 3. UNION OF INDIA, MINISTRY OF FINANCE, REPRESENTED BY ITS SECRETARY, DEPARTMENT OF REVENUE, CENTRAL SECRETARIAT, NORTH BLOCK, NEW DELHI-110 001. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): PETITIONER: -------------------------- INFO PARKS KERALA, KAKKANAD, COCHIN-682 030, REPRESENTED BY ITS CHIEF EXECUTIVE OFFICER, SRI.RADHAKRISHNAN NAIR. ADV. SRI.K.ANAND (A.201) FOR R1 SMT.LATHA KRISHNAN FOR R1 SRI.V.RAMACHANDRAN THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 08/01/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: J.B. Koshy, Ag.C.J. & P.R.Ramachandra Menon, J. -------------------------------------- W.A. No.2243 of 2008 - E --------------------------------------- Dated this the 8th day of January, 2009 Judgment Koshy, Ag.C.J.: The writ petitioner is a Society established under the Travancore Cochin Societies Registration Act, 1955 set up with the object of development of Information Technology Parks. Suitable lands were identified in Ernakulam District and Government issued notification under Section 4 of the Land Acquisition Act, 1894 (in short,”the Act”) notifying the lands. Notification was also issued under Section 6(1) of the Survey and Boundaries Act, 1961. The District Level Purchase Committee with District Collector as Chairman was authorised to determine the price of the land. That has to be considered by Empowered Committee by giving approval which consists of senior officers of the Government. The parties had two options; either to negotiate settlement or to go by the land acquisition procedure as provided under the Act. In the first category, there is sale of property on agreed price and in the second category there is compulsory acquisition. In that case, apart from market value, solatium, interest etc. are payable. If the market value fixed is not acceptable, the parties can go to the court for reference. On negotiation large extent of lands involved in the Section 4 notification was sold and sale deeds were executed and those lands were excluded from the provisions of the Land Acquisition Act. Government withdrew from the Land Acquisition under Section 48 by W.A.No.2243/2008 2 effacement of the notification issued under Section 4(1) of the Land Acquisition Act. 2. Appellants demanded deduction of tax as per Section 194 LA of the Income Tax Act, 1961, which reads as follows: “194LA. Payment of compensation on acquisition of certain immovable property.- Any person responsible for paying to a resident any sum, being in the nature of compensation or the enhanced compensation or the consideration or the enhanced compensation on account of compulsory acquisition, under any law for the time being in force, of any immovable property (other than agricultural land), shall, at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent of such sum as income-tax thereon”. A reading of the above Section shows that, that is applicable only when lands are compulsorily acquired by the Government. Even though, here the acquisition procedures were initiated, lands were sold to the Government by negotiating settlement. Under Section 194LA of the Income Tax Act, deduction of an amount equal to ten per cent of compensation is required only when lands are compulsorily acquired but deduction of tax is not necessary when the land is purchased by negotiation after executing sale deeds. It is well settled that taxing statute should be interpreted strictly. But for Section 194LA, even in compulsory acquisition, entire compensation determined was payable to the owner of the land. After Section 194LA was introduced, only after deducting 10% of the amount towards income tax, the Government can pay the compensation. If the owners of the land are not liable to pay W.A.No.2243/2008 3 income tax, they can get refund of the amount by producing the certificate of deduction. But such compulsory deduction at source is not mandated under Section 194LA when the land is purchased by executing sale deeds on the price paid by it. Only by proper legislation that can be done. If the purchasers are liable to pay tax, it is for the income tax department to demand from them. Here the lands were sold by executing sale deeds and therefore Section 194LA is not applicable. 3. All the contentions raised by the appellants were considered meticulously by the learned Single Judge and the appellants had no contention that any of the points were left out by the learned Single Judge. We fully agree with the views taken by the learned Single Judge and hence we are not reiterating the same. The appeal is dismissed. J.B.Koshy Acting Chief Justice P.R.Ramachandra Menon Judge bkn/dk.