M.C.THOMAS Vs. DISTRICT COLLECTOR

JUDGEMENT

(1.) Is income tax liable to be deducted from the sale consideration at the time of transfer of an immovable property by a resident transferor The issue crops up frequently in the wake of parcels of land being purchased in lieu of land acquisition for the prestigious Kochi Metro Rail Project.

(2.) An extent of 1.61 Ares (3.98 cents) of land comprised in R.S.No.78/2-1 of Aluva West Village in Aluva Municipality belonging to the petitioner is being transferred to the Government for the Kochi Metro Rail Project. A district level purchase committee constituted for the purpose has negotiated with the petitioner as regards the price of the property and a consideration at the rate of Rs. 17 lakhs per cent is agreed upon. The petitioner has already produced the consent letter as well as the original documents including the title deeds, encumbrance certificate, tax receipt, possession certificate etc. to the Special Tahsildar (Land Acquisition) No.II. The petitioner is apprehensive of deduction of income tax and has filed the writ petition for a direction to disburse the whole of the sale consideration without any deduction what so ever. Reliance is placed on Infopark Kerala v. Asst. Commissioner of Income Tax,2008 4 KerLT 782 to contend that such deduction is warranted only when there is a compulsory acquisition.

(3.) The respondents do concede that income tax is not liable to be deducted under Section 194LA of the Income Tax Act, 1961 ('the Act' for short) when the price is fixed by negotiation and not through land acquisition. But the respondents maintain that tax is liable to be deducted under Section 194 IA of the Act effective from 1.6.2013 though not under Section 194 LA of the Act. The respondents point out that the property agreed to be transferred is not an agricultural land and that the sale consideration exceeds Rs. 50 lakhs attracting the rigour of Section 194 IA of the Act.