The
question of compulsory acquisition will arise only where the compensation
cannot be determined by agreement. In other words when the compensation is
based on an agreement between State Government and owner of the land, no more
can we say that it is a compulsory acquisition.
The
disputed issue is as under:
Whether
acquisition of land under an agreement by Karnataka Industrial Area Development
Board (a state Government Undertaking) with landowners under the Karnataka
Industrial Areas Development Act, 1966 (‘KIA Act’) would be deemed as
compulsory acquisition within the meaning of Sec.194LA?”
Held:
1)
Section 194LA applies only when there is a
compulsory acquisition under law. Under compulsory acquisition, the seller has
no option but to sell the land. He cannot even negotiate the price as same is
fixed by statute itself.
2)
In the instant case, the land owners and a
State Government Undertaking (i.e., assessee) entered into an agreement whereby
they mutually agreed for the amount of compensation which was fixed in
accordance with Section 29(2) of the KIA Act.
3)
The question of compulsory acquisition will
arise only where the compensation cannot be determined by agreement. In other
words when the compensation is based on an agreement between State Government
and owner of the land, no more can we say that it is a compulsory acquisition.
4)
In the instant case, compensation was based
on an agreement between State Government and owner of the land, and, therefore,
it could not be said to be a case of compulsory acquisition. Thus, once the
acquisition is not considered as compulsory, Sec.194LA of the IT Act will not
be applicable.
5)
The matter was remanded back to AO for
verification whether in all the cases payment was made under agreement only.
Once it was found that the acquisition resulted through an agreement, it would
not be considered as compulsory acquisition- Karnataka
Industrial Area Development Board v. ITO [2015] 62 taxmann.com 393
(Bangalore - Trib.)
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