Karnataka High Court

Mr Vellara Francis Thomas vs The Union Of India on 27 February, 2024

Author: S.R.Krishna Kumar

Bench: S.R.Krishna Kumar

                                         -1-
                                                        NC: 2024:KHC:8023
                                                    WP No. 1705 of 2024




                   IN THE HIGH COURT OF KARNATAKA AT BENGALURU

                     DATED THIS THE 27TH DAY OF FEBRUARY, 2024

                                       BEFORE
                     THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR
                       WRIT PETITION No.1705 OF 2024 (T-IT)
              BETWEEN:

              MR VELLARA FRANCIS THOMAS
              AGED ABOUT 44 YEARS,
              NO.10, WOOD STREET,
              BANGALORE-560025
              INDIVIDUAL.
                                                            ...PETITIONER
              (BY SRI ANIRUDHA RJ NAYAK, ADVOCATE)

              AND:

              1.    THE UNION OF INDIA
                    REPRESENTED BY ITS SECRETARY,
                    MINISTRY OF FINANCE, NORTH BLOCK,
                    NEW DELHI.

              2.    THE CHIEF COMMISSIONER OF INCOME TAX
Digitally           C.R. BUILDING,
signed by R
MANJUNATHA          INFANTRY ROAD,
Location:           QUEENS ROAD,
HIGH COURT
OF                  BENGALURU-560001
KARNATAKA                                              ...RESPONDENTS
              (BY SRI MADANAN PILLAI, AGA FOR R1;
              SRI E.I.SANMATHI, ADVOCATE FOR R2)

                   THIS WRIT PETITION IS FILED UNDER ARTICLES 226
              AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO
              IMMEDIATELY ANNUL/QUASH ORDER IN F.NO.COND. 119(2)(b)
              /VFT/CCIT/BNG-1/2023-24 DATED 31.07.2023 ENCLOSED AS
              ANNEXURE-C AND HOLDING THE SAME TO BE UNTENABLE IN
              LAW AND ETC.,
                                   -2-
                                                   NC: 2024:KHC:8023
                                               WP No. 1705 of 2024




     THIS WRIT PETITION, COMING ON FOR ORDERS, THIS
DAY, THE COURT MADE THE FOLLOWING:

                               ORDER

Heard Sri Anirudha RJ Nayak, learned counsel for the

petitioner and Sri Madanan Pillai, AGA for respondent No.1 and

Sri E.I.Sanmati, learned counsel for respondent No.2.

2. In this petition, petitioner seeks the following reliefs:

"i. Issue a writ of certiorari or such other Writ, Order or direction as this Hon'ble Court may deem fit, immediately annulling / quashing Order in F.No. Cond.119(2)(b) /VFT/ CCIT/BNG- 1/2023-24 dated 31.07.2023 enclosed as Annexure C and holding the same to be untenable in law, in the facts and circumstances of the instant case;

ii. Issue a writ of mandamus, or such other Writ, Order or direction, as this Hon'ble Court may deem fit and proper, directing Respondents to immediately decide on their request for rectification of Order in F.No.Cond. 119(2)(b)/VFT/CCIT/ BNG -1/2023-24 dated 31.07.2023 enclosed as Annexure C;

iii. To quash Order in F.No.Cond.119(2)(b)/VFT/CCIT/ BNG -

1/2023-24 dated 31.07.2023 enclosed as Annexure C and decide their request in accordance with law after providing them an opportunity of hearing in a time bound manner;"

3. In addition to reiterating the averments urged in the

petition and referring to the material on record, learned counsel

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for the petitioner invited my attention to the impugned order,

in order to contend that respondent No.2 committed an error in

rejecting the petitioner's claim for refund for the Assessment

Year 2019-20 on the erroneous ground that the Right to Fair

Compensation and Transparency in Land Acquisition,

Rehabilitation and Resettlement Act, 2013 ('RFCTLARR Act' for

short) was not applicable to the compensation payable in

favour of the petitioner.

4. In this context, my attention is invited to the agreement

dated 06.03.2019 entered into between the petitioner and

Karnataka Industrial Areas Development Board ('KIADB' for

short) under Section 29 of the Karnataka Industrial Areas

Development Act, 1966, pursuant to which, petitioner has

received the subject compensation from the KIADB/State.

5. My attention is also invited to the judgment of this Court

in the case of Smt.P. Jaishree vs. The Chief Commissioner

of Income Tax passed in W.P.No.7660/2023 dated

09.01.2024, in order to contend that insofar as compensation

received pursuant to acquisition by the State/KIADB, petitioner

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would not be liable to pay income tax, which deserves to be

refunded to the petitioner.

6. Per contra, learned counsel for respondents submits that

there is no merit in the petition and the same is liable to be

dismissed.

7. As rightly contended by the learned counsel for the

petitioner, perusal of the impugned Order will indicate that

respondent No.2 has committed an error in proceeding on the

erroneous premise that compensation payable in favour of

petitioner was on account of Metro Rail Project which was not

covered by the provisions of Section 96 of RFCTLARR Act.

8. In this context, respondent No.2 failed to consider and

appreciate that the compensation was paid in favour of

petitioner pursuant to the agreement dated 06.03.2019 entered

into between the petitioner and the Special Land Acquisition

Officer, KIADB, under Section 29(2) of the KIAD Act, in respect

of which, petitioner would not be liable to pay income tax nor

be liable to get the tax deducted at source, as held by the

Division Bench of this Court in the case of Bangalore Metro

Rail Corporation Limited vs. M/s Sri Balaji Corporate

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Services and Others in W.A.No.890/2022 dated

27.09.2023. Further, said judgment has been followed by this

Court in Jaishree's case supra in which it is held as under:

"In this petition, the petitioner seeks the following reliefs:

"[i] Issue a Writ of Certiorari or in the like nature of writ, quashing the impugned order dated 08.03.2023, passed by the concerned respondent Authority vide F. No.Cond.119[2][b]/CCIT/BNG-1/2022-23 passed in DIN: ITBA/COM/S/91/2022-23/1051049705[1] vide Annexure-D;

[ii] Issue a Writ of Mandamus or in the like nature of writ, directing the concerned respondent No.1 authority to consider the application under Section 119[2][b] of the Act dated 22.02.2022 vide Annexure-C, by condoning the delay thereon in filing the same, consider the said application filed by the petitioner and thereafter pass an order in respect to the exemption claimed by the petitioner, under the Income Tax Act, 1961 and allow the same."

2. Heard the learned counsel for the parties and perused the material on record.

3. The material on record discloses that the petitioner who is the individual assessee under the Income Tax Act, 1961 [for short, 'the IT Act'] filed her income tax returns for the assessment year 2018-19 and in the said returns, she voluntarily disclosed tax in respect of long term capital gains for receiving compensation from the concerned authority-Karnataka Industrial Areas Development Board. It is contended that the petitioner was unaware of the exemption for

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deduction of tax deducted at source as well as payment of tax in respect of the land acquisition compensation received by her and when she came to know about the same, she submitted an application under Section 119[2][b] of the IT Act seeking condonation of delay and sought for refund accordingly. The said application was considered by the respondent who proceeded to reject the same both on the ground of delay as well as on merits by passing the impugned order dated 08.03.2023 which is assailed in the present petition.

4. Insofar as the entitlement of the petitioner to claim exemption from payment of income tax on the land acquisition compensation under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 is concerned, the said issue/question is truly and squarely covered by the Division Bench decision of this Court in the case of 'BANGALORE METRO RAIL CORPORATION LIMITED v. M/s. SRI BALAJI CORPORATE SERVICES AND OTHERS' in W.A. No.890/2022 and connected matters disposed of on 27.09.2023, wherein it is held that the land acquisition compensation is exempted from payment of income tax. Applying the law laid down by the Hon'ble Division Bench, I am of the considered opinion that the respondents committed error in rejecting the request of the petitioner for refund of the tax collected by them in relation to the subject land acquisition compensation.

5. Insofar as the reasons assigned by the respondents to reject the request of the petitioner for

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condonation of delay is concerned, a perusal of the impugned order will indicate that the respondents had adopted hyper technical approach and failed to consider and appreciate the reasons assigned by the petitioner in her application dated 22.02.2022 which clearly constituted valid and sufficient cause for not being able to submit the refund application within the prescribed period. Under these circumstances, the impugned order rejecting the request for condonation of delay is also contrary to the material on record and the same deserves to be quashed on this ground also. In the result, the following:

ORDER

[a] The petition is hereby allowed.

[b] The impugned order dated 08.03.2023 [Annexure-D] of the respondent No.1 is set aside.

[c] The respondent No.1 is directed to refund the entire tax collected by the respondents back to the petitioner as expeditiously as possible and at any rate within a period of one month from the date of receipt of a copy of this order."

9. Perusal of the impugned Order will also indicate that

respondent No.2 committed error in refusing to condone the

delay without appreciating that petitioner had made out valid

and sufficient grounds to condone the delay and consequently,

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impugned Order refusing to condone the delay also deserves to

be set-aside.