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Posted at: Apr 17, 2018, 1:27 AM; last updated: Apr 17, 2018, 1:27 AM (IST)

Centre can’t levy tax on farm income, HC told

It’s prerogative of state govt, says income tax officer

Tribune News Service

Chandigarh, April 16

Less than six months after the Punjab and Haryana High Court took cognisance of a petition for levying tax on agricultural income of rich and affluent farmers, the Union Government today claimed that the state governments alone could come out with such a legislation. The Centre was not competent to levy it.

As the petition filed in public interest by advocate Hari Chand Arora came up for resumed hearing, an affidavit on behalf of the Union Government by Deputy Commissioner of Income Tax (HQ) (Judicial), Vivek Vardhan was placed before the Bench of Justice Ajay Kumar Mittal and Justice Anupinder Singh Grewal.

It stated that “taxes on agricultural income” fell under Entry 46 in the State List under the Constitution. As such, only the state governments were competent to enact legislations imposing a tax on agricultural income.

Referring to the recommendations of the Tax Administration Reforms Commission in its third report, the affidavit added that tax on agricultural income could be imposed by the Centre only if the states passed a resolution under Article 252 of the Constitution authorising the Centre to impose the tax.

Appearing before the Bench, Arora had earlier contended that Section 10 (1) of the Income Tax Act, exempting agricultural income, was highly arbitrary, as even affluent farmers had been given benefit of the provision.

He alleged that big industrialists, transporters, and even liquor barons were taking benefit of the provision by projecting earnings from other business as agricultural income for avoiding tax liability.

He specifically referred to politicians Parkash Singh Badal, Sukhbir Badal, Manpreet Badal, Rana Gurjit Singh, Kuljit Singh Nagra, and Bhupinder Singh Hooda.


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