Notice to Punjab, Haryana on plea against tax exemptions to wealthy farmers

By Times Of India on 11 Oct 2017 | read
CHANDIGARH: The Punjab and Haryana high court on Tuesday issued notice to the Union government and the states of Punjab and Haryana on a public interest litigation (PIL) seeking quashing of provisions the Income Tax Act, which exempts income from agriculture of rich and affluent farmers from the tax.

According to the PIL, such exemption cannot be granted to creamy layer of rich and affluent farmers or businessmen, who avail benefit of this provision by diverting business income to show it as agricultural.

The matter reached the HC in the wake of a petition filed by advocate H C Arora. According to the petitioner, the provision contained in Section 10 (1) of the Income Tax Act, 1961, providing total exemption of agricultural income from income tax is highly arbitrary, as even the rich and affluent farmers have been given benefit of this provision.

He alleged that big industrialists, transporters and liquor barons were taking benefit of the provision and causing huge loss to revenue by diverting income from other business to show it to be agricultural income for avoiding tax liability. The petitioner further contended that the exemption was against basic principles of Constitution that envisaged India to be "a socialist republic", when very rich and affluent farmers were being given benefit of this provision by exempting their agricultural income from tax.

The petitioner also referred to affidavits, which were filed by various political leaders before the returning officers early this year while submitting nomination papers for assembly elections, to show that rich political leaders running business empires are also availing benefit of exemption. He specifically referred to instances of senior leaders, including Parkash Singh Badal, Sukhbir Badal, Manpreet Singh Badal, Rana Gurjeet Singh, Kuljit Singh Nagra, and Bhupinder Singh Hooda, to substantiate his contentions.

The petitioner stated that the Tax Administration Reforms Commission (TARC) had submitted its recommendations in 2014 to the Central Board of Direct Taxes (CBDT). One recommendation was that farmers having agricultural income of more than Rs 50 lakh should be levied tax, but the CBDT did not accept the said recommendation. Thus, petitioner has no other alternative except to approach the HC for intervention.

He has prayed that the Centre should be directed to exclude rich and affluent farmers from the benefit of exemption the Income Tax Act, 1961, just as the benefits of reservation in government jobs to those persons belonging to OBCs, who have wealth or income above specified limits.