A Public Interest Litigation has been filed in Punjab and Haryana High Court for bringing Rich and Affluent farmers under Income Tax Net.
The Petitioner in Person has challenged the total exclusion of agricultural income from levy of income tax and Sought levying of tax on agricultural income of rich and affluent farmers.
A division Bench comprising of Justice Ajay Kumar Mittal and Justice Amit Rawal issued notices to Union Government, and States of Punjab and Haryana.
The petitioner argued that 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 also alleged that big industrialists, transporters, liquor barons are taking benefit of this provision and causing huge loss to revenue by diverting income from other business to show it to be agricultural income for avoiding liability to pay income tax.
The petition also stated that exemption under section 10 (1) is against basic principles of our Constitution which envisages India to be “a socialist republic”, when very rich and affluent farmers are being given benefit of this provision by exempting their agricultural income also from tax. The petitioner contended that this provision is arbitrary and discriminatory also, as other persons with same quantum of income are being made to pay income tax.
Petition referred to affidavits filed by various political leaders of Punjab before the Returning Officers early this year, while submitting nomination papers for Assembly elections, to show that rich political leaders, running other business empires are also availing benefit of such exemption from paying tax on their agricultural income. He specifically referred to instances of Sarv Shiri Parkash Singh Badal, Sukhbir Badal, Manpreet Badal, Rana Gurjit Singh, Kuljit Singh Nagra, and Bhupinder Singh Hooda etc, to substantiate his aforesaid contention.
Petitioner stated that TARC (Tax Administration Reforms Commission) had submitted its recommendations in 2014 to Government of India/CBDT. One recommendation was that farmers having agricultural income of more than 50 lakhs should atleast be levied tax on their agricultural income, but the CBDT (Central Board of Direct Taxes) did not accept even the said recommendation. Thus, petitioner has no other alternative except to approach the High Court for intervention.
The petition has prayed that respondent Governments be directed to exclude rich and affluent farmers from the benefit of exemption under Section 10 (1) of the Income Tax Act, 1961, just as the respondents have done by denying the benefits of reservation in Government jobs to those persons belonging to OBCs (Other Backward Classes), who have wealth or income above specified limits, as they do not deserve the support of such concessions or exemptions.