2002 (10) TMI 740 - HC - Indian Laws

Summary

Issues Involved:

1. Applicability of Section 194-A of the Income-tax Act, 1961 to the Court of reference under Sections 18 and 30 of the Land Acquisition Act.
2. Liability of the Court to deposit the deducted amount by T.D.S. Challan, issue deduction certificate in Form 25-A of I.T. Rules, and file the return like a private individual.
3. Timing and responsibility for tax deduction if the Court is not responsible.
4. Whether the Court of reference can retain the amount of approximate tax and inform the concerned I.T.O. to collect it by means of a voucher.

Issue-wise Detailed Analysis:

1. Applicability of Section 194-A of the Income-tax Act, 1961:

The Court addressed whether Section 194-A of the Income-tax Act, 1961, which mandates tax deduction at source on interest, applies to the Court of reference under Sections 18 and 30 of the Land Acquisition Act. The Court concluded that Section 194-A does apply to interest accrued on enhanced compensation under Sections 18 and 30 of the Land Acquisition Act. However, the Court clarified that the Executing Court is not the person responsible for paying the interest and thus not liable to deduct tax at source. The responsibility lies with the Land Acquisition Officer or Collector who has the money in possession and is responsible for making the payment.

2. Liability of the Court to Deposit TDS and Issue Certificates:

The Court examined whether it is liable to deposit the deducted amount by TDS Challan, issue deduction certificates in Form 25-A of the Income-tax Rules, and file returns like a private individual. The Court ruled that it is not liable to perform these actions. The Court is merely a conduit for the payment made to the claimant in execution of a decree, and the real responsibility for tax deduction lies with the Land Acquisition Officer or Collector.

3. Timing and Responsibility for Tax Deduction:

The Court addressed the issue of when and by whom the tax should be deducted if the Court is not responsible. It reiterated that under Section 194-A read with Section 204 of the Income-tax Act, the person responsible for paying income by way of interest is the Land Acquisition Officer or Collector. The Court itself is not responsible for this deduction.

4. Retention of Approximate Tax Amount by the Court:

The Court considered whether it could retain the approximate tax amount and inform the concerned I.T.O. to collect it by means of a voucher. It concluded that since the Court is not liable to deduct tax under Section 194-A, it should not retain the amount of approximate tax. The responsibility for tax deduction remains with the Land Acquisition Officer or Collector.

Conclusion:

The Court concluded that under Section 194-A of the Income-tax Act, 1961, the tax deduction at source is permissible on interest accrued on enhanced compensation under Sections 18 and 30 of the Land Acquisition Act. However, the Court is not liable to deposit the deducted amount by TDS Challan, issue deduction certificates, or file returns. The responsibility for tax deduction lies with the Land Acquisition Officer or Collector, not the Court. The Court should not retain the approximate tax amount and inform the I.T.O. to collect it. The Registry was directed to forward this opinion to the Court of Vth Additional Judge to the Court of District Judge, Indore, for disposal of the execution in accordance with the law.