2002 (9) TMI 847 - Commission - Indian Laws

Summary

Issues Involved:
1. Deduction of TDS by Ghaziabad Development Authority (GDA)
2. Deficiency in service by GDA regarding the Kaushambi Housing Scheme
3. Refund and compensation claim by the Complainant

Issue-wise Detailed Analysis:

1. Deduction of TDS by Ghaziabad Development Authority (GDA):
The primary issue was whether GDA was justified in deducting Tax Deducted at Source (TDS) from the interest payable to the Complainant. GDA argued that under Section 194-A of the Income Tax Act, 1961, it was statutorily obligated to deduct TDS from any interest paid. The State Commission, however, held that there was no order to deduct TDS and directed GDA to refund the deducted amount with interest at 18% p.a. The Commission referred to the case of Rama Bai and Ors. Vs. Commissioner of Income Tax, A.P., Hyderabad & Ors., where interest paid on enhanced compensation required TDS deduction. However, the Commission distinguished the present case from Rama Bai's case, noting that the interest in the current case was not on a deposit or borrowed money but was compensation for delayed possession and failure to provide promised facilities. The Commission concluded that the interest awarded was in the nature of damages and not taxable under Section 194-A, thus GDA's deduction of TDS was incorrect.

2. Deficiency in Service by GDA Regarding the Kaushambi Housing Scheme:
The Complainant applied for a plot under the Kaushambi Housing Scheme and paid the required amount. GDA later changed the scheme, offering built-up houses and flats instead of plots. The Complainant opted for a flat and paid the additional amount required. However, GDA failed to deliver the flat within the promised time and did not provide the advertised infrastructural facilities such as approach roads, lifts, electricity, etc. The State Commission found that GDA's failure to provide these facilities amounted to a deficiency in service. The Commission held that the Complainant was justified in refusing to pay additional amounts and take possession until all promised facilities were provided.

3. Refund and Compensation Claim by the Complainant:
The Complainant demanded a refund of the amounts paid with interest and compensation for the delay. The State Commission directed GDA to refund the amount with interest at 18% p.a. from the dates of various deposits until payment. Additionally, the Commission awarded costs of Rs. 2,000/- and further interest at 18% p.a. on the entire amount due if not paid within a month. The Commission emphasized that the interest awarded was a method to calculate compensation for the delay and was not taxable as interest under the Income Tax Act. The Commission upheld the State Commission's order, dismissing GDA's revision petition.

Conclusion:
The Commission upheld the State Commission's order that GDA was wrong in deducting TDS from the interest payable to the Complainant. It emphasized that the interest awarded was compensation for the delay and deficiency in service, not taxable under Section 194-A of the Income Tax Act. The order for refund with interest and compensation was affirmed, and GDA's revision petition was dismissed.