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Issues involved: Challenge to rejection of refund claim for TDS amount deducted from compensation awarded for land acquisition u/s 194-A of the Income-tax Act, 1961.
Summary: The petition challenged the rejection of the refund claim for Tax Deducted at Source (TDS) amount deducted from the compensation awarded for land acquisition. The petitioners sought refund of the TDS amount along with interest, which was deducted from the compensation awarded to them. The respondents contended that TDS was deducted in accordance with Section 194A of the Income-tax Act, and TDS certificates were issued to those who filed representations. The court noted that TDS could be deducted from the interest realized from enhanced compensation as per Section 194A of the Act. Referring to a previous case, it was established that interest received on delayed payment of compensation is considered a revenue receipt liable to tax under the Income Tax Act. The Supreme Court's rulings emphasized that interest on delayed payment of compensation is a revenue receipt and thus taxable. Therefore, TDS under Section 194A of the Act is applicable to interest income on delayed payments. The court rejected the argument that interest income should be treated as agricultural income, stating that once interest is considered a revenue receipt, it falls under the charging section of the Act. Consequently, the petition was dismissed based on the precedent set in a previous judgment. The court found that the issues raised in the petition were already addressed in the earlier case, leading to the dismissal of the current petition.
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