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2017 (6) TMI 729 - HC - Income TaxTDS u/s 194(A) - TDS on compensation amount awarded under Section 28 of The Land Acquisition Act, 1894 - Held that - The law laid down in the case of Movaliya Bhikhubhai Balabhai 2016 (5) TMI 488 - GUJARAT HIGH COURT is squarely applicable to the facts of the present case wherein held not to deduct TDS from the amount of compensation awarded under Section 28 of the Land Acquisition Act, 1894. - Decided in favour of assessee.
Issues:
Challenge to deduction of Tax At Source (TDS) under Section 194(A) of the Income Tax Act from compensation awarded in a land acquisition case. Analysis: In this petition under Article 226 of the Constitution of India, the petitioner challenges the deduction of TDS at 20% from the compensation awarded for land situated at Village Navapura, Taluka Unjha, District Mehsana. The petitioner seeks direction for the respondents to deposit the TDS amount deducted under Section 194(A) of the Income Tax Act while depositing the compensation under Section 28 of the Land Acquisition Act. The Division Bench of the High Court had previously held that interest under Section 28 of the Land Acquisition Act does not fall within the ambit of "interest" as contemplated in the Income Tax Act, and thus, TDS deduction is not justified on such amounts. The court noted that the law laid down by the Division Bench in a previous case remains applicable to the present case. The Division Bench had clarified that since the amount paid under Section 28 of the Land Acquisition Act forms part of compensation and not interest, TDS deduction under Section 194(A) of the Income Tax Act is not justified. The petitioner is entitled to a refund of the wrongly deducted amount. The respondents were directed not to deduct TDS from the compensation awarded under Section 28 of the Land Acquisition Act, and any amount already deducted should be refunded to the petitioner in connection with the specific land acquisition case. In summary, the court allowed the writ petition to the extent of directing the respondents not to deduct TDS from the compensation amount awarded under Section 28 of the Land Acquisition Act. The judgment clarified the legal position regarding TDS deduction on compensation under the Land Acquisition Act, emphasizing that TDS should not be deducted on such amounts.
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