9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (5) TMI 1279 - HC - Income TaxWhether compensation payable for acquisition of land under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 is amenable to income tax and if so whether at the time of payment of compensation there is a requirement for deduction of Tax at Source (TDS)? - HELD THAT - The compensation having been determined to be paid to each of the Petitioners under the 2013 Act is not liable for deduction of Income Tax, much less TDS. A direction is issued to refund to the Petitioners in WP(C) No. 13960/2018 the TDS amount deducted on or before 31st May, 2019 together with simple interest at 6% p.a. from the date of deduction of the TDS amount till the date of payment, which should not be later than 31st May, 2019. If the refund is delayed beyond that period simple interest at 9% p.a. will be paid by the CALA on the said sum for the period of delay. Petition disposed off.
Issues:
1. Taxability of compensation under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. 2. Requirement for deduction of Tax at Source (TDS) on compensation payments for land acquisition. Analysis: Issue 1: Taxability of compensation under the 2013 Act The primary issue addressed in the judgment was whether compensation payable for the acquisition of land under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (2013 Act) is subject to income tax. Section 96 of the 2013 Act provides an exemption from income tax on any award or agreement made under the Act, except under section 46. The Central Board of Direct Tax (CBDT) clarified that compensation received for compulsory acquisition of land under the 2013 Act is exempted from income tax, irrespective of whether the land is agricultural or non-agricultural. This exemption was further reinforced by the second proviso to Section 194 LA of the Income Tax Act, which exempts compensation payments exempted under section 96 of the 2013 Act from TDS. Issue 2: Requirement for TDS deduction on compensation payments The judgment clarified that compensation determined to be paid under the 2013 Act is not liable for deduction of Income Tax, including Tax at Source (TDS). In a specific case (Writ Petition No. 753/2019), where TDS was erroneously deducted by the Competent Authority Land Acquisition (CALA), the Income Tax Department was directed to refund the TDS amount to the petitioner. Similarly, in another case (Writ Petition No. 13960/2018), the National Highways Authority of India (NHAI) had not deducted TDS, and the CALA was instructed to refund any TDS amount deducted from the petitioner. The judgment emphasized that neither the NHAI nor the Income Tax Department could be held liable for any TDS deduction errors made by the CALA. In conclusion, the court disposed of the petitions by issuing directions for the refund of TDS amounts erroneously deducted, emphasizing the non-taxability of compensation under the 2013 Act and the exemption from TDS for such payments. The judgment refrained from expressing an opinion on the classification of the acquired land as agricultural or non-agricultural, as it was deemed irrelevant to the legal issues at hand.
|
