9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (6) TMI 453 - HC - Income TaxTDS liability u/s 194A - Interest received on compensation for agricultural land - Award of Compensation - nature of income - Held that - As per section 145A interest received by an assessee on compensation or on enhanced compensation as per the case may be, shall be deemed to be the income of the year in which it is received and shall be chargeable under the head income from other sources u/s 56(viii) - Tribunal has clarified that word interest has been wrongly used. It is infact an enhanced compensation - thus we agree with the learned CIT(A) that impugned amount was additional compensation and not liable to deduction of tax u/s 194A - Decided in favor of assessee.
Issues:
1. Interpretation of whether payment @ 12% per annum on compensation is enhanced/additional compensation or interest. 2. Liability of TDS on interest payments towards compensation for non-agricultural land. 3. Assessment of interest under Section 201(1A) of the Income Tax Act. 4. Appeal against the order of the Commissioner of Income Tax (Appeals). 5. Tribunal's decision on the liability of TDS under Section 194A of the Act. Analysis: 1. The primary issue in this case revolves around determining whether the payment @ 12% per annum on compensation constitutes enhanced/additional compensation or interest. The Tribunal, in alignment with the CIT(A), concluded that the payment was additional compensation under Section 23(1A) of the Land Acquisition Act, 1894, and not subject to tax deduction under Section 194A of the Income Tax Act. The Tribunal emphasized that the substance of the transaction, not its nomenclature, is crucial in assessment proceedings. The decision was supported by the clarification from the competent authority and the Special Secretary revenue, Government of Punjab. 2. The case also delves into the liability of TDS on interest payments related to compensation for non-agricultural land. The Assessing Officer contended that TDS should have been deducted on the interest component as per Section 194A of the Act. However, the CIT(A) ruled in favor of the assessee, stating that the interest on compensation for acquiring agricultural land was additional compensation, not interest. This decision was upheld by the Tribunal, leading to the dismissal of the revenue's appeal. 3. Another crucial aspect addressed in the judgment is the assessment of interest under Section 201(1A) of the Income Tax Act. The Assessing Officer created a demand under this section, which was partially confirmed by the CIT(A). However, the CIT(A) deleted a significant portion of the demand, emphasizing that the interest on compensation was additional compensation and not interest, thereby impacting the liability under Section 194A. 4. The appeal against the order of the Commissioner of Income Tax (Appeals) was filed by the revenue before the Tribunal. The Tribunal's decision to dismiss the appeal further solidified the position that the impugned amount was additional compensation as per the Land Acquisition Act, 1894, and not subject to tax deduction under Section 194A of the Income Tax Act. 5. Lastly, the Tribunal's detailed analysis and findings, supported by legal provisions and clarifications from competent authorities, reinforced the conclusion that the payment in question was additional compensation under the relevant Act. The Tribunal's decision highlighted the importance of substance over form in tax assessments, leading to the dismissal of the revenue's appeal due to the lack of merit in challenging the Tribunal's ruling.
|
