2020 (7) TMI 574 - HC - Income Tax

Refund of income tax inadvertently paid on interest received under Section 28 of the Land Acquisition Act, 1894 for various assessment years - applications filed by the petitioners u/s 119(2)(b) - HELD THAT - Different High Courts subsequent to the judgment of CIT Vs. Ghanshyam Dass HUF 2009 (7) TMI 12 - SUPREME COURT have held that tax is payable on the interest received under Section 28 of the Land Acquisition Act, under the head income from other sources . Most of the applications filed by the petitioners are barred by limitation under the same circular dated 9th June, 2015, relied upon by the learned counsel for the petitioners. Keeping in view the limited prayer sought in the writ petitions, the same are disposed of with a direction to the respondent to decide the applications filed by the petitioners within eight weeks in accordance with law. All the rights and contentions of the parties, including the plea of maintainability, are left open.

Summary

Issues:
Delay in deciding applications for refund of income tax paid on interest received under the Land Acquisition Act, 1894.

Analysis:
The petitioners filed writ petitions seeking a direction for the respondent to decide their applications for refund of income tax paid on interest received under Section 28 of the Land Acquisition Act, 1894. The petitioners relied on the Supreme Court judgment in CIT Vs. Ghanshyam Dass HUF, (2009) 8 SCC 412, which held that such interest is not taxable income. They argued that even if tax was paid under a misrepresentation or mistake, a refund can be claimed for income that was not taxable. The petitioners highlighted an unreasonably long delay of almost four years in deciding their applications, pointing out that this delay contradicted a Circular issued by the Central Board of Direct Taxes in 2015.

The respondent, represented by Mr. Sunil Agarwal and Ms. Vibhooti Malhotra, accepted the notice and contended that different High Courts had ruled that tax is payable on interest received under Section 28 of the Land Acquisition Act under the head "income from other sources." They also argued that most of the petitioners' applications were time-barred under the Circular dated 9th June, 2015. Despite these arguments, the Court, considering the limited prayer in the writ petitions, disposed of the petitions by directing the respondent to decide the applications within eight weeks in accordance with the law. The Court explicitly stated that all rights and contentions of the parties, including the issue of maintainability, were left open for further consideration.

In conclusion, the High Court addressed the delay in deciding the applications for refund of income tax paid on interest received under the Land Acquisition Act, 1894. The Court's judgment emphasized the need for timely resolution of such matters and provided a specific timeline for the respondent to process the petitioners' applications.