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2024 (3) TMI 618 - HC - Income TaxClaim for refund on income tax or TDS paid - compensation received pursuant to acquisition by the State/KIADB Karnataka Industrial Areas Development Board - exemption from payment of income tax on the land acquisition compensation under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 - Claim rejected on ground that the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 ( RFCTLARR Act ) was not applicable to the compensation payable in favour of the petitioner - HELD THAT - As rightly contended by the petitioner, perusal of the impugned Order will indicate that respondent No. 2 has committed an error in proceeding on the erroneous premise that compensation payable in favour of petitioner was on account of Metro Rail Project which was not covered by the provisions of Section 96 of RFCTLARR Act. Respondent No. 2 failed to consider and appreciate that the compensation was paid in favour of petitioner pursuant to the agreement dated 06.03.2019 entered into between the petitioner and the Special Land Acquisition Officer, KIADB, under Section 29(2) of the KIAD Act, in respect of which, petitioner would not be liable to pay income tax nor be liable to get the tax deducted at source, as held by the Division Bench of this Court in the case of Bangalore Metro Rail Corporation Limited vs. M/s Sri Balaji Corporate Services and Others 2023 (9) TMI 1443 - KARNATAKA HIGH COURT Order - The impugned order of the respondent No. 1 is set aside and is directed to refund the entire tax collected by the respondents back to the petitioner as expeditiously as possible and at any rate within a period of one month from the date of receipt of a copy of this order.
Issues involved:
The issues involved in this case include the rejection of the petitioner's claim for refund for the Assessment Year 2019-20 based on the applicability of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. Another issue is the refusal to condone the delay in filing the application for refund under Section 119(2)(b) of the Income Tax Act, 1961. Issue 1: Rejection of Claim for Refund: The petitioner sought relief through a writ of certiorari to annul the order rejecting their claim for refund, contending that the compensation received was not liable to income tax under the RFCTLARR Act. The court noted the agreement with Karnataka Industrial Areas Development Board (KIADB) and referred to a previous judgment to support the petitioner's position that the compensation should not be subject to income tax. The court found that the respondent erred in rejecting the claim based on an incorrect premise regarding the nature of the compensation, which was not related to the Metro Rail Project and was exempt from income tax according to relevant legal precedents. Issue 2: Refusal to Condone Delay in Refund Application: The petitioner also sought relief regarding the refusal to condone the delay in filing the refund application under Section 119(2)(b) of the Income Tax Act, 1961. The court reviewed the petitioner's grounds for the delay and compared them to the reasons provided in the application. It found that the respondent's rejection of the request was based on a hyper-technical approach and failed to consider valid and sufficient causes for the delay. Consequently, the court set aside the order refusing to condone the delay and directed the respondent to refund the tax collected back to the petitioner expeditiously. Separate Judgement: A separate judgment was delivered in a related case where the court allowed the petition, set aside the impugned order, and directed the respondent to refund the tax collected back to the petitioner within a specified timeframe. The court held that the land acquisition compensation was exempt from income tax based on a Division Bench decision, and the rejection of the refund request was in error. The court also found that the reasons for rejecting the condonation of delay were insufficient and ordered the refund to be processed promptly.
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