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TMI Blog2009 (8) TMI 665X X X X Extracts X X X X X X X X Extracts X X X X ..... ation in respect of acquired agricultural land belonging to the predecessor-in-interest of the petitioner. As a substantive question of law is involved, we are not influenced by the paltry sum which is sought to be recovered as TDS. 2. The brief facts of the case are that Shri Kartar Singh, father of the petitioner was the owner of land situated in village Ottu, Tehsil Rania, District Sirsa. On May 9, 2000, the said land was acquired under section 4 of the Land Acquisition Act, 1894 (for brevity, "the 1894 Act"), for construction of Darba Ghaggar Drain. On October 15, 2001, an award was passed by the Land Acquisition Collector. The father of the petitioner preferred a reference under section 18 of the 1894 Act for enhancement of compensation (Reference No. 918LA of 2004) in the court of the learned Additional District Judge, Sirsa. The said reference was consolidated with other land references, which were decided, vide award dated June 14, 2007 (P-2). The land reference was eventually allowed partly vide short order dated March 11, 2008. A sum of Rs. 5,61,000 per acre was awarded as compensation for nehri land (P-1). On June 14, 2007, the petitioner received the compensation b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land in question was acquired by the State of Haryana for a public purpose and as per the detail given in the award as well as the revenue record, the land in question was "agricultural land". However, in paragraph 4 of the affidavit the submission has been made that section 194A of the Act is applicable on the interest income of the petitioner because the same has been received by the petitioner as "income on account of interest" on which TDS is required to be paid. 6. We have heard learned counsel for the parties and have also perused the paper book along with the relevant statutory provisions. In order to put the whole controversy in its proper perspective it would first be necessary to read section 194LA of the Act, which postulates the payment of TDS when amount of compensation on acquisition of certain immovable property is made. Section 194LA of the Act reads thus : "194LA. Payment of compensation on acquisition of certain immovable property.-Any person responsible for paying to a resident any sum, being in the nature of compensation or the enhanced compensation or the consideration or the enhanced consideration on account of compulsory acquisition, under any law f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of powers conferred by item (B) of clause (ii) of the proviso to sub-clause (c) of clause (1A), and item (b) of sub-clause (iii) of clause 14 of section 2 of the Act, the Central Government has issued Notification No. 9447 (F. No. 164/3/87-IT(A-1), dated January 6, 1994 ([1994] 205 ITR (St.) 121), after following procedure. The notification includes the land belonging to the petitioner and it has to be treated as "agricultural land". It is worthwhile to read the notification, which is as under : " 7. Vicinity of urban areas notified under proviso (ii)(B) to sub- clause (c) of clause (1A) for the purposes of exemption of income from agricultural house property. Whereas a draft notification was published by the Central Government in exercise of the powers conferred by item (B) of clause (ii) of the proviso to sub-clause (c) of clause (1A), and item (b) of sub- clause (iii) of clause (14) of section 2 of the Income-tax Act, 1961 (43 of 1961), in the Gazette of India, Extraordinary, Part II, section 3, sub-section (ii), dated February 13, 1991, under the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. S. O. 91(E), dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usand according to the last preceding census of which the relevant figures have been published before the first day of the previous year. (2) The reference to municipal limits or the limit of cantonment board in the Schedule to this notification is to the limits as existing on the date on which the notification is published in the Official Gazette. Notification No. 9447 [F. No. 164/3/87-IT(A-I)], dated January 6, 1994." 9. It is, therefore, evident that the land in question is "agricultural land" and it is excluded from the operation of section 194LA of the Act. 10. The aforesaid finding that the land in question is "agricultural land" is further supported by the categorical admission made by the respondent- State in its affidavit dated May 20, 2009. However, the following question would arise for determination of this court : "Whether the interest accrued on the delayed payment of enhanced amount of compensation would partake of the character of compensation taken from agricultural land' and, therefore, is assess- able to deduction of TDS?" 11. The answer to the aforesaid question would depend upon as to whether interest is regarded as revenue receipt attractin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot intended to exclude the revenue receipt of interest on delayed payment of compensation from taxability. Once it is construed to be a revenue receipt, necessarily, unless there is an exemption under the appropriate provisions of the Act, the revenue receipt is exigible to tax. The amendment is only to bring within its tax net, income received from the transaction covered under the definition of interest. It would mean that the interest received as income on the delayed payment of the compensation determined under section 28 or 31 of the Acquisition Act is a taxable event. Therefore, we hold that it is a revenue receipt exigible to tax under section 4 of the Income-tax Act. Section 194A of the Act has no application for the purpose of this case as it encompasses deduction of the income at the source. However, the appellants are entitled to spread over the income for the period for which payment came to be made so as to compute the income for assessing tax for the relevant accounting year." 14. Once interest is regarded as a revenue receipt then it would fall within the mischief of section 4 of the Act which is a charging section. Therefore, it follows that TDS under section 194 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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