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TMI Blog2002 (9) TMI 847X X X X Extracts X X X X X X X X Extracts X X X X ..... s no such order, no deduction towards TDS could have been made. State Commission, therefore, directed that the amount which had been deducted by the GDA towards the TDS be refunded to the Complainant with interest at the rate of 18% p.a. This order of the State Commission has been challenged by the GDA on the ground that it was a statutory duty imposed on it under Sec. 194-A of the Income Tax Act, 1961 to deduct the tax and when it has deposited the tax to the account of the Central Government and has also given a certificate for the tax so deducted to the Complainant, it could not be said that there was any deficiency in service on its part or it had contravened the order of the State Commission passed in the complaint filed by the Respondent/Complainant. Basing reliance on the case of Rama Bai and Ors. Vs. Commissioner of Income Tax, A.P., Hyderabad Ors., reported as 1990 (Supp) SCC 699, 'where interest was paid on an enhanced compensation and tax was deducted at source', it was contended that it was rightful on the part of the GDA to deduct the tax. In the present case, it may however, be noticed that Rama Bai's case arose out of the interest paid under Sections 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in every flat marble flooring in bathroom/kitchen and kota stone in all public areas geyser connection in all bathroom/kitchen independent water supply system 24 hours electricity supply multi-channel antenna with two close circuit TV channels provision for centralised air-conditioning in four room apartments space for car parking. And., Star infrastructural facilities, as badminton court medical aid swimming pool club health club community centre primary school security arrangements indoor games and children play area in each block. Admittedly, the star infrastructural facilities were not available when the possession of the flat was offered to Dr.Gupta and also most of other facilities. State Commission held that representation by the public authority like the GDA to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided family, who is responsible for paying to a resident any income by way of interest other than income (by way of interest on securities), shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force . Reference was also made to a decision of the Supreme Court in the case of Rama Bai and Ors. Vs. Commissioner of Income Tax, A.P., Hyderabad Ors., 1990 (Supp) SCC 699, wherein the question before the Supreme Court was regarding the point of time at which the interest payable under Sections 28 and 34 of the Land Acquisition Act, 1894 accrues or arises, where such interest is payable on enhanced compensation awarded on a reference under Section 18 of that Act or further appeal to the High Court and/or Supreme Court. It is not clear to us as to how this judgment has any relevance to the issue before us. Perhaps, argument is sought to be built is that where interest is paid under the aforesaid provisions of Land Acquisition Act, 1894, TDS has to be deducted under Section 194A of the Income Tax Act. We do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vested in the Government. It is as it were that from the date the Government withheld the compensation amount which the claimant would be entitled to under the provisions of the Act. Therefore, a statutory liability has been imposed upon the Collector of the Act. Therefore, a statutory liability has been imposed upon the Collector to pay interest on the amount awarded from the time of his taking possession until the amount is paid or deposited. This amount is not, therefore, compensation for the land acquired or for depriving the claimant of his right to possession, but is that paid to the claimant for the use of his money by the State. In this view there cannot be any difference in the legal position between a case where possession has been taken before and that where possession has been taken after the award, for in either case the title vests in the Government only after the possession has been taken. The Legislature expressly used the word interest with its well known connotation under Section 34 of the Act. It is, therefore, reasonable to give that expression the natural meaning it bears. There is an illuminating exposition of the expression interest by the House ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land acquired . (Emphasis supplied) Finally, the Supreme Court observed as under: But in case where title passes to the State, the statutory interest provided thereafter can only be regarded either as representing the profit which the owner of the land might have made if he had the use of the money or the loss suffered because he had not that use. In no sense of the term can it be described as damages or compensation for the owner's right to retain possession, for he has no right to retain possession after possession was taken under Section 16 or Section 17 of the Act. We, therefore, hold that the statutory interest paid under Section 34 of the Act is interest paid for the delayed payment of the compensation amount and, therefore, is a revenue receipt liable to tax under the Income-Tax Act. Interest has been defined in sub-section (28A) and interest on securities under sub-section (28B) of the Income Tax Act. These two sub-sections are reproduced as under: 2(28A) interest means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Self Finance Scheme) did not fall under any category in Section 2(28A) of the Income Tax Act, but represented measure for quantifying compensation for delay in construction and handing over possession of dwelling unit which was in nature of non-taxable capital income. In coming to this conclusion the Appellate Tribunal relied on various judgments including that of the Supreme Court in the case of Dr.Shamlal Narula Vs. Commissioner of Income Tax. It will be interesting to note that DDA filed a writ petition in the Delhi High Court arising out of the aforesaid judgment of the Appellate Tribunal wherein it demanded interest with reference to Sec.244(1A) and 244A of the Income Tax Act. This was on account of the revenue authorities not refunding the amounts in terms of the order of the Appellate Tribunal. The Division Bench of the Delhi High Court consisting of Hon'ble Mr. Justice R.C.Lahoti (as his Lordship then was) and Hon'ble Mr. Justice J.K.Mehra, held in favour of the DDA that Sections 244 and 244A are applicable and directed refund of the amount with interest in view of the order of the Appellate Tribunal. The word interest used in the order of the State Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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