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TMI Blog2005 (3) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... 73. The matter arose from an order passed by the Subordinate Judge, Thiruvananthapuram, in execution of an award passed in L.A.R. No. 120 of 1993 of that court. This court considered the principles to be followed while calculating the amounts due to a decree holder in a land acquisition case, the obligation on the Land Acquisition Officer to deduct income-tax from the amounts to be deposited, the method of calculating the interest awardable under different heads and also the principles to be followed while adjusting the part payments effected by the judgment-debtor. After the pronouncement of the order, it was noticed that this court committed an error in calculating the amount due to the claimant under section 23(1A) of the Land Acquisition Act ("the Act" for short) and the interest payable to the claimant on such amount. Since the findings of this court on those points were against the decisions of the apex court, this court suo motu decided to hear that matter again so as to correct its own records in the final order in exercise of the powers conferred on this court under article 215 of the Constitution of India. Accordingly, the matter was heard. Learned counsel appearing f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already paid by the Land Acquisition Officer in terms of the award was deducted. The enhanced land value awarded was fixed as Rs. 8,52,404.80. The learned Sub-Judge found that the decree holder was entitled to get 30 per cent, solatium. It was also found that the decree holder is entitled to get additional increase at the rate of 12 per cent, per annum on the enhanced amount from May 14,1985, till March 31, 1986. It was further found that for one year from the date of taking possession, i.e., from February 4, 1986, the decree holder was entitled to get interest at the rate of 9 per cent, and from February 4, 1987, at the rate of 15 per cent, per annum and also proportionate cost. The State filed an appeal before this court as L. A. A. No. 196 of 1995 challenging the judgment of the subordinate court. This court by judgment dated August 24, 1998, dismissed the appeal confirming the enhancement of land value awarded by the Subordinate Judge's court. The cross-objection filed by the claimant was also dismissed. While the land acquisition appeal was pending, the State deposited an amount of Rs. 13,64,228 on January 17, 1996, as per cheque No. 3155 before the sub-court. The State als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o file any civil revision petition against the order dated October 19, 2002, as the same is only an interim order. It is argued that the judgment-debtor is entitled to challenge that order also in this revision petition. It is argued that the petitioner had filed E.A. No. 572 of 2002 to review the order fixing the amount due to the decree holder and attaching the property. It cannot be said that the order passed on October 19, 2002, has become final and conclusive so as to operate as res judicata. There was dispute regarding the amount payable to the decree holders. A perusal of the records shows that the decree holder as well as the judgment-debtor had filed a number of statement of accounts. The records show that originally the decree holder filed a statement of accounts on March 20, 1999, claiming that as on March 27, 1999, an amount of Rs. 23,01,601.25 was due to the decree holder. On March 28, 2000, she filed another statement to the effect that as on March 27, 2000, she was entitled to get Rs. 14,90,946.39. Subsequently, on March 16, 2001, the decree holder filed another statement contending that as on March 15, 2001, the judgment-debtor was liable to pay a further amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wards till realization the claimant is entitled to get interest at the rate of 15 per cent, per annum; and he is also entitled to get proportionate cost." In this case the Land Acquisition Officer had paid the amount due under the award. On January 17, 1996, the State had deposited an amount of Rs. 13,64,228 towards the decree debt and deducted an amount of Rs. 84,783 towards the income-tax payable by the decree holder at source. So, on January 17, 1996, the State had deposited an amount of Rs. 14,49,011. On February 15, 2000, the State had deposited an amount of Rs. 9,68,905 to be paid to the decree holder and an amount of Rs. 1,08,854 remitted towards income-tax. So, on that day the judgment-debtor had deposited an amount of Rs. 10,77,759. Thus, the total amount deposited by the judgment-debtor on two dates comes to Rs. 25,26,770. The simple question arising for consideration is how to adjust the amounts deposited by the judgment-debtor and also whether the amount which the State remits towards income-tax can be ignored by the executing court while calculating the amount due to the decree holder. Before dealing with the provisions of the Code of Civil Procedure, it is nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference court consists of the following components: (i) Market value of the land acquired as on the date of notification. (ii) The amount of 12 per cent, per annum on the market value of the land determined under the first clause of sub-section (1) of section 23 for the period between the date of publication of notification under section 4(1) and the date of award of the Collector or the date of taking possession of land whichever is earlier. (iii) Solatium as provided under sub-section (2) of section 23. (iv) Interest on the amount awarded by the court in excess of the amount fixed by the Collector under section 28 of the Act. (v) Interest on the solatium in case the same is awarded in the decree. In this connection, the provisions of section 30 of the Land Acquisition (Amendment) Act, 1984, which deals with the transitional provisions is also relevant. Section 30(1) of the Amendment Act, 1984, deals with 12 per cent, awardable by the subordinate judge under section 23(1A) of the principal Act. Section 30(2) deals with the commencement of the provisions of section 23(2). So, if the award of the Collector was made before the date mentioned in section 30(1) of the Amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llows: "There can be no doubt that all the three heads specified in the three sub-sections in section 23 are the sums to be 'awarded by the court'. Hence the words 'every award under this part' cannot be treated as the award after delinking the amounts awarded under subsection (1A) or sub-section (2) of section 23." It was further held that the compensation awarded would include not only the total sum arrived at as per sub-section (1) of section 23, but the remaining sub-sections thereof as well. In Nagpur Improvement Trust v. Vasantrao [2002] 7 SCC 657, the Supreme Court followed the principle laid down in Sunder's case, AIR 2001 SC 3516, and found that the claimants are entitled to interest on the amount payable to them under sub-section (1A) of section 23 of the Act and the judgment-debtors were directed to compute and pay the interest payable to the claimants in accordance with law as enunciated in Sunder's case, AIR 2001 SC 3516. So, the claimants are entitled to interest on the additional amount calculated at the rate of 12 per centum per annum awarded. In Mir Fazeelath Hussain v. Special Deputy Collector [1995] 3 SCC 208 the apex court held that the solatium is not par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Land Acquisition Officer to deduct the income-tax due on the amount payable by way of compensation and the remedy available to the claimant is to get a certificate from the competent officer and produce the same before the Income-tax Department and if he is entitled to claim exemption or refund of any amount, such a claim is to be made before the Income-tax Officer. Sri Mohan C. Menon, learned senior Government Pleader, has contended that the learned sub-judge went wrong in not giving credit to the amounts deposited by the Land Acquisition Officer towards income-tax. It is argued that the Land Acquisition Officer has no other option but to deduct the amount due towards income-tax from the amount due to the decree holder under the decree in view of the provisions of the Income-tax Act. Deduction of income-tax from the decree debt: Learned counsel appearing for the respondent has argued that if the Income-tax Department has got any claim, it is for them to take appropriate action for recovery and the Land Acquisition Officer has no authority to deduct any amount towards income-tax. It is further argued that if as a matter of fact any amount is to be paid to the Income-tax Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision need be made in the decree authorizing him to deduct income-tax. In Lt. Col. K.D. Gupta v. Union of India [1990] 181 ITR 530, the apex court held that if the income-tax is to be deducted from the amount, the same has to be deducted and for withholding of amounts towards income-tax contempt proceedings cannot be initiated against the officer who deducted the same. The principle laid down in Lt. Col. K.D. Gupta's case [1990] 181 ITR 530 (SC) was followed in Kedarnath Jute Manufacturing Co. Ltd. v. Prasad Ranjan Ray [2004] 266 ITR 677 (Cal). Counsel for the Government of India (Taxes) has filed a statement stating that the amounts payable as income-tax are to be deducted from the amounts to be paid to the claimants in the land acquisition case. He had made available a Circular No. CC/CHN/PR/151/2003-2004 dated March 23, 2004, issued by the Chief Commissioner of Income-tax, Kochi, to the District Collector, Ernakulam. The learned Government Pleader has made available a circular, No. LR 82/4726 of 2000 dated June 26, 2000, issued by the Commissioner of Land Revenue, Thiruvananthapuram, to the District Collectors and Land Acquisition Officers of Kerala as to how the amount due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hundred thousand rupees: Provided further that no deduction shall be made under this section from any payment made on or after the 1st day of June, 2000." The above section was introduced by the Finance Act, 1999. So, for any amount which was deposited from June 1,1999, to June 1, 2000, when section 194L was in force, the claimant was liable to pay income-tax on the land value and the Land Acquisition Officer ought to have deducted such amounts also. The Income-tax Act was again amended by the Finance (No. 2) Act, 2004. Section 194LA was introduced with effect from October 1, 2004. Section 194LA reads as follows: "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 for the time being in force, of any immovable property (other than agricultural land), shall, at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent, of such sum a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of deposit. Who is the competent authority to deduct income-tax? In some cases land is acquired either for a public company or for local bodies. In such cases the compensation amount is always made available by the requisitioning authority. Even if land is acquired for a local authority or company and necessary funds are also made available to the Land Acquisition Officer by such authorities, the liability to pay income-tax is with the Land Acquisition Officer, who initiated proceedings under the Land Acquisition Act and actually pays the compensation amount and interest to the claimants. In Baldeep Singh v. Union of India [1993] 199 ITR 628 (P H), it was held that the real person for paying income-tax is the Land Acquisition Officer. In Shankar v. Union of India [2002] 178 CTR 26 (Delhi), also it was held that the Land Acquisition Officer should deduct tax at source. The principle laid down in Baldeep Singh's case [1993] 199 ITR 628 (P H) was followed in Kranti Kumar Saxena, In re [2003] 262 ITR 33 (MP) and held that the court is not liable to deposit the tax by challan or issue TDS in Form No. 25A and the real person responsible for paying income-tax on interest is the Land A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining necessary certificate from the Land Acquisition Officer and he cannot be allowed to raise a contention that the Land Acquisition Officer is not entitled to deduct the amount payable under the Income-tax Act. Adjustment of the amount deposited: Learned counsel appearing for the respondent, relying on the decisions reported in Meghraj v. Mst. Bayabai [1969] 2 SCC 274; AIR 1970 SC 161 and I.C.D.S. Ltd. v. Smithaben H. Patel [1999] 96 Comp Cas 1 (SC); AIR 1999 SC 1036, has argued that whenever the judgment-debtor under the decree deposits an amount in court the decree holder is entitled to appropriate the same towards interest and cost and the balance towards principal. In Meghraj's case, AIR 1970 SC 161, the decree passed was for sale of a mortgaged house. The principal amount awarded was Rs. 33,866.51 and an amount of Rs. 746.30 was awarded as interest. The judgment-debtor raised a contention that the amount deposited shall be adjusted towards principal first. It was held that unless the decree holder was informed that the amount deposited shall be adjusted towards principal first and the balance towards interest and cost and the decree holder agrees to such a suggestion, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled to appropriate amount of compensation first towards cost and then towards interest, etc..." The principle laid down in Prem Nath Kapur's case [1996] 2 SCC 71 that when any amount is deposited it shall be adjusted towards compensation firstly was not overruled in Sundery's case, AIR 2001 SC 3516. The non-entitlement of the claimant to get interest on solatium alone was overruled and hence the subordinate courts are bound to follow the principle laid down in Prem Nath Kapur's case [1996] 2 SCC 71, so far as it relates to the adjustment of the amount deposited. In Mathunni Mathai v. State of Kerala [1998] 1 KLT 812, a learned single judge of this court after considering the principles laid down in Prem Nath Kapur's case [1996] 2 SCC 71 held as follows: "The Supreme Court held that the ratio in Meghraj case [1969] 2 SCC 274 is equally inapplicable to the appropriation of debt under the Land Acquisition Act and the same is applicable only to a debtor and creditor in an ordinary civil suit governed by the provisions of the C.P.C. The Supreme Court held that the applicability of the C.P.C. to the proceedings under the Act stands excluded under section 53 of the Land Acquisition A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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