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TMI Blog2002 (10) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... cable in its strict sense to the court of reference under sections 18 and 30 of the Land Acquisition Act? (b) If so, whether the court is liable to deposit the deducted amount by T.D.S. challan and to issue deduction certificate in Form No. 25A of the Income-tax Rules and to file the return like a private individual? (c) If not, then at what point of time and by whom this tax is to be deducted? (d) Whether the court of reference can itself retain the amount of approximate tax and inform the concerned Income-tax Officer to collect it by means of voucher? After receiving this reference, notices were issued to all the concerned parties. Nobody appeared on behalf of the claimants even after issuance of S.P.C. and repeated registered notices by this court. Shri V.P. Khare, learned Deputy Government Advocate appeared for the State. The reference court has stated the following facts for recording the opinion of this court that at the instance of the Executive Engineer, Public Works Department, Madhya Pradesh, the lands situated at Jawahar Marg, Indore, were acquired for construction of the Siyaganj over-bridge by the Collector and the Land Acquisition Officer, Indore, and in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the deduction of income-tax. In this reference petition it has been stated on behalf of the executing court that firstly the executing court decided to deduct this amount and to credit it to the Income-tax Department but later on under section 194A of the Income-tax Act, 1961, it appeared to the court that tax on the amount of interest is to be deducted by the person who is actually responsible for its payment and that is to be deducted at the earliest point of time. Thereafter the court sent back the above amount by means of a voucher dated October 9, 1991 (annexure C), to the Collector and the Land Acquisition Officer with a direction to deduct the tax and to credit it to the Income-tax Department and then to remit the rest of the amount along with the challan copy for further proceedings. The Land Acquisition Officer, Indore, vide letter dated October 14, 1991 (annexure D), replied and denied his liability to deduct the tax and directed the court to do so. Therefore, on the aforesaid facts, the court has formulated the aforesaid questions and had sought opinion of this court. I have heard Shri R.L. Jain, learned counsel appearing for the Income-tax Department of the Union o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force: (***) Omitted by the Finance Act, 1992, with effect from June 1, 1962. Explanation.-For the purposes of this section, where any income by way of interest as aforesaid is credited to any account, whether called 'Interest payable account' or 'Suspense account' or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly. (***) Omitted by the Finance Act, 1992, with effect from June 1, 1992. (3) The provisions of sub-section (1) shall not apply- (i) where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the person referred to in sub-section (1) to the account of, or to, the payee, does not exceed two thousand five hundred rupees: Provided that in respect of the income credited or paid in respect of- (a) time deposits with a ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the 1st day of July, 1995) with a banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act) (viia) to such income credited or paid in respect of, (a) deposits with a primary agricultural credit society or a primary credit society or a co-operative land mortgage bank or a cooperative land development bank; of (b) deposits (other than time deposits made on or after the 1st day July, 1995) with a co-operative society, other than a co-operative society or bank referred to in sub-clause (a), engaged in carrying on the business of banking; (viii) to such income credited or paid by the Central Government under any provision of this Act or the Indian Income-tax Act, 1922 (11 of 1922), or the Estate Duty Act, 1953 (34 of 1953), or the Wealth-tax Act, 1957 (27 of 1957), or the Gift-tax Act, 1958 (18 of 1958), or the Super Profits Tax Act, 1963 (14 of 1963), or the Companies (Profits) Surtax Act, 1964 (7 of 1964), or the Interest-tax Act, 1974 (45 of 1974). Explanation.-For the purposes of clauses (i), (vii) and (viia), 'time deposits' means deposits (excluding recurring dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )." This section 194A has been inserted in the Income-tax Act, 1961, by the Finance (No. 2) Act, 1967, with effect from April 1, 1967, which relates to deduction of income-tax at source from interest. Under this new section tax deduction at source is permissible in respect of interest on compensation on compulsory acquisition of land and also accrued on enhanced compensation under section 18 of the Land Acquisition Act. Where the total income assessable to tax exceeds taxable limit, interest accrued or after order from the date of delivery of possession of land till the date of order granting enhanced compensation and its yearwise break up shall be taken into account. This section has to be read in conjunction with section 204 which furnishes the meaning of "person responsible for paying". Where land is compulsorily acquired and the money to be paid as enhanced compensation, is deposited in the execution court and interest is awarded on such compensation, the court is not the person responsible for paying any income by way of interest to the assessee. The real person responsible for paying income-tax by way of interest is the Land Acquisition Officer/Collector who had money in hi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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