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TMI Blog2021 (12) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... RABLE MR. JUSTICE BECHU KURIAN THOMAS APPELLANT: SRI.P.K.R.MENON, SR.COUNSEL, GOI(TAXES) AND SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT: SRI.T.B.HOOD, SMT.M.ISHA, ADV SRI.K.R.VINOD, ADV SELMA JANNATH, SRI.R.SANJITH, MS.JENCY SUSAN JOSE, SMT.M.S.LETHA AND SRI.V.SRI NATH JUDGMENT Bechu Kurian Thomas, J. The issue that arises for consideration in this batch of writ appeals relate to the question whether tax is liable to be deducted at source for amounts paid as compensation arrived at under negotiated settlements during acquisition of property. The learned Single Judge held that tax cannot be deducted at source under Section 194LA of the Income Tax Act, 1963 (for short, 'the Act') in respect of compensation paid to the lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court in the decision reported in Balakrishnan v. Union of India and Others [(2017) 3 SCC 634] and held in favour of the appellants. 5. Before we consider the aforesaid submission of the learned counsel for the appellant, we wish to mention that the impugned judgment was rendered on 03.06.2014 and even though the appeal was admitted in 2014, there was no stay of operation of the judgment and accordingly the compensation amounts would have already been disbursed to the writ petitioners, in tune with the impugned judgment. 6. Be that as it may, Section 194LA was inserted in the statute book by Finance Act 2004 With effect from 01-10-2004. The section reads as below: S.194LA. Payment of compensation on acquisition of certain immovab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at when compensation or consideration, as the case may be, for compulsory acquisition of any immovable property other than agricultural land becomes payable, the person responsible for paying such compensation or consideration shall be bound to deduct ten percent of such sum as income tax at the time of payment. The proviso to the section, as it then stood, further stipulated that the deduction need not be made, if the aggregate amount of such payment to the person during a financial year, does not exceed two hundred thousand rupees. It is obvious that the emphasis in the section is on the words 'compulsory acquisition'. If the nature of acquisition is compulsory, then, irrespective of whether the amounts are paid as compensation or as cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acter of the acquisition from that of compulsory acquisition to a voluntary sale. The decision which was relied upon by the learned Single Judge i.e. Info Park v. Asst. Commissioner of Income Tax [2008 (4) KLT 782] was overruled by the Supreme Court in the aforesaid case. 10. For a better comprehension the observations of the Supreme Court in Balakrishnan's case (supra) are extracted as below : 7. It is in the aforesaid factual backdrop, this Court is to determine as to whether it can be treated that the land of the appellant was compulsorily acquired. From the facts mentioned above, it becomes apparent that the acquisition process was initiated by invoking the provisions of the LA Act by the State Government. For this purpose, not o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as well which was a necessary consequence and a step which the appellant had to take. 8. In our view, insofar as acquisition of the land is concerned, the same was compulsorily acquired as the entire procedure under the LA Act was followed. The settlement took place only qua the amount of the compensation which was to be received by the appellant for the land which had been acquired. It goes without saying that had steps not been taken by the Government under Sections 4 and 6 followed by award under Section 9 of the LA Act, the appellant would not have agreed to divest the land belonging to him to Techno Park. He was compelled to do so because of the compulsory acquisition and to avoid litigation entered into negotiations and settled t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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