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2023 (6) TMI 622

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..... ince the purchase price is fixed as per private negotiation and not by fixing of compensation under an award to be passed by following the parameters laid down under the Act of 2013. Thus, any land acquired and compensation paid in terms of an award passed under the Act of 2013, in terms of Section 96 of the Act of 2013, the compensation payable thereunder would not attract any income tax or stamp duty in terms of Section 96 of the Act of 2013 which is reinforced by the second proviso to Section 194LA of the IT Act. In the light of Section 96 of the Act of 2013 read with Second proviso to Section 194LA of the IT Act would categorically indicate that no such distinction could be made and that all lands which are acquired and the award passed in terms of the Act of 2013, is exempted from payment of income tax. When the compensation itself is exempted from income tax, the question of deducting tax at source on such exempted income would also not arise. Hence, looked at from any angle, as long as the award is made under the Act of 2013, the compensation paid would not be liable for any tax. It is not in dispute in the present matter that the an Award has been passed under the .....

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..... e compensation of Rs. 2,99,435/- per acre, additional market value at 12% per annum and 12% solatium on compensation and awarded 9% interest per annum for a period of one year from the date of preliminary notification and thereafter interest at the rate of 15% per annum. 6. Since the amounts were not paid by the State, Execution Petition came to be filed by the petitioner in Execution Petition No. 610/2018 before the First Additional District Judge, Raichur. The State continued to default on the payment to be made, the petitioner filed I.A.No. III under Order 21 Rule 46B read with Section 151 CPC for garnishee order to be passed as regards the bank where the account of the State is held which also came to be allowed. 7. Finally, the Additional District Judge, Raichur directed payment of necessary amount to the petitioner by way of e-payment. However, before such payment, the said Court by its letter on 17.04.2023 addressed to the Special Land Acquisition Officer, Raichur, sought for information as regards whether the amount of compensation is taxable or not and what is the percentage of Tax to be Deducted at Source on the compensation amount. 8. Shockingly, the Special Lan .....

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..... the petitioner, Sri Shivakumar R. Tengli, learned Additional Government Advocate for respondents and perused the records. 15. The Short point that would arise for consideration in the present matter is whether tax is required to be deducted at source on compensation amount paid on account of acquisition of land? 16. Section 194LA of the Income Tax Act, 1961, is reproduced hereunder for easy reference. 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 as income-tax thereon: Provided that no deduction shall be made under this section where the amount of such payment or, as the case may be, the aggregate amount of such payments to a resident during the financial year do .....

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..... trict Collector notifying him of-- (a) intent to purchase; (b) purpose for which such purchase is being made; (c) particulars of lands to be purchased. (2) It shall be the duty of the Collector to refer the matter to the Commissioner for the satisfaction of all relevant provisions under this Act related to rehabilitation and resettlement. (3) Based upon the Rehabilitation and Resettlement Scheme approved by the Commissioner as per the provisions of this Act, the Collector shall pass individual awards covering Rehabilitation and Resettlement entitlements as per the provisions of this Act. (4) No land use change shall be permitted if rehabilitation and resettlement is not complied with in full. (5) Any purchase of land by a person other than specified persons without complying with the provisions of Rehabilitation and Resettlement Scheme shall be void ab initio: Provided that the appropriate Government may provide for rehabilitation and resettlement provisions on sale or purchase of land in its State and shall also fix the limits or ceiling for the said purpose. (6) If any land has been purchased through private negotiations by a .....

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