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2021 (12) TMI 407 - HC - Income TaxTDS u/s 194LA - compensation paid to the land owners which was arrived at based on negotiated settlements - acquisition of land initiated under Section 11 of the Land Acquisition Act, 1894 - Whether tax is liable to be deducted at source for amounts paid as compensation arrived at under negotiated settlements during acquisition of property? - HELD THAT:- Acquisition of property becomes compulsory in nature whenever and wherever property is obtained by the government, pursuant to proceedings initiated for land acquisition under the relevant land acquisition laws. Negotiated settlements arrived at with government or governmental bodies for transfer of property, after proceedings for acquisition have been initiated remain in the realm of compulsory acquisition. The decision to part with the property, which is the subject matter of a negotiated settlement, does not originate from any exercise of a free mind of the owner of the property. It stems from the compulsion imposed by proceedings for acquisition. The transfer of property remains in the nature of compulsory acquisition. Once the proceedings for acquisition are initiated under law, whatever be the nature of payment, whether as compensation for acquisition or as consideration for a negotiated settlement, the character of the acquisition remains compulsory in nature and hence Section 194LA of the Act will apply. The judgement in Balakrishnans’ case [2017 (3) TMI 745 - SUPREME COURT] clearly covers situations of this nature. In the above circumstances, the judgment of the learned Single Judge is liable to be set aside. We do so, in all these appeals. After the impugned judgment there was no stay of operation of the judgment and the compensation or consideration as the case may be would have been paid without deducting the TDS. We clarify that in cases where TDS was deducted before payment of consideration, the same is liable to be made over to the Income Tax Department. In cases where the consideration was paid without deduction of tax as per the judgment, it is needless to state that the judgment had worked itself out. Appeal dismissed.
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