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2023 (6) TMI 622 - KARNATAKA HIGH COURTTDS u/s 194LA - compensation amount paid on account of acquisition of land - distinguish acquisition of agricultural land and non-agricultural land - HELD THAT:- As per Section 194LA any person responsible for paying to the resident any sum being in the nature of compensation or enhanced compensation, or consideration or enhanced consideration on account of compulsory acquisition of immovable property other than agricultural land at the time of payment of such sum, has to deduct an amount equivalent to 10% as income tax and deposit the same with the concerned authority to the account of the assessee. A perusal of Section 96 of the Act of 2013 would make it abundantly clear that no income tax or stamp duty shall be levied on any award or agreement made under the Act except under Section 46. A reading of Section 46 of the Act of 2013 would indicate that it relates to purchase of land through private negotiations, which necessarily means otherwise than through acquisition. This being so since 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 Act of 2013. This aspect has been completely missed out by the SLAO in his letter to the court, and the court, without looking into the provisions and appreciating the import thereof, has passed the impugned order, requiring this court to intercede and correct the injustice caused. ORDER: The entire compensation amount payable to the petitioner is directed to be paid to the petitioner without deduction of any tax at source. The Additional Registrar General of this Court is directed to forward a copy of this order to all the Courts which are handling land acquisition matters including the compensation thereto for necessary compliance.
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