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2016 (6) TMI 1458 - AT - Income TaxTDS u/s 194A - payment of interest on compensation of agricultural land - enhanced / additionalf compensation paid and recorded as interest in the “Award of Compensation” of the Punjab Government - assessee submitted that amount on which TDS has been proposed to be deducted is not interest but enhanced compensation as per Standing order No. 28 of Punjab Government under which land has been acquired, which has been paid to land owner @ 12% from the date of initial notification - Also submitted that as per record, no interest has been paid on account of delayed payment i.e. from date of award till date of payment - CIT-A held amount was additional compensation paid as per section 23(IA) of the Land Acquisition Act of 1894 and not liable to deduction of tax - HELD THAT:- We find that as per Provisions of clause (b) of section 145A of the Income Tax Act, 1961 interest received by an assessee on compensation or on enhanced compensation as the case may be, shall be deemed to be the income of the year in which it is received. As per provisions of section 56 (viii) of the Income Tax Act, 1961, income by way of interest received on compensation or enhanced compensation referred to in clause (b) of section 145A shall be chargeable to income-tax under the head 'Income from other sources.' TDS is deducted U/s 194A on the payment of interest other than "Interest on securities". Also, as per provisions of Section 194LA, TDS is deducted on payment of compensation on acquisition of certain immovable property other than agricultural land - competent authority in this regard has clearly clarified that word ‘interest’ has been wrongly used. It is in fact an enhanced compensation. This statement of the competent authority is unambiguous and it has also been accepted by the Assessing officer in the remand report. It is undisputed that the payment in this regard does not relate to any award by the Court regarding payment of interest. The payment has been made as per section 23 (1A) of the Land Acquisition Act, 1894 which was erroneously mentioned as interest in the award of competent authority. The clarification in regard has been issued by the Special Secretary Revenue, Government of Punjab. Letter was also issued to the Chief Commissioner of Income Tax, Chandigarh clarifying the position. We agree with the CIT(A) that impugned amount was additional compensation paid as per section 23(IA) of the Land Acquisition Act of 1894 and not liable to deduction of tax u/s 194A - It is settled law that it is the substance of the transaction which has to be taken into account in assessment proceedings and not the nomenclature to the same. The Revenue in grounds of appeal has referred to the decision of Manjit Singh (HUF) Vs. UOI and others [2015 (12) TMI 1123 - PUNJAB & HARYANA HIGH COURT] - DR was not at all in a position to explain us to how this decision helps the case of Revenue. Accordingly, we do not find any merit in the grounds raised by the Revenue. Accordingly, we uphold the order of Ld. CIT(A). Appeal filed by the Revenue stands dismissed.
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