TMI Blog2011 (8) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... .P. DEVADHAR A.A. SAYED, JJ. Mr.A.V. Anturkar i/by Mr. Sugandh B. Deshmukh for the petitioners. Mr.Suresh Kumar for the respondents. JUDGMENT (PER J.P. DEVADHAR, J. 1. The petitioners are aggrieved by the action on the part of the respondents in deducting tax at source while paying the amount of compensation on acquisition of the land belonging to the petitioners. The petitioners have also challenged the constitutional validity of Section 194LA of the Income Tax Act, 1961. 2. As regards the deduction of tax at source is concerned, the argument of the petitioners is that under Section 12(2) of the Land Acquisition Act, the compensation was payable to the petitioners immediately after the Award dated 30th May 1995. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensation which includes the cost of the land. It is contended that the cost of the land does not involve any income element and, therefore, Section 194LA which mandates deduction of tax at source on the entire amount of consideration including the cost of the land must be held to be unconstitutional. 4. We see no merit in the above contention. The Apex Court in the case of Associated Cement Company Limited V/s. Commissioner of Income Tax reported in 201 ITR 435 (SC) was called upon to consider similar provisions contained in Section 194C of the Act under which a person responsible to make payment to a contractor is required to deduct tax at source before making the payment. On consideration of various aspects of the matter, the Apex Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 13 of the terms and conditions of the contract in reimbursement of the amount paid by him to workers, from the sum envisaged therein, as was suggested on behalf of the appellant. (emphasis supplied) 5. The object of Section 194LA as per the CBDT Circular No.5 of 2005 dated 15th July 2005 {276 ITR (st) 151} is to curb the tendency of evading taxes by not reporting the income comprised in the compensation received on acquisition of immovable property. Section 194LA does not determine the tax liability of the person receiving the amount of compensation but it merely requires the person paying the compensation to deduct certain percentage of the sum payable as compensation towards the tax liability of the recipient that would be det ..... X X X X Extracts X X X X X X X X Extracts X X X X
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