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TMI Blog2011 (8) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... ers 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k and, therefore, tax had to be deducted while making the payment of compensation. For the delay in paying the compensation, the petitioners have been paid interest and, therefore, the fact that the compensation has been paid belatedly, cannot be a ground to hold that the compensation with interest has to be paid without deducting tax at source. Hence, the argument of the petitioners that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove 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 matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contractor constitutes the income of the latter. It is not also possible to think that Parliament could have intended to cast such impossible burden upon the payer nor could it be attributed with the intention of enacting such an impractical and unworkable provision. Hence, on the express language employed in the subsection, it is impossible to hold that the amount of two per cent required to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4LA 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 determined in the assessment proceedings. 6. Therefore, the argument that Section 194LA purports to imposetax on the cost ..... X X X X Extracts X X X X X X X X Extracts X X X X
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