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2015 (10) TMI 75 - ITAT HYDERABAD

2015 (10) TMI 75 - ITAT HYDERABAD - TMI - Non deduction of tax at source u/s 194LA - assessee paying compensation to the property owners on account of road widening - assessee corporation strongly contended that the acquisition proceedings made as per section 146 of Hyderabad Municipal Corporation Act, 1955 - CIT(A) delted the disallowance - Held that:- After considering the provisions of section 146, 147 of GHMC Act and also section 194LA of I.T. Act, 1961, it is clear that sec.146 of HMCA, 195 .....

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GHMC Act, 1955. So far as section 194LA of I.T. Act, 1961 is concerned, the language used in section and provision is “Any person responsible for paying to a resident any sum, being in the nature of compensation or the enhanced compensation or the consideration or the enhanced consideration on account of compulsory acquisition, under any law for the time being in force, of any immovable property.” Therefore, one of the ingredients is compensation on account of compulsory acquisition if fulfilled .....

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n the order of the Ld. CIT(A) and accordingly we confirm the same. - Decided in favour of assessee. - ITA.No.78 & 79/Hyd/2015 - Dated:- 4-9-2015 - SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER For The Revenue : Mr. Ramakrishna Bandi For The Assessee : Mr. S. Rama Rao ORDER PER SAKTIJIT DEY, J.M. These appeals filed by the Revenue are directed against separate but similar Orders of Ld. CIT(A)-VI, Hyderabad, both dated 12.09.2014 for the A.Y. 2006-2007 and 2007-2008. S .....

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est for late remittance of TDS iii. non-deduction of TDS on contract and salary payments. iv. short deduction of TDS on professional fee paid v. non-deduction of TDS on payments made for acquisition of land under section 194LA (Rs.1,16,57,605) vi. short deduction under section 194LA. vii. deduction of TDS under section 194C instead of 194. 2.1. The A.O. has passed an order under section 201/201(1A) of the I.T. Act, with a direction to the assessee to pay an amount of ₹ 36,14,019 for nonded .....

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deducting the TDS for the A.Y.2006-07. 4. In the short notice given it is very difficult to submit the information as the matter pertains to past periods. 5. The appellant craves leave to alter, add to and / or amend the aforesaid grounds. 6. The appellant wish to be heard personally / through authorized representative before passing any order in this regard. 3. On careful consideration of the above grounds raised by the assessee corporation, the Ld. CIT(A) partly allowed the grounds relating to .....

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of TDS on professional fee paid under section 201 at ₹ 16,600 and ₹ 11,995 under section 201(1A) (ii) demand raised on account of short deduction of tax on compensation paid towards acquisition of land under section 194LA at ₹ 2,89,874 and an amount of ₹ 1,85,590 under section 201(1A), (iii) deduction of TDS under section 194C instead of section 194J - Demand u/s.201 at ₹ 9020 and interest u/s.201(1A), the learned CIT(A) dismissed the above grounds raised by the ass .....

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unds : 1. The order of the Commissioner of Income Tax(A) is erroneous both on facts and in law. 2. The Commissioner of Income Tax(A) erred in holding that the acquisition of land under section 146 of the Hyderabad Municipal Corporation Act does not fall under Compulsory Acquisition to liable to TDS under Section 194LA of the Income Tax Act,1961, when the deductor itself deducted tax at source in respect of the land component of the acquisition made under section 146 of the Hyderabad Municipal Co .....

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377; 1,16,57,605 as compensation to three individual parties and five other parties through the First Senior Civil Judge, City Civil Court, Hyderabad towards acquisition of structures. The assessee corporation has not deducted tax on the said amount. Therefore, the A.O. assessed an amount of ₹ 13,07,983 under section 201 and ₹ 9,41,747 under section 201(1A). Further, he strongly relied on the order of the A.O. 6. On the other hand, the Ld. Counsel for the assessee reiterated the subm .....

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empowered to acquire immovable property by mutual consent under section 146 of HMC Act, 1955. Therefore, the provisions of section 194LA of I.T. Act, 1961 are not applicable to the assessee corporation. He further argued that the demolition of structure and compensation payment takes place as per section 146 of Hyderabad Municipal Corporation Act, 1955 but not under Land Acquisition Act, 1894. The learned A.R. further relied on the decision of Coordinate Bench of this Tribunal in ITA.No.140,141 .....

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of road widening. For the year under consideration, the assessee corporation shown to have paid compensation of ₹ 1,16,57,605 to eight parties, on which, TDS was not made. The contention of the corporation is that the compensation paid was through agreements and not under compulsory acquisitions, as such, provisions of section 194LA of the I.T. Act, 1961 would not apply. The assessee corporation strongly contended that the acquisition proceedings made as per section 146 of Hyderabad Munic .....

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le property 194LA. Any person responsible for paying to a resident any sum, being in the nature of compensation or the enhanced compensation or the consideration or the enhanced consideration on account of compulsory acquisition, under any law for the time being in force, of any immovable property (other than agricultural land), shall, at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent of .....

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ovable property means any land (other than agricultural land) or any building or part of a building.] 8.1 As can be seen from the above, the following conditions are to be satisfied before the provisions are invoked: (i) There has to be an acquisition. (ii) The acquisition must be compulsory in nature. (iii) The acquisition must be of an immovable property; and (iv) Compensation or consideration must be paid on account of acquisition of such immovable property (other than agricultural land) (v) .....

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on behalf of the Corporation by agreement on such terms at such rates or prices not exceeding such maximum as shall be approved by the Standing Committee, either generally for any class of cases or specially in a particular case. (2) And whenever, under any provision of this Act, the Commissioner is authorised to agree to pay tile whole or any portion of the expenses of acquiring any immovable property, he shall do so on such terms and at rates or prices not exceeding such maximum as shall be ap .....

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ompensating the owner of any such right in respect of any deprivation thereof or interference therewith. (4) No contract for the acquisition of any immovable property or of any interest therein or any right thereto or the payment of any compensation under sub-sections (1), (2) or (3) shall be valid, if the price or compensation to be paid for such property or interest or right exceeds rupees five thousand unless and until such contract has been approved by the Corporation. (5) Every contract or .....

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n sub-section (4) shall be binding on the Corporation. (7) The foregoing provisions of this section which apply to an original contract relating to the acquisition of immovable property, or any interest therein or any right thereto shall be deemed to apply also to any variation or discharge of such contract. 8.3. As seen from the above provision, in the event of the inability of MCH to acquire any immovable property through agreement in terms of sec.146 of the HMCA 1955, a procedure has been lai .....

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ssioner made with tile approval of the Standing Committee and subject to the other provisions of this Act, order proceedings to be taken for acquiring tile same on behalf of the Corporation in accordance with the provisions of the Land Acquisition Act, 1894 as amended for a public purpose within the meaning of the provisions of the said Act.] 8.4. After considering the provisions of section 146, 147 of GHMC Act and also section 194LA of I.T. Act, 1961, it is clear that sec.146 of HMCA, 1955 is a .....

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d and in the present case on hand, the acquisition was through the provisions of sec.146 of the HMC Act, 1955. Therefore, to the extent of properties acquired under section 146, we are of the firm view that the provisions of section 194LA of the I.T. Act, 1961 do not apply to the present case on hand since there was no compulsory acquisition proceedings initiated by the assessee corporation. 8.5. Apart from this, we have also perused the Order of the Coordinate Bench of the Tribunal in assessee .....

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