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TMI Blog2013 (12) TMI 1527X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. All the aforementioned three revision petitions are directed against the orders dated 16.11.2013 passed by learned Additional District Judge, Hisar whereby direction has been issued to the petitioner to deposit entire compensation including the Tax Deducted at Source (for short `TDS') in the Court or in the account of decree-holders on or before 04.12.2013. For facility of reference, facts are being taken from C.R. No. 7953 of 2013. I have heard learned counsel for the petitioner and perused the record. Respondents are owners of agricultural land which has been acquired under Section 28 of the Land Acquisition Act,1894 (hereinafter referred to as the "Act"). Compensation has been assessed as per the provisions of the Act, howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar dated 13.04.2011 to Revenue Secretaries of all the States clarifying the issue of levy of tax on compensation awarded under Land Acquisition Act. As per provisions of Income Tax Act, 1961 explained in said circular, there is no tax liability in respect of compensation received in lieu of acquisition of rural agricultural land. In relation to urban agricultural land, there is exemption from tax liability after 01.04.2004 as per Section 10(37) of the Income Tax Act. In case the conditions for exemption are not fulfilled in respect of Urban Agricultural land then tax is liable to be paid on capital gain, however, it is not to be deducted at source. In that case also the land owners are entitled to benefit of Sections 54-B, 54-EC and 54-F t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to award interest on the excess amount of compensation over and above what is awarded by the Collector. It includes additional amount under Section 23(1A) and solatium under Section 23(2) of the said Act. Section 28 of the 1894 Act applies only in respect of the excess amount determined by the court after reference under Section 18 of the 1894 Act. It depends upon the claim, unlike interest under Section 34 which depends on undue delay in making the award. 50. It is true that "interest" is not compensation. It is equally true that Section 45(5) of the 1961 Act refers to compensation. But as discussed hereinabove, we have to go by the provisions of the 1894 Act which awards "interest" both as an accretion in the value of the lands acquired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pensation and is treated differently. The interest component on enhanced compensation under Section 28 is taxable under Section 56 of the Act as 'income from other sources'. 24. The Apex Court in Ghanshyam (HUF)'s case (supra), considered this aspect as under: ".... The award of interest under Section 28 of the 1894 Act is discretionary. Section 28 applies when the amount originally awarded has been paid or deposited and when the Court awards excess amount. In such cases interest on that excess alone is payable. Section 28 empowers the Court to award interest on the excess amount of compensation awarded by it over the amount awarded by the Collector. The compensation awarded by the Court includes the additional compensation awarded under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttle confusion in reference to the relevant sections but as per discussion, it is clear that interest directed by the Collector partakes the character of compensation and forms part thereof under Section 34 of the Act whereas the interest ordered by the Court falls under Section 28 of the Act." Apparently there is some conflict between the two judgments as regards nature of interest awarded under Section 28 of the Land Acquisition Act. The spirit of both the judgments is however, same i.e. when interest is awarded for delay in payment it does not form part of compensation and is taxable as `income from other source' whereas interest awarded on enhanced amount of compensation is accretion of value of land and partakes character of compe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discharge of liability under Section 28 must be taken as part of the compensation to which Section 194 LA shall apply and that compensation being the value of agricultural land, then the exclusion as provided under the Section shall also be attracted. In this case, compensation assessed and the interest calculated are for acquiring agricultural land and the amount deposited represented the liability under Section 28. I have no doubt in my mind that there was no requirement for collecting TDS for this amount. I clarify that in terms of the judgment of the Supreme Court any liability which goes towards interest calculated under Section 34 would not obtain the benefit and if there is any deduction for TDS for such a component of interest, it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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