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Attar Singh and others Versus State of Haryana and others

2015 (12) TMI 1066 - PUNJAB AND HARYANA HIGH COURT

Release of amount of TDS from the compensation of their acquired land seeked - Held that:- Examining the issue of taxability of interest under Section 28 of the Act, in Commissioner of Income Tax v. Bir Singh (HUF) [2010 (10) TMI 581 - PUNJAB & HARYANA HIGH COURT ] it was held by the Division Bench of this Court that the interest awarded by court on enhanced compensation under Section 28 of the Act was chargeable to tax as income from other sources in the year of receipt

In view of th .....

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three petitions bearing CWP Nos. 10125, 10135 and 10230 of 2015 as according to learned counsel for the parties the identical issues are involved therein. For brevity, the facts are being extracted from CWP No. 10125 of 2015. 2. CWP No. 10125 of 2015 has been filed by the petitioners under Articles 226/227 of the Constitution of India praying for issuance of a writ in the nature of mandamus directing the respondents to release the amount of deducted as Tax Deduction at Source (TDS) from the com .....

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velopment and utilization of Kundli-Manesar-Palwal Road in District Gurgaon. The Land Acquisition Collector vide award dated 10.5.2006 awarded compensation at the rate of ₹ 12.50 lacs per acre. The petitioners filed reference under Section 18 of the Act and the Additional District Judge, Gurgaon vide award dated 27.8.2012 enhanced the compensation at the rate of ₹ 43,17,841/- per acre. The petitioners received Form-D (Annexures P-3 and P-4, respectively) and the respondents deducted .....

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al land. Reliance was placed upon the judgments of the Apex Court in Commissioner of Income-tax v. Ghanshyam (HUF) (2009) 315 ITR 1 (SC) and of this Court in Civil Revision No. 7740 of 2012 (Jagmal Singh and another v. State of Haryana and another) decided on 18.7.2013 (Annexure P-5). 5. On the other hand, learned State counsel opposed the prayer made by the petitioners by pleading that the TDS was rightly deducted by the respondents on the interest paid to the petitioners for their acquired lan .....

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s in substance, provisions for recovery of tax payable by the assessees and do not in any manner affect the levy or the charge of tax. In certain cases obligation is cast on the person responsible for making such payments to deduct tax at source and deposit in Government Treasury, but under Section 199 of the Act, the deduction so made under Chapter XVII of the Act and paid to the Central Government is to be treated as payment on behalf of the assessee. In other words, the TDS is provisional col .....

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that amendment was made to subsection (2) of Section 56 of the 1961 Act by Finance (No.2) Act, 2009 w.e.f. 1.4.2010 to the following effect:- viii) Income by way of interest received on compensation or on enhanced compensation referred to in clause (b) of Section 145A. Further, amendment was also carried out in Section 145A of the 1961 Act by inserting clause (b) by Finance (No.2) Act, 2009 w.e.f. 1.4.2010 as under:- (b) interest received by an assessee on compensation or enhanced compensation, .....

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ners, it may be noticed that a Division Bench of this Court in Manjeet Singh (HUF) Karta Manjeet Singh v. Union of India and others, CWP No. 15506 of 2013 decided on 14.1.2014 to which one of us (Ajay Kumar Mittal, J.) was a member had dealt with the similar issue holding that the petitioners cannot derive any benefit from Ghanshyam's case (supra) with the following observations:- 12. Adverting to the case law on the subject, inevitably, reference is made to the judgment by the three Judges .....

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er, as soon as the Collector has taken possession of the land either before or after the award the title absolutely vests in the Government and thereafter owner of the land so acquired ceases to have any title or right of possession to the land acquired. Under the award he gets compensation for both the rights. Therefore, the interest awarded under s. 28 of the Act, just like under s. 34 thereof, cannot be a compensation or damages for the loss of the right to retain possession but only compensa .....

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owed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised. The expression 'interest' occurring in sub-section (28A) of Section 2 of the Act widens the scope of the term 'interest' for the purposes of the Act. 14. Another three Judges bench of the Apex Court in Bikram Singh vs. Land Acquisitio .....

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sidered the earlier case law on the concept of "interest" laid down by the Privy Council and all other cases and had held at page 158 as under: "In a case where title passes to the State, the statutory interest provided thereafter can only be regarded either as representing the profit which the owner of the land might have made if he had the use of the money or the loss he suffered because he had not that use. In no sense of the term can it be described as damages or compensation .....

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Commissioner of Incometax, Madras [66 ITR 465], Rama Rai & Ors. vs. CIT, Andhra Pradesh [181 ITR 400] and K.S. Krishna Rao vs. CIT, A.P. [181 ITR 408]. Thus by a catena of judicial pronouncements, it is settled law that the interest received on delayed payment of the compensation is a revenue receipt eligible to income tax. It is true that in amending the definition of "interest" in Section 2(28A) interest was defined to mean interest payable in any manner in respect of any money .....

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orrowed or a debt incurred or enumerated analogous transaction would be deemed interest. That was explained by the Board in the circular referred to hereinbefore. But the question is: whether the interest on delayed payment on the acquisition of the immovable property under the Acquisition Act would not be eligible to income-tax? It is seen that this Court has consistently taken the view that it is a revenue receipt. The amended definition of "interest" was not intended to exclude the .....

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n 28 or 31 of the Acquisition Act is a taxable event. 15. Now, we advert to the judgment of the Apex Court in Ghanshyam (HUF)'s case (supra) on the basis of which learned counsel for the assessee had sought reconsideration of judgment of this Court in CIT v. Bir Singh, ITA No.209 of 2004 decided on 27.10.2010 where Division Bench of this Court has held that element of interest awarded by the court on enhanced amount of compensation under Section 28 of the 1894 Act falls for taxation under Se .....

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t under Section 28 is part of the amount of compensation whereas interest under Section 34 is only for delay in making payment after the compensation amount is determined. Interest under Section 28 is a part of the enhanced value of the land which is not the case in the matter of payment of interest under Section 34. 17. In view of the authoritative pronouncements of the Apex Court in Dr. Sham Lal Narula, T.N.K.Govindaraja Chetty, Amarjit Singh, Sunder, Bikram Singh's cases (supra), Rama Bai .....

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al Leave Petitions are dismissed. 11. In view of the above and also the amendments made by the Finance (No.2) Act, 2009 w.e.f. 1.4.2010 noticed hereinbefore, no advantage can be derived by the petitioners from the judgment in Ghanshyam's case (supra). 12. Examining the issue of taxability of interest under Section 28 of the Act, in Commissioner of Income Tax v. Bir Singh (HUF), ITA No. 209 of 2004 decided on 27.10.2010, it was held by the Division Bench of this Court that the interest awarde .....

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l income and is not covered by Section 45(c) of the Act. We thus answer the questions in favour of the revenue and modify our order dated 5.7.2010 accordingly. The amount of interest on enhanced compensation is held to be taxable in the year of receipt irrespective of pendency of proceedings against award of enhanced compensation. 13. The judgment of learned Single Judge in Jagmal Singh's case (supra) (Annexure P-5) on which reliance has been placed by the petitioners being contrary to the a .....

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