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TMI Blog2021 (8) TMI 1435X X X X Extracts X X X X X X X X Extracts X X X X ..... earned 7th Additional Senior Civil Judge, Ahmedabad (Rural) partly allowed the said case in all seven reference cases being LRC No. 265 to 271 of 1998. The judgement and award came to be passed on 16.10.2006. 3 The opponent filed First Appeal No. 3840 to 3846 of 2008 against the said judgment and award of the Reference Court. The High Court dismissed the appeals on 26.09.2013. 4 The opponent had deposited compensation amount with the trial Court during the pendency of appeal after deducting the tax (TDS) at the rate of 11.33% amounting to Rs. 17,62,504/- on interest amount. This deduction of the TDS is the bone of contention in the present matter. As according to the applicant, the deduction of TDS is contrary to the judgement delivered by this Court where the High Court in the case of Movaliya Bhikhubhai Balabhai Income Tax Officer - (TDS) & Others, 2017 (2) GLH 554 has held that TDS cannot be deducted while depositing compensation amount payable to the farmers under the Land Acquisition Act. This legal position also had been communicated and brought to the notice of the opponents vide notices dated 20.01.2015,28.09.2015, 01.12.2013, 23.12.2015, 15.06.2016,12.07.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e furnished to the Registry for disbursement of the amount through the banking mode. This Court passed a detailed order on 17.08.2020 and directed the Registry to transfer the amount to the respective accounts within three days. 10 The relevant paragraphs of order dated 17.08.2020 are reproduced as under:- "1. This is an application for contempt under the Contempt of Courts Act, 1971. Notice came to be issued by this Court on 6.3.2020 (Coram: Hon'ble the Chief Justice and Hon'ble Justice A.J. Shastri,). On 6.8.2020 learned advocate Mr. Munshaw appearing for the opponent had ensured deposit of the entire amount of Rs. 17,62,504/- within one week. It had been directed to deposit the said amount with the High Court Registry by way of RTGS. Today he confirms that total amount has been deposited and the Registry also by way of its separate note confirms the same. 2. We have heard learned advocate Mr. Nitin Amin and learned advocate Mr. Munshaw and also perused the Note of the Registry as well as the details furnished by learned advocate Mr. Munshaw by way of his e-mail dated 11.8.2020. He has bifurcated the entire amount into the shares which each applicant is entitled to and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was needed to be deposited with the Income Tax Department for being the TDS, the same had not been paid to the petitioner. 5. Noticing the fact that the first communication had gone from present petitioner to the respondent officer on 15.6.2016 within three months of the delivery of the decision, and various communications also followed thereafter, since make the issue clear, we see no ground much less any cogent reasons to satisfy ourselves of the delay caused in making payments. Not only the judgement is clear, but the subsequent correspondence makes it very clear that TDS was not to be deducted. Let the respondents file an Affidavit to present its case. The same shall be done on or before 26.8.2020 with an advance copy to the other side. 6. We note that it is a serious issue that despite specific reiterative reminders to the officers concerned, no heed was paid nor has anyone responded nor the amount was deposited. However, before holding anything in relation to this aspect further, we would prefer to avail an opportunity to the officer concerned to explain himself and then shall take a call thereafter. Within 3 days the Registry shall transfer the amount in respective acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, total amount of Rs. 1,68,24,292/was deposited through a cheque on 22.09.2008 by the office of Superintendent Engineer, Public health Circle, after obtaining an opinion of the advocate on 23.09.2008. It was re-calculated and additional amount of Rs. 28,89,402/- had been deposited in the District Court, Ahmedabad (Rural) on 01.12.2008. Out of this huge amount, amount of Rs. 17,62,504/- was deducted towards TDS. The then Executive Engineer of Public Health Works Division, Ahmedabad did not take any decision in respect of the TDS and circle level exercise was initiated and completed. All the notices were addressed to Executive Engineer, Public Health Construction Department near Town Hall, Ellis Bridge and the opponent was not holding additional charge of Executive Engineer till 17.10.2017 and the concerned Executive Engineer had addressed a letter to the Superintendent Engineer, Public Health Circle, Ahmedabad. The opponent, therefore, was not at all conversant with the land acquisition prices, as well as the correspondences, as he was holding the additional charge of Executive Engineer with effect from 17.10.2017. He came to know about the proceedings as well as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the concerned Executive Engineer had addressed a letter to the Superintendent Engineer, Public Health Circle, Ahmedabad requesting him to do the needful. 15 As can be seen from the communication dated 03.08.2016 addressed to the Executive Engineer to Superintendent Engineer, on receipt of notice of Mr. M.G.Amin of dated 15.06.2016, stating that the opinion has been sought from advocate Siddhesh Desai, which is expected to arrive and a short note prepared has been sent to the Superintendent Engineer in doing the needful in the matter. The note provides the details of victims, the land reference case number with survey number and measurement of the land acquired. It also provides the details of the amount, which had been deposited and TDS deducted from the said amount of compensation deposited with the Court. The total amount of Rs. 17,62,504/-(Rs. 14,47,313/-)+ Rs. 3,15,191/-) was to be returned to be disbursed with 15% interest to the claimant victims as per the notice of Mr. M.G. Amin. It also refers to the decision rendered in Special Civil Application No. 17944 of 2015 stating that as per the said decision, the interest given under section 28 of the Land Acqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land had been acquired and when direction was to deposit the entire sum including the amount of interest, no TDS could have been held back. There is no justifiable ground much less any satisfying reason for not disbursing the amount in favour of the applicant. Apt would be to refer to the decision of this Court, rendered on 31.03.2016 of Movaliya Bhikhubhai Balabhai (supra), where the petitioner had challenged the communication issued by the Income Tax Officer as well as action of the respondent of deducting and depositing the amount towards TDS from the amount of interest and further directions had been sought to pay the amount of TDS to the petitioner. 16.1 The petitioner in that case was the original claimant in the Land Reference Cases. It was decided by the learned Principal Senior Civil Judge, Junagadh by an award, whereby the reference was partly allowed and additional compensation as awarded irrigated land and for non-irrigated land along with other benefits. Pursuant to the award passed by the Reference Court, the Executive Engineer, Junagadh Irrigation Scheme Division submitted a calculation sheet, which showed the amount of interest. The amount of TDS is to be deducted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Act. In other words, in case of a transaction which is otherwise exigible to capital gains tax under section 45 of the I.T. Act, the interest received under section 28 of the Act of 1894 being an accretion to the value, would form part of the compensation and would be exigible to tax under section 45(5) of the I.T. Act, whereas the interest received under section 34 of the Act of 1894 would be "interest" within the meaning of such expression as envisaged under section 145A of the I.T. Act and would be deemed to be the income of the year under consideration, chargeable to tax as income from other sources under section 56 of the I.T. Act. 10. In the facts of the present case, it is an admitted position that the interest on which the tax is sought to be deducted at source under section 194A of the Act is interest under section 28 of the Act of 1894 and not under section 34 thereof. As noted here in above, the petitioner's application for a certificate under section 197 of the I.T. Act for no deduction of tax at source has been rejected on the ground that the interest amount received under section 28 of the Act of 1894 is taxable as per the provisions of section 57(iv) read wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be taxed under Section 45(5) of the 1961 Act. This is the scheme of Section 45(5) and Section 155(16) of the 1961 Act. We may clarify that even before the insertion of Section 45(5)(c) and Section 155(16) w.e.f. 1-4-2004, the receipt of enhanced compensation under Section 45(5)(b) was taxable in the year of receipt which is only reinforced by insertion of clause (c) because the right to receive payment under the 1894 Act is not in doubt. 55. It is important to note that compensation, including enhanced compensation/consideration under the 1894 Act, is based on the full value of property as on the date of notification under Section 4 of that Act. When the court/tribunal directs payment of enhanced compensation under Section 23(1-A), or Section 23(2) or under Section 28 of the 1894 Act it is on the basis that award of the Collector or the court, under reference, has not compensated the owner for the full value of the property as on date of notification." Thus, it is clear that the Supreme Court after considering the scheme of section 45(5) of the I.T. Act has categorically held that payment made under section 28 of the Act of 1894 is enhanced compensation, as a necessary corol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt under section 28 of the Land Acquisition Act since partakes the character of compensation, it cannot fall under the expression interest under section 145A of the Income Tax Act. Therefore, it is not the income from other sources and the petitioner is not liable to pay any tax on the interest paid to it under section 28 of the Act. 17.1 In other words, the amount paid under section 28 since forms part of the compensation and not the interest, there is no justification in deducting the tax at source under section 194A of the Income Tax Act in respect of such amount. The said decision had entitled the revision of the amount, which has been wrongly deducted under section194A of the Income Tax Act. The High Court had directed the Income Tax Department to forthwith deposit the tax deducted at source, which was otherwise payable to the petitioner by way of interest under section 28 with the Reference Court and further directed the amount to be disbursed to the petitioner. 17.2 This decision leaves no room of doubt for any one, who has been communicated the same that the amount of interest would not attract the tax and, therefore, it would not be required for the authority to deduct t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eason for the opponent to continue to hold this amount, which did not belong to the respondent contemnor or to the Board. It had no legitimate reason at all to retain the same. Where was the need on the part of the applicant to issue a single notice, since the appeals were of the opponent Board. The Board was fully aware of the appeals having been dismissed against it and resulted in favour of the present applicant, therefore, being the acquiring body, the onus lied on the opponent to pay the entire amount of compensation, which had been directed by the Court. It when had no business to unauthorised and unsustainably retain any amount of the litigating party, who has already been deprived of its land, for being used for the public purpose and yet the owners continued to be at the receiving end all these years. 20 Even while giving benefit to its maximum to the conduct of the respondent that it had no clarity till the decision of this Court delivered on 31.03.2016. The ignorance of law thereafter is not an excuse, much less for those who are holding the public posts. It is also incorrect to state that the law was not comprehensible for the contemnor or that he is not supposed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he local area, the local limits of its jurisdiction and whether the person alleged to be guilty of contempt is within or outside such limit. 20.6 Section 12 provides for punishment for contempt of Court. It provides that save as expressly provided in this Act or any other law, the contempt of Court shall be punished with simple imprisonment for a term, which may extend to six months or with fine, which may extend to Rs. 2000/- or with both. 20.7 Sub-section (3) of Section 12 starts with non-obstante clause and states that notwithstanding anything contained in this section, whether the person is found guilty of civil contempt, the Court, if considers that fine will not meet with the ends of justice and that the sentence of imprisonment is necessary, shall instead of sentence, given the simple imprisonment direct that he be detained in civil prison for such period not exceeding six months, as it may think fit. 20.8 Sub-Section (4) further provides that whether the persons found guilty of contempt of Court in respect of any undertaking given to Court is a company, every person, who, at the time of contempt was in-charge of or was responsible to the company for the conduct of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ork wise for being incharge of the post, are hardly palatable defences. Neither they appear as valid or truthful defences nor are they anywhere touching the requirement of public interest. After the delivery of decision by this Court in, of course, another matter on identical issue, there are six notices issued by the applicant in post 31st March, 2016 period being (i) 15.06.2016 (ii) 12.07.2016 (ii) 25.08.2016 (iv) 18.10.2016 (v) 24.06.2017 (vi) 24.07.2019 and not a single notice is answered and in absence of any justifiable ground this willfull, deliberate and arbitrary approach is not explained in any manner except as discussed above which is not only not satisfactory explanation, it pains us to find that such kind of bureaucratic approach is capable of not allowing the fruits of the decision of the Court to be reaped by the common man. 23 This Court, from the overall discussion as held hereinabove, finds that the act of the opponent is willful and he is guilty of civil contempt. He shall be heard on 31.07.2021. (MS. SONIA GOKANI, J. ) (N.V.ANJARIA, J) Further Order 24 After pronouncing the contemnor guilty of contempt of court, we have heard him for punishment. The conte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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