TMI Blog2005 (6) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... me of the person Asst. yr. -------------------------------------------- Sh. Mangat Ram 1998-99 Sh. Om Saran, Sirsa 1987-88 Shri Om Saran, Sirsa 1988-89 Sh. Om Saran, Sirsa 1996-97 Sh. Gobind Ram, Sirsa 1987-88 Sh. Gobind Ram, Sirsa 1988-89 Sh. Gobind Ram, Sirsa 1996-97 Sh. Ashok Bansal, Sirsa 1988-89 Sh. Ashok Bansal, Sirsa 1987-88 Smt. Shashi Parbha 1988-89 -------------------------------------------- In respect of the above persons, the assessments have been made and an information furnished before the Revenue authorities as well as before us. In respect of the following persons, the assessee has not been able to collect the information about any tax paid by the recipient: ---------------------------------------------------- Name of the Asst. yr. Complete Address person ---------------------------------------------------- Sh. Ram Kishore 1988-89 202, General Kari Appa Agra Cantt, U.P. Sh. Shyam Lal 1987-88 S/o Sh. Ram Chander, Near Hissari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Court and that the interest so awarded by the Court is not taxable under the IT Act. The assessee had also sought legal opinion about the TDS and it was opined that no tax was to be deducted out of the interest payment awarded by the Court for enhanced compensation. The learned counsel pointed out that CBDT Circular No. 526 is dt. 5th Dec, 1988. Though the said circular was not available to the assessee, yet most of the payments on account of interest have been made by the assessee are prior to 5th Dec, 1988. It was further contended that only four payments were made by the assessee after the date of issue of the CBDT circular. It was contended that major payments out of the four persons was made to Shri Mangat Ram of 26,69,640. The assessee was required to deduct tax @ 10 per cent as per the version of the AO. The said assessee has paid advance tax on 6th March, 1999 and assessment in his case was also made under s. 143(3) on 21st Jan., 2001. Copy of the assessment order in respect of the various persons to whom interest was paid by the assessee had been placed on record of the AO. In the case of some of the land owners, the assessment record could not be obtained. So however, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduct tax from the interest payments to the land owners. The assessee having failed to deduct tax, the AO was justified in creating the demand under ss. 201 and 201(1A) for non-deduction of tax. According to the learned Departmental Representative, there has been an amendment by insertion of s. 194L w.e.f. 1st June, 1999 by virtue of which it has been clearly laid down that tax is to be deducted in respect of interest on enhanced compensation. According to the learned Departmental Representative, the said amendment is clarificatory and applicable retrospectively. It was accordingly, pleaded that the appeal of the assessee may be dismissed. 8. We have given our careful consideration to the rival contentions. In order to decide the issue involved in these appeals it would be necessary to determine as to whether the assessee was required to deduct tax at source under s. 194A from the interest paid on delayed payment of enhanced compensation. As already pointed out, the learned counsel for the assessee has heavily relied on the decision of the Supreme Court in the case of Bikram Singh vs. Land Acquisition Collector in support of the contention that provisions of s. 194A are not att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-applicability of s. 194A. In our considered view, the observation of the Hon'ble Supreme Court has got to be seen in the context in which it has been made. The issue before the Hon'ble Supreme Court was not about the applicability of provisions of s. 194A. As held by the Supreme Court in the case of CIT vs. Sun Engineering Works (P) Ltd. (1992) 107 CTR (SC) 209 : (1992) 198 ITR 297 (SC), the decision of the Court has got to be seen in the context in which it has been rendered. Fallacy of the contention advanced on behalf of the assessee is exposed when it is seen that the judgment of Hon'ble Punjab Haryana High Court has been confirmed by the Hon'ble Supreme Court. The Hon'ble Supreme Court has quoted the relevant portion of the High Court judgment in its own decision and it is observed from the quoted portion of the decision that the Hon'ble High Court held that the Land Acquisition Collector was justified to demand tax on account of interest under s. 194A of the Act. Moreover, the issue had come up before the Punjab Haryana High Court again in the case of Tuhi Ram vs. Land Acquisition Collector. In the said case, their Lordships of the Punjab Haryana High Court held as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Collector could not be asked to deduct the tax at source. Their Lordships of the Delhi High Court held dismissing the petition that no relief could be granted to the petitioners in view of the decision of the Supreme Court in Bikram Singh vs. Land Acquisition Collector wherein it was held that the interest received on delayed payment of compensation under the Land Acquisition Act, 1894, was a revenue receipt exigible to tax. Their Lordship, held that the persons entitled to compensation would be entitled to spread over the income to the period for which the payment came to be made. 10. In the light of the decisions of the Hon'ble jurisdictional High Court of Punjab Haryana, referred to above, and decision of the Delhi High Court referred to above, it is abundantly clear that provisions of s. 194A are attracted in the case of payment of interest on enhanced compensation for the acquisition of land. 11. The next question that arises for consideration is as to whether the order passed by the AO under ss. 201 and 201(1A) is justified on the facts and in the circumstances of the case. Sec. 201 of the IT Act empowers the AO to treat the person responsible for deduction of tax to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxable limit. The learned counsel for the assessee, as already pointed out, has placed on record some of the assessment orders and details of payment of taxes by the recipients to support the contention that the tax due on the interest payments on enhanced compensation had already been paid by them and, therefore, order under s. 201 is not justified in respect of such recipients. This view is supported by the following decisions: (i) CIT vs. Manager, Madhya Pradesh State Co-operative Development Bank Ltd. (ii) CIT vs. Divisional Manager, New India Assurance Co. Ltd. (iii) CIT vs. Shri Synthetics Ltd. (1984) 39 CTR (MP) 72 : (1985) 151 ITR 634 (MP) (iv) Gwalior Rayon Silk Co. Ltd. vs. CIT (1983) 37 CTR (MP) 351 : (1983) 140 ITR 832 (MP) (v) CIT vs. Hindustan Steel Ltd. (1984) Taxation 73(3) 153 (MP) (vi) CIT vs. MP Agro Morarji Fertilizers Ltd. (vii) CIT vs. Life Insurance Corporation (viii) CIT vs. Kannan Devan Hill Produce Co. Ltd. (1987) 63 CTR (Ker) 28 : (1986) 161 ITR 477 (Ker) (ix) Kannan Devan Hill Produce Co. Ltd. vs. CIT (1986) 161 ITR 489 (Ker) In the case of CIT vs. Mahindra Mahindra Ltd. (2000) 242 ITR (St) 187, the Hon'ble Supreme Court dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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