Tax deduction on land acquisition interest upheld as delayed compensation interest was held taxable under income-tax law.

Interest paid on delayed compensation under sections 28 and 34 of the Land Acquisition Act was treated as revenue receipt chargeable to income-tax, so tax deduction at source under section 194A of the Income-tax Act was held applicable. The later Supreme Court ruling on taxability was binding, and the earlier contrary view could not be relied on to avoid deduction. The petitioners were therefore not entitled to refund or other relief in the writ petition, though they remained at liberty to seek assessment on a spread-over basis in line with the Supreme Court decision.

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Issues: Whether interest awarded under sections 28 and 34 of the Land Acquisition Act, 1894, was liable to tax deduction at source under section 194A of the Income-tax Act, 1961, and whether the petitioners were entitled to refund of the tax deducted.

Analysis: The interest paid on delayed compensation had already been held by the Supreme Court to be a revenue receipt exigible to income-tax under section 4 of the Income-tax Act, 1961. That later pronouncement was binding, and the Court held that the petitioner could not reopen the issue by relying on an earlier decision taking a different view. The petitioner was, however, left at liberty to seek assessment on a spread-over basis in accordance with the Supreme Court ruling.

Conclusion: The amount of interest was subject to tax deduction at source, and the petitioners were not entitled to refund or any relief in the writ petition.

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