TDS refund on land acquisition compensation depends on whether deductees already received assessment credit

Where compensation deposited under a land acquisition award was never actually paid and the acquisition award was later set aside, deduction and remittance of tax at source became unnecessary. Refund was nevertheless made subject to verification whether the deductees had already received TDS credit in their assessments. If credit had not been granted, the amount was to be refunded to the petitioners; if credit had already been allowed, repayment was to be sought from the deductees.

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Issues: Whether the petitioners were entitled to refund of tax deducted at source from compensation amounts deposited pursuant to a land acquisition award that was subsequently set aside.

Analysis: The compensation amounts were never actually paid to the awardees, and the acquisition proceedings and award were later invalidated. In that situation, the deduction and remittance of tax at source became unnecessary. The Court also noticed the Revenue's stand that refund of TDS ordinarily follows the statutory procedure, including verification whether credit had already been given in the assessments of the concerned deductees. Balancing these aspects, the Court directed the tax to verify whether the deductees had obtained TDS credit and then either refund the amount to the petitioners or require repayment by the deductees if credit had already been granted.

Conclusion: The petitioners were held entitled to relief in principle, but only after verification of assessment credit, with a consequential direction for refund or repayment as the case may be.

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