Taxability of interest on enhanced land acquisition compensation requires return filing and statutory refund, not direct writ relief.

Interest received on enhanced land acquisition compensation is taxable in the year of receipt, so the recipients were required to file income tax returns and discharge the resulting liability. Where tax had been deducted at source, the proper remedy was to seek adjustment against that liability and, if excess tax remained, claim refund under the statutory mechanism. Direct writ relief for refund was therefore not warranted, and the petitioners were relegated to the return-and-refund process prescribed by law.

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Issues: Whether the petitioners were entitled to a writ direction for refund of tax deducted at source from interest paid on land acquisition compensation, or were required to pursue the statutory remedy of filing income tax returns and seeking adjustment or refund in accordance with law.

Analysis: The amount released to the petitioners was found to relate to interest on enhanced compensation. Such interest was held to be taxable in the year of receipt, and the petitioners were therefore required to discharge their tax liability by filing returns. The Court noted that where tax had been deducted at source, the proper course was to seek adjustment against tax liability, and if the deduction exceeded the liability, refund could be claimed under the Act. In view of this statutory mechanism, a direct writ for refund was not warranted.

Conclusion: The petitioners were not granted direct refund in writ proceedings and were relegated to the remedy of filing income tax returns and claiming refund of any excess tax deducted at source in accordance with law.

Ratio Decidendi: Interest on enhanced land acquisition compensation is taxable in the year of receipt, and refund of excess tax deducted at source must be pursued through the statutory return-and-adjustment mechanism rather than by direct writ relief.

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