2022 (4) TMI 1598 - HC - Indian Laws

Landowners whose property acquired after 2014 under Section 28(1) entitled to compensation under 2013 Act, not 1894 Act

M/s Sri Balaji Corporate Services; NCC Urban Infrastructure Limited Versus Union of India Ministry of Finance Department of Revenue, Central Board For Direct Taxes; Government Of India, Ministry Of Finance, New Delhi And Ors.

M/s Sri Balaji Corporate Services; NCC Urban Infrastructure Limited Versus Union of India Ministry of Finance Department of Revenue, Central Board For ... Issues Involved:1. Maintainability of the writ petitions.2. Entitlement to compensation under the Land Acquisition Act, 1894, or the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.3. Exemption of compensation from tax deduction at source (TDS) and income tax under Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.Detailed Analysis:Re. Point No.1: Maintainability of the Writ PetitionsThe respondents argued that the writ petitions were not maintainable because the petitioners had an alternative remedy of seeking enhancement of compensation before the reference court, which they had already sought. However, the court held that the claim for compensation under the 2013 Act and the claim for enhancement of compensation are distinct and mutually exclusive. The right to seek compensation under the 2013 Act is independent of the right to seek enhancement before the reference court. Therefore, the writ petitions were maintainable.Re. Point No.2: Entitlement to Compensation Under the 2013 ActThe petitioners contended that they were entitled to compensation under the 2013 Act, as the acquisition proceedings were initiated after 01.01.2014. The court noted that the Karnataka Industrial Areas Development Board (KIADB) had resolved in its 343rd Board meeting that compensation for lands acquired after 01.01.2014 would be determined as per the 2013 Act. This resolution was recognized and affirmed by the court in various litigations. The court also observed that the KIADB had paid compensation under the 2013 Act in other cases. Consequently, the court held that the petitioners were entitled to compensation under the 2013 Act and not under the 1894 Act. The impugned awards and endorsements were quashed, and the respondents were directed to pass fresh awards under the 2013 Act.Re. Point No.3: Exemption from TDS and Income TaxThe petitioners argued that the compensation payable was exempt from TDS and income tax under Section 96 of the 2013 Act. The court referred to Section 96, the CBDT Circular dated 25.10.2016, and the amended Section 194-LA of the Income Tax Act, which confirmed the exemption. The court held that compensation payable under the 2013 Act was exempt from income tax and TDS. The respondents' actions of deducting TDS and demanding income tax were deemed illegal and without jurisdiction. The court directed the respondents to refund the TDS amount deducted and to pass fresh awards exempting the petitioners from income tax and TDS.Conclusion:The court summarized the legal principles as follows:1. Compensation for lands acquired after 01.01.2014 under the KIAD Act must be determined under the 2013 Act.2. Such compensation is exempt from income tax.3. Such compensation is also exempt from TDS.Order:1. The writ petitions were allowed.2. The impugned awards and endorsements were quashed.3. The respondents were directed to refund the TDS amount with interest.4. It was declared that the petitioners are entitled to compensation under the 2013 Act.5. The compensation payable is exempt from income tax and TDS.6. The respondents were directed to pass fresh/modified awards under the 2013 Act within three months.7. The respondents were directed to disburse the compensation already deposited.8. The amounts deposited before the court were to be released to the petitioners.