TaxTMI 
TaxTMI 
2005 (3) TMI 27
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....uncement of the order, it was noticed that this court committed an error in calculating the amount due to the claimant under section 23(1A) of the Land Acquisition Act ("the Act" for short) and the interest payable to the claimant on such amount. Since the findings of this court on those points were against the decisions of the apex court, this court suo motu decided to hear that matter again so as to correct its own records in the final order in exercise of the powers conferred on this court under article 215 of the Constitution of India. Accordingly, the matter was heard. Learned counsel appearing for the decree holder has argued that the findings of this court that the decree holder is entitled to get only simple interest and that the provisions of Order XXI, rule 1, are not applicable while adjusting the decree debt deposited by the State in execution of the award passed by the land acquisition court are also wrong. This court had only followed the principles laid down by the Supreme Court regarding the nature of the interest payable and the applicability of Order XXI, rule 1, of the Code of Civil Procedure. Hence, those points do not require any reconsideration. The f....
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....9 per cent, and from February 4, 1987, at the rate of 15 per cent, per annum and also proportionate cost. The State filed an appeal before this court as L. A. A. No. 196 of 1995 challenging the judgment of the subordinate court. This court by judgment dated August 24, 1998, dismissed the appeal confirming the enhancement of land value awarded by the Subordinate Judge's court. The cross-objection filed by the claimant was also dismissed. While the land acquisition appeal was pending, the State deposited an amount of Rs. 13,64,228 on January 17, 1996, as per cheque No. 3155 before the sub-court. The State also remitted an amount of Rs. 84,783 towards income-tax on January 16, 1996. According to the State, the balance to be deposited was Rs. 9,71,562. Subsequently, the State deposited an amount of Rs. 9,68,905 on February 15, 2000. An amount of Rs. 1,08,854 was also remitted on the same day towards income-tax. On December 1, 2001, the decree holder filed a statement to the effect that she is entitled to get an additional amount of Rs. 16,37,806. The judgment-debtor filed objections contending that the entire amount due to the decree holder was already deposited. The executing court....
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....usal of the records shows that the decree holder as well as the judgment-debtor had filed a number of statement of accounts. The records show that originally the decree holder filed a statement of accounts on March 20, 1999, claiming that as on March 27, 1999, an amount of Rs. 23,01,601.25 was due to the decree holder. On March 28, 2000, she filed another statement to the effect that as on March 27, 2000, she was entitled to get Rs. 14,90,946.39. Subsequently, on March 16, 2001, the decree holder filed another statement contending that as on March 15, 2001, the judgment-debtor was liable to pay a further amount of Rs. 5,86,662.71. On December 1, 2001, the decree holder filed another statement contending that as on December 1, 2001, the decree holder was entitled to get an amount of Rs. 16,37,806.93. The revision petitioner had also filed a statement of accounts on March 25, 2003, contending that the State had already deposited excess amount and the decree holder is liable to return an amount of Rs. 1,06,197 back to the State. In the review petition filed on June 25, 2003, also a statement of accounts was filed by the judgment-debtor claiming that an amount of Rs. 1,06,197 was due t....
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....of Rs. 9,68,905 to be paid to the decree holder and an amount of Rs. 1,08,854 remitted towards income-tax. So, on that day the judgment-debtor had deposited an amount of Rs. 10,77,759. Thus, the total amount deposited by the judgment-debtor on two dates comes to Rs. 25,26,770. The simple question arising for consideration is how to adjust the amounts deposited by the judgment-debtor and also whether the amount which the State remits towards income-tax can be ignored by the executing court while calculating the amount due to the decree holder. Before dealing with the provisions of the Code of Civil Procedure, it is necessary to refer to the provisions for determining the compensation under the Land Acquisition Act. Section 23(1) of the Land Acquisition Act provides that the market value of the land as on the date of publication of the notification is to be fixed. Sub-section (1A) of section 23 provides for awarding of additional amount payable at the rate of 12 per cent, on such market value. Sub-section (1A) reads as follows: "(1A) In addition to the market value of the land, as above provided, the court shall in every case award an amount calculated at the rate of twel....
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.... by the court in excess of the amount fixed by the Collector under section 28 of the Act. (v) Interest on the solatium in case the same is awarded in the decree. In this connection, the provisions of section 30 of the Land Acquisition (Amendment) Act, 1984, which deals with the transitional provisions is also relevant. Section 30(1) of the Amendment Act, 1984, deals with 12 per cent, awardable by the subordinate judge under section 23(1A) of the principal Act. Section 30(2) deals with the commencement of the provisions of section 23(2). So, if the award of the Collector was made before the date mentioned in section 30(1) of the Amendment Act of 1984, the claimant is not entitled to get the benefit of additional amount calculated at the rate of 12 per cent, per annum on the amount already awarded by the Collector as provided under section 23(1A). There is no provision in the Land Acquisition Act which contemplates payment of compound interest. The judgment-debtor is liable to pay only simple interest. Section 28 also does not contemplate award of compound interest. It also contemplates only payment of simple interest. So, only simple interest need be paid on the various amo....
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....[2002] 7 SCC 657, the Supreme Court followed the principle laid down in Sunder's case, AIR 2001 SC 3516, and found that the claimants are entitled to interest on the amount payable to them under sub-section (1A) of section 23 of the Act and the judgment-debtors were directed to compute and pay the interest payable to the claimants in accordance with law as enunciated in Sunder's case, AIR 2001 SC 3516. So, the claimants are entitled to interest on the additional amount calculated at the rate of 12 per centum per annum awarded. In Mir Fazeelath Hussain v. Special Deputy Collector [1995] 3 SCC 208 the apex court held that the solatium is not part of the award and no interest is claimable thereon. The principle laid down in that decision was overruled by a Constitution Bench of the Supreme Court consisting of five judges in Sunder v. Union of India [2001] 2 KLJ 449; AIR 2001 SC 3516 in which it was held that solatium is also part of the award and interest is payable on that amount. After the pronouncement of the decision in Sunder's case AIR 2001 SC 3516, the parties are entitled to get interest on solatium also. But the executing court shall consider whether the decree in a given ....
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....ition Officer towards income-tax. It is argued that the Land Acquisition Officer has no other option but to deduct the amount due towards income-tax from the amount due to the decree holder under the decree in view of the provisions of the Income-tax Act. Deduction of income-tax from the decree debt: Learned counsel appearing for the respondent has argued that if the Income-tax Department has got any claim, it is for them to take appropriate action for recovery and the Land Acquisition Officer has no authority to deduct any amount towards income-tax. It is further argued that if as a matter of fact any amount is to be paid to the Income-tax Department, the State ought to have raised a contention regarding that claim before the passing of the judgment and decree and necessary provisions ought to have been made in the decree itself. It is argued that in fact the action of the Land Acquisition Officer deducting amounts towards income-tax in violation of the order of the executing court by which the State was directed to deposit the entire amount in the court is nothing but contempt of court and he is liable to be proceeded under the provisions of the Contempt of Courts Act. I....
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....ITR 677 (Cal). Counsel for the Government of India (Taxes) has filed a statement stating that the amounts payable as income-tax are to be deducted from the amounts to be paid to the claimants in the land acquisition case. He had made available a Circular No. CC/CHN/PR/151/2003-2004 dated March 23, 2004, issued by the Chief Commissioner of Income-tax, Kochi, to the District Collector, Ernakulam. The learned Government Pleader has made available a circular, No. LR 82/4726 of 2000 dated June 26, 2000, issued by the Commissioner of Land Revenue, Thiruvananthapuram, to the District Collectors and Land Acquisition Officers of Kerala as to how the amount due under the decree in a land acquisition case has to be calculated. In that circular also it is stated that income-tax is to be deducted at source. Section 194A of the Income-tax Act deals with interest. Section 194A reads as follows: "194A.(1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income by way of interest on securities, shall at the time of credit of such income to the account of the payee or at the time of payment ....
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....2004. Section 194LA was introduced with effect from October 1, 2004. Section 194LA reads as follows: "194LA. Payment of compensation on acquisition of certain immovable property.-Any person responsible for paying to a resident any sum, being in the nature of compensation or the enhanced compensation or the consideration or the enhanced consideration on account of compulsory acquisition, under any law for the time being in force, of any immovable property (other than agricultural land), shall, at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent, of such sum as income-tax thereon: Provided that no deduction shall be made under this section where the amount of such payment or, as the case may be, the aggregate amount to such payments to a resident during the financial year does not exceed one hundred thousand rupees. Explanation.-For the purposes of this section,- (i) 'agricultural land' means agricultural land in India including lands situate in any area referred to in items (a) and (b) of sub-clause (iii) of clause (14) of section 2; (ii) 'immovable property' mea....
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....ion Act and actually pays the compensation amount and interest to the claimants. In Baldeep Singh v. Union of India [1993] 199 ITR 628 (P&H), it was held that the real person for paying income-tax is the Land Acquisition Officer. In Shankar v. Union of India [2002] 178 CTR 26 (Delhi), also it was held that the Land Acquisition Officer should deduct tax at source. The principle laid down in Baldeep Singh's case [1993] 199 ITR 628 (P&H) was followed in Kranti Kumar Saxena, In re [2003] 262 ITR 33 (MP) and held that the court is not liable to deposit the tax by challan or issue TDS in Form No. 25A and the real person responsible for paying income-tax on interest is the Land Acquisition Officer or Collector who has the money in his possession. So, in every case, whether the acquisition is for the Central Government, State Government or other agencies, it is the duty of the Land Acquisition Officer to deduct the income-tax due to the Income-tax Department from the amount of compensation and interest in accordance with the provisions of section 194A or section 194LA, as the case may be. Of course, if in a particular case the claimant is not liable to pay income-tax or if he is entitle....
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....ent-debtor under the decree deposits an amount in court the decree holder is entitled to appropriate the same towards interest and cost and the balance towards principal. In Meghraj's case, AIR 1970 SC 161, the decree passed was for sale of a mortgaged house. The principal amount awarded was Rs. 33,866.51 and an amount of Rs. 746.30 was awarded as interest. The judgment-debtor raised a contention that the amount deposited shall be adjusted towards principal first. It was held that unless the decree holder was informed that the amount deposited shall be adjusted towards principal first and the balance towards interest and cost and the decree holder agrees to such a suggestion, the judgment-debtor is not entitled to raise a contention that the amount deposited shall be adjusted towards principal first. In I.C.D.S. Ltd.'s case [1999] 96 Comp Cas 1 also the apex court after interpretting the provisions of Order XXI, rule 1(2) held as follows (head-note): "The general rule of appropriation of payments towards a decretal amount is that such an amount is to be adjusted firstly strictly in accordance with the directions contained in the decree and in the absence of such direction, ad....
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....1, so far as it relates to the adjustment of the amount deposited. In Mathunni Mathai v. State of Kerala [1998] 1 KLT 812, a learned single judge of this court after considering the principles laid down in Prem Nath Kapur's case [1996] 2 SCC 71 held as follows: "The Supreme Court held that the ratio in Meghraj case [1969] 2 SCC 274 is equally inapplicable to the appropriation of debt under the Land Acquisition Act and the same is applicable only to a debtor and creditor in an ordinary civil suit governed by the provisions of the C.P.C. The Supreme Court held that the applicability of the C.P.C. to the proceedings under the Act stands excluded under section 53 of the Land Acquisition Act which shall prevail. When the deposit is made towards the specified amounts, the claimant/owner is not entitled to deduct from the amount of compensation towards cost, interest, additional amount under section 23(1A) with interest and then to claim the total balance amount with further interest." So, the law regarding adjustment of the decree amount deposited by the State in execution of a decree passed in a land acquisition reference is clear and settled. The decree holder shall calculate the....