AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (7) TMI 1278
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....d in village Garhi Mundon, Tehsil Jagadhri, District Ambala (now Yamuna Nagar). The said land was acquired by the Government vide notification dated 28.1.2002 issued under Section 4 of the Land Acquisition Act, 1894 (in short "the Act") followed by notification dated 23.1.2003 under Section 6 of the Act. The award was passed on 20.1.2005 (Annexure P-2) allowing compensation at the rate of Rs. 6 lakhs per acre. As per deposit dated 3.8.2005 (Annexure P-3), a total compensation of Rs. 8,49,402/- was given to the father of the petitioners without deducting TDS. Against the award dated 20.1.2005 (Annexure P-2), the father of the petitioners filed reference under Section 18 of the Act and the Additional District Judge, Jagadhri vide award dated 30.7.2009 enhanced the compensation of Rs. 1560/- per square meter. The Land Acquisition Officer deposited the enhanced compensation after deducting TDS amounting to Rs. 15,82,907/- on the total interest vide letter (Form D) dated 3.5.2010 (Annexure P-4). On 29.09.2010, the father of the petitioners expired who had executed a Will in favour of the petitioners and their mother. The mother of the petitioners had also expired on 24.5.2012 and, there....
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...."Collection and Recovery of Tax" prescribed under Part B of Chapter XVII of the Act. This is in substance, provision for recovery of tax payable by the assessees and do not in any manner affect the levy or the charge of tax. In certain cases obligation is cast on the person responsible for making such payments to deduct tax at source and deposit in Government Treasury, but under Section 199 of the Act, the deduction so made under Chapter XVII of the Act and paid to the Central Government is to be treated as payment on behalf of the assessee. In other words, the TDS is provisional collection of tax by the revenue and is always subject to final determination at the time of filing of the return. The petitioners had received the amount of enhanced compensation and interest thereon. A perusal of Annexures P-3 and P-4 appended by the petitioners clearly shows that tax has been deducted on the element of interest on enhanced compensation and, therefore, would fall under Section 194A of the Act which relates to interest other than "interest on securities". 5. It may also be noticed that amendment was made to sub-section (2) of Section 56 of the 1961 Act by Finance (No. 2) Act, 2009 w.e.f.....
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....ut only compensation payable by the State for keeping back the amount payable to the owner." The principle of Dr. Shamlal Narula's case (supra) had subsequently been applied by three Judges Bench of the Apex Court in a later decision in T.N.K. Govindaraju Chetty v. CIT, (1967) 66 I.T.R. 465. 13. Further Section 2(28A) of the Act defines "interest" and was inserted by Finance Act, 1976 to be effective from 1.6.1976. It reads thus:- "interest' means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised." The expression 'interest' occurring in sub-section (28A) of Section 2 of the Act widens the scope of the term 'interest' for the purposes of the Act. 14. Another three Judges bench of the Apex Court in Bikram Singh v. Land Acquisition Collector, (1997) 224 I.T.R. 551 following Dr. Shamlal Narula's case (supra) and taking into consideration definition of "interest" in Section 2(28A) of the Act had r....
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.... was explained by the Board in the circular referred to hereinbefore. But the question is: whether the interest on delayed payment on the acquisition of the immovable property under the Acquisition Act would not be eligible to income-tax? It is seen that this Court has consistently taken the view that it is a revenue receipt. The amended definition of "interest" was not intended to exclude the revenue receipt of interest on delayed payment of compensation from taxability. Once it is construed to be a revenue receipt, necessarily, unless there is an exemption under the appropriate provisions of the Act, the revenue receipt is eligible to tax. The amendment is only to bring within its tax net, income received from the transaction covered under the definition of interest. It would mean that the interest received as income on the delayed payment of the compensation determined under Section 28 or 31 of the Acquisition Act is a taxable event." 15. Now, we advert to the judgment of the Apex Court in Ghanshyam (HUF)'s case (supra) on the basis of which learned counsel for the assessee had sought reconsideration of judgment of this Court in CIT v. Bir Singh, I.T.A. No. 209 of 2004 dec....
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.... Division Bench of this Court that the interest awarded by court on enhanced compensation under Section 28 of the Act was chargeable to tax as income from other sources in the year of receipt. Division Bench of this Court again in Commissioner of Income Tax, Panchkula v. Prem Singh, decided on 16.12.2010 while considering identical issue recorded as under:- "11. In this view of the matter, the interest component on enhanced compensation under Section 28 is liable to be taxed under Section 56 of the Act even when compensation is treated as agricultural income and is not covered by Section 45(c) of the Act. We thus answer the questions in favour of the revenue and modify our order dated 5.7.2010 accordingly. The amount of interest on enhanced compensation is held to be taxable in the year of receipt irrespective of pendency of proceedings against award of enhanced compensation." 11. Adverting to the judgment of the Gujarat High Court in Movaliya Bhikhnbhai Balabhai's case (supra), it may be noticed that since the Jagmal Singh's case (supra) on the basis of which the said case was decided, has been overruled by this Court in CWP No. 10125 of 2015 (Attar Singh and others v. ....