2014 (5) TMI 1200

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....filed under article 227 of the Constitution is whether the Government was justified in deducting tax at source while disbursing compensation for land acquired under the Land Acquisition Act, 1894. Indisputably, the land acquired is agricultural land. This issue is not res integra and has been settled by this Court and more recently the issue has been examined by brother K.Kannan, J. In CR No.7740 ....

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....n the present case, the interest received by the petitioner was on account of delay in making the payment of enhanced compensation and, therefore, would fall under Section 28 of the 1894 Act. Such payment could not par-take the character of compensation for acquisition of agricultural land and, thus, was not exempt under the Act. Once that was so, the tax at source had been rightly deducted by the....

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....n 194 LA will not apply. Since the very same provision under Section 28 has been brought for consideration by Supreme Court in CIT, Faridabad Vs. Gaushyam in Civil Appeal No.4401 of 2009 decided on 16.7.2009 it has to be examined. The following observation is relevant:- "It is true that "interest" is not compensation. It is equally true that Section 194 LA of the 1961 Act refers to compensation.....

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....on that goes towards the discharge of liability under Section 28 must be taken as part of the compensation to which Section 194 LA shall apply and that compensation being the value of agricultural land, then the exclusion as provided under the Section shall also be attracted. In this case, compensation assessed and the interest calculated are for acquiring agricultural land and the amount deposite....