TaxTMI 
TaxTMI 
2012 (1) TMI 438
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....ucting 10% of the interest awarded under Sections 28 and 34 of the Land Acquisition Act, 1894 (for short 'the Act') towards deduction of tax at source though the lands acquired were agricultural lands? 2. The petitioners were the owners of agricultural lands at Arekeri Village, Yelburga Taluk, Koppal District. The said lands were acquired by the State Government for Hirehalla Irrigation Project. The second respondent made an award under Section 11 of the Act determining the compensation. Not being satisfied with the quantum of compensation, the petitioners sought reference under Section 18 of the Act. The Reference Court enhanced the compensation. The petitioners filed appeals before this Court under Section 54 of the Act seeking....
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....here the acquired property is an agricultural land. There is no bar for deducting 10% of interest towards tax at source. 7. The Finance (No.2) Act, 2004 inserted Section 194LA w.e.f. 1.10.2004, which is as under: "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 a....
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....oner, after holding necessary enquiry makes an award inter alia determining the amount of compensation payable for the lands acquired. Section 15 of the Act says that in determining the amount of compensation, the Deputy Commissioner shall be guided by the provisions contained in Sections 23 and 24. Section 23 provides for matters to be considered in determining compensation and Section 24 describes the matters to be neglected in determining the compensation. A perusal of Section 23 shows that interest is not an item included in the compensation for any of the matters mentioned therein nor is it mentioned as the consideration for acquisition of the land. Thus, the Act itself makes a clear distinction between the compensation payable for the....
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....payment of compensation amount and therefore, is a revenue receipt liable to tax under the Income Tax Act. 12. In BIKRAM SINGH AND OTHERS VS. LAND ACQUISITION COLLECTOR AND OTHERS - (1997) 224 ITR 551, the Apex Court has again held that interest received on delayed payment of compensation under the Land Acquisition Act is a revenue receipt exigible to Income Tax. 13. In the instant case, admittedly, the immovable property acquired was agricultural land. In the circular at Annexure 'B' dated 4.9.2010, the State Government has clarified that tax has to be deducted at source in respect of the interest awarded under Sections 28 and 34 of the Act on the compensation for acquiring the agricultural lands though deduction of tax at so....