TaxTMI 
TaxTMI 
2005 (6) TMI 219
X X X X Extracts X X X X
X X X X Extracts X X X X
....s made to the following persons: -------------------------------------------- Name of the person Asst. yr. -------------------------------------------- Sh. Mangat Ram 1998-99 Sh. Om Saran, Sirsa 1987-88 Shri Om Saran, Sirsa 1988-89 Sh. Om Saran, Sirsa 1996-97 Sh. Gobind Ram, Sirsa 1987-88 Sh. Gobind Ram, Sirsa 1988-89 Sh. Gobind Ram, Sirsa 1996-97 Sh. Ashok Bansal, Sirsa 1988-89 Sh. Ashok Bansal, Sirsa 1987-88 Smt. Shashi Parbha &n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....zar, Sirsa. Smt. Rajni 1988-89 D/o Sh. Ram Kishore, Bansal, Sirsa 202, General Kari Appa Agra Cantt, U.P. Suman 1988-89 D/o Sh. Ram Kishore, 202, General Kari Appa Agra Cantt, U.P. Saruti 1988-89 W/o Sh. Ashok Bansal ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e, yet most of the payments on account of interest have been made by the assessee are prior to 5th Dec, 1988. It was further contended that only four payments were made by the assessee after the date of issue of the CBDT circular. It was contended that major payments out of the four persons was made to Shri Mangat Ram of 26,69,640. The assessee was required to deduct tax @ 10 per cent as per the version of the AO. The said assessee has paid advance tax on 6th March, 1999 and assessment in his case was also made under s. 143(3) on 21st Jan., 2001. Copy of the assessment order in respect of the various persons to whom interest was paid by the assessee had been placed on record of the AO. In the case of some of the land owners, the assessment record could not be obtained. So however, their income is meager. Reliance was placed on the decision of the Madhya Pradesh High Court in the case of CIT. vs. Divisional Manager, New India Assurance Co. Ltd. (1983) 33 CTR (MP) 248 : (1983) 140 ITR 818 (MP), wherein it has been held that where a regular assessment of a payee has been made and tax has been fully paid, the AO would not be justified in creating demand under s. 201 of the IT Act for n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed in respect of interest on enhanced compensation. According to the learned Departmental Representative, the said amendment is clarificatory and applicable retrospectively. It was accordingly, pleaded that the appeal of the assessee may be dismissed. 8. We have given our careful consideration to the rival contentions. In order to decide the issue involved in these appeals it would be necessary to determine as to whether the assessee was required to deduct tax at source under s. 194A from the interest paid on delayed payment of enhanced compensation. As already pointed out, the learned counsel for the assessee has heavily relied on the decision of the Supreme Court in the case of Bikram Singh vs. Land Acquisition Collector in support of the contention that provisions of s. 194A are not attracted in this case. We have gone through the decision of the Supreme Court referred to above and find the contention advanced on behalf of the assessee as not well founded. The issue involved in the case of Bikram Singh vs. Land Acquisition Collector was as to whether notice issued by the Land Acquisition Officer for payment of income-tax on the delayed interest amount recovered under the Land....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the decision of the Court has got to be seen in the context in which it has been rendered. Fallacy of the contention advanced on behalf of the assessee is exposed when it is seen that the judgment of Hon'ble Punjab & Haryana High Court has been confirmed by the Hon'ble Supreme Court. The Hon'ble Supreme Court has quoted the relevant portion of the High Court judgment in its own decision and it is observed from the quoted portion of the decision that the Hon'ble High Court held that the Land Acquisition Collector was justified to demand tax on account of interest under s. 194A of the Act. Moreover, the issue had come up before the Punjab & Haryana High Court again in the case of Tuhi Ram vs. Land Acquisition Collector. In the said case, their Lordships of the Punjab & Haryana High Court held as under: "Interest received as a consequence of compulsory acquisition of land/agricultural land is income exigible to tax. By force of s. 194A, at the time of credit of such income to the account of the payee or at the time of payment either in cash or by issue of cheque or draft or other mode, the person responsible for payment is entitled to deduct income-tax thereon at the rates in force....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s a revenue receipt exigible to tax. Their Lordship, held that the persons entitled to compensation would be entitled to spread over the income to the period for which the payment came to be made. 10. In the light of the decisions of the Hon'ble jurisdictional High Court of Punjab & Haryana, referred to above, and decision of the Delhi High Court referred to above, it is abundantly clear that provisions of s. 194A are attracted in the case of payment of interest on enhanced compensation for the acquisition of land. 11. The next question that arises for consideration is as to whether the order passed by the AO under ss. 201 and 201(1A) is justified on the facts and in the circumstances of the case. Sec. 201 of the IT Act empowers the AO to treat the person responsible for deduction of tax to be in default in respect of non-deduction or short-deduction of tax. In this case, interest has been paid on the enhanced compensation to various persons. Sec. 194A made it obligatory upon the person responsible for payment of interest to deduct tax at the time of credit or at the time of payment of such sum to the payees. Sec. 194A provides that no deduction of tax would be made in case t....