Punjab-Haryana High Court
Date Of Decision: 6.09.2013 vs The Union Of India And Others on 6 September, 2013
Author: G.S.Sandhawalia
Bench: Jasbir Singh, G.S.Sandhawalia
CWP No.3477 of 2006 -1-
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IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
1. CWP No.3477 of 2006
Date of decision: 6.09.2013
Karan Singh and others .petitioners
Vs.
The Union of India and others .Respondents
2. CWP No.10089 of 2006
Puran Singh and others .petitioners
Vs.
Union of India and others .Respondents
CORAM: HON'BLE MR.JUSTICE JASBIR SINGH
HON'BLE MR.JUSTICE G.S.SANDHAWALIA
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Present: Mr. O.P.Sharda, Advocate for the petitioners.
Mr. D.Khanna, Addl. Advocate General, Haryana
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G.S.SANDHAWALIA, J.
1. This order shall dispose of Civil Writ Petitions No.3477 and 10089 of 2006 as the common questions of facts and law are involved in both the petitions.
2. Both the aforesaid writ petitions were admitted and ordered to be heard along with Civil Writ Petition No.17963 of 1999. The said writ petition was dismissed for non-prosecution in view of the statement Kumar Pardeep 2013.09.27 10:35 I attest to the accuracy and integrity of this document CWP No.3477 of 2006 -2- **** of counsel for the revenue that the matter is covered by judgment of this Court in Karnail Singh Vs. State of Haryana and others Vol.CLVI- (2009-4) PLR 423.
4. Since issue in question in both the writ petitions is common, for dictating order, the facts have been taken from Civil Writ Petition No.3477 of 2006.
5. The challenge by the petitioners is to the tax deducted at source on the element of interest which was paid on account of delay in payment of enhanced compensation regarding acquisition of their agricultural land. The prayer made is for directing the respondents to refund the amount which had been deducted at source.
6. The case set up by the petitioners is that the agricultural land of the petitioners situated in Gurgaon District was acquired vide award dated 22.1.1992 at the rate of ` 1,25,000/- per acre and the learned Addl. District Judge, Gurgaon vide award dated 7.11.2000 enhanced the compensation to ` 7,22,500/- per acre. The Land Acquisition Collector had deposited the amount of enhanced compensation in the Executing Court after deducting the tax at source to the tune of ` 4,99,643.50 paise in case of petitioner no.1 and ` 99928.70 paise in case of petitioners no.2 to 6 each. The said deduction is the subject matter of challenge.
7. As noticed above, the Division Bench of this Court in Karnail Singh's case (supra) has held that the interest received on account of delayed payment of the compensation amount is revenue receipt and is exigible to income tax being revenue receipt under the Kumar Pardeep 2013.09.27 10:35 I attest to the accuracy and integrity of this document CWP No.3477 of 2006 -3- **** Income Tax Act, 1961.
8. Counsel for the petitioners relied upon Risal Singh and another Vs. Union of India and others (2010) 321 ITR 251 (P&H) to submit that deduction of tax at source was not permissible by the Collector.
9. Another Division Bench of this Court in Civil Writ Petition No.9739 of 2011 Sarti Vs. Haryana State Industrial & Infrastructure Development Corporation Ltd. and others decided on 30.5.2011 has considered a similar question and it was noticed that this Court, in Income Tax Appeal No. 209 of 2004, decided on 27.10.2010 Commissioner of Income Tax, Faridabad v. Bir Singh (HUF), Ballabgarh had held that interest paid on enhanced amount of compensation in respect of the acquired land falls for taxation under Section 56 of the Act as "income from other sources" and it would be exigible to tax in the year of receipt under cash system of accountancy. Accordingly, it was held that tax at source had been rightly deducted. The relevant portion of the judgment reads as under:-
"6. A perusal of Annexure P-2 clearly depicts that the nature of interest received by the petitioner falls under Section 194- A of the Act on account of delayed payment made by the State Government for acquisition of her land. Learned counsel for the petitioner submitted that since the interest was received in respect of the land, which was agricultural in nature, it had also attained the character of 'agriculture income' and, therefore, no tax was deductible thereon in Kumar Pardeep 2013.09.27 10:35 I attest to the accuracy and integrity of this document CWP No.3477 of 2006 -4- **** view of the decision of this Court in Civil Writ Petition No. 9912 of 2009 (Risal Singh and another v. The Union of India and others) decided on 11.1.2010.
7. We are unable to accept the contention.
8. This Court, in Income Tax Appeal No. 209 of 2004, decided on 27.10.2010 (Commissioner of Income Tax, Faridabad v.Bir Singh (HUF), Ballabgarh) had held that interest paid to the assessee under Section 28 of the Land Acquisition Act, 1894 (for brevity, "1894 Act") on enhanced amount of compensation in respect of the acquired land falls for taxation under Section 56 of the Act as "income from other sources" and is exigible to tax in the year of receipt under cash system of accountancy. It had also been observed that where the assessee is not maintaining books of accounts by adopting any specific method, it shall be treated to be cash system of accountancy. In 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 payer. We find no infirmity in the 'Tax Deducted at Source' certificate issued by the payer of the amount. Accordingly, there is no merit in the Kumar Pardeep 2013.09.27 10:35 I attest to the accuracy and integrity of this document CWP No.3477 of 2006 -5- **** writ petition and the same is dismissed."
10. Thereafter in Civil Writ Petition No.10333 of 2011 Kulwant Rai and others Vs. State of Haryana and others decided on 2.6.2011, it was held that the petitioners have alternative remedy by way of filing the income tax return and getting the tax deducted at source adjusted against their tax liability
5. The relief claimed by the petitioners in all the petitions is that the respondents have made tax deduction at source from the amount of compensation of the acquired agricultural land which they were not authorized to do so and, therefore, the said amount be released to the petitioners along with interest.
6. Learned counsel for the petitioners by placing reliance upon Annexure P-2, order dated 15.9.2010 passed by this Court in CWP No. 16549 of 2010 (Bikramjeet Sood v. State of Punjab and others) submitted that the petitioners have received the amount of enhanced compensation in respect of agricultural land on which no tax was payable. Therefore, the tax deducted as source by the Land Acquisition Officer while depositing the amount with the Additional District Judge, Ambala was unsustainable and, thus, the petitioners are entitled to refund of the same.
7. A perusal of Annexure P-1 shows that the following amounts have been deducted at source on the principal amount of enhanced compensation as well as on the Kumar Pardeep 2013.09.27 10:35 I attest to the accuracy and integrity of this document CWP No.3477 of 2006 -6- **** interest received on enhanced compensation in all the three writ petitions:-
Sr. No. CWP No. Amount deducted
1. 10333 of 2011 Rs.44,118/-
2. 10417 of 2011 Rs.11,69,007/-
3. 1 0481 of 2011 Rs.35,96,498/-
8. Learned counsel for the petitioners was unable to dispute that in view of receipt of interest element on enhanced compensation, the same being taxable in the year of receipt, the petitioners were required to file return as tax was payable on the said amount. In such a situation, the petitioners have an alternative remedy by way of filing the income tax return and getting the tax deducted at source adjusted against their tax liability. If any amount deducted at source is found to be in excess of the tax liability, the petitioners are entitled to refund in accordance with the provisions of the Act.
9. In view of the above, the writ petitions stand disposed of with liberty to the petitioners to file the income tax returns and seek refund of excess tax deducted at source in accordance with law."
11. Keeping in view of the observations made in Karnail Singh's, Sarti's and Kulwant Rai's cases (supra), it is held that the writ petitions are not maintainable as the petitioners have alternative remedy by way of filing the income tax returns and getting the tax Kumar Pardeep 2013.09.27 10:35 I attest to the accuracy and integrity of this document CWP No.3477 of 2006 -7- **** deducted at source adjusted against their tax liability.
12. Accordingly both the writ petitions are disposed of. However, if any amount deducted at source is found to be in excess, the petitioners would be entitled to apply for refund thereof in accordance with the provisions of the Income Tax Act, 1961.
(G.S.SANDHAWALIA)
JUDGE
6.09.2013 (JASBIR SINGH)
Pka JUDGE
Kumar Pardeep
2013.09.27 10:35
I attest to the accuracy and
integrity of this document