SPECIAL DEPUTY COLLECTOR (LAND ACQUISITION),HYDERABAD vs. INCOME TAX OFFICER, WARD-14(2), , HYDERABAD

Brief facts of the case are that as per the order passed u/s 201(1A) of the Act, the assessee deductor is a Government Department and has acquired land for :- 2 -: Special Deputy Officer (Land Acquisition), Hyd. international airport in Shamshabad, Hyderabad against which has paid land acquisition compensation. From the information filed subsequent to the inspection, the AO noticed that the assessee deductor had paid land acquisition compensation and deducted TDS u/s 194LA of the Act, but remitted belatedly to the Government account. He further observed that the assessee deductor had made payments on account of advertisement to M/s Catalysis deducted TDS u/s 194C and remitted into Government Account. He, therefore, calculated interest payable u/s 201(1A) Rs. 4,76,851/-.

When, the assessee preferred an appeal against the order of AO, the CIT(A) confirmed the order of AO passed u/s 201(1A) of the Act.

Before us, the ld. AR of the assessee submitted that the then land acquisition officer by mistake had deducted tax at source against the payments made to the parties but remitted the same to the credit of the Central Govt. after the stipulated time. He submitted that the then Land Acquisition officer ought not to have deducted the income tax in respect of payments made towards the agricultural land as they do not come under the purview of IT as per section 194LA of the IT Act. He contended that the learned ITO did not consider the submission of the assessee and :- 3 -: Special Deputy Officer (Land Acquisition), Hyd. proceeded with imposing of interest u/s 201(1A) of the Act, which is not proper as per law.

The ld. DR, on the other hand relied on the orders of revenue authorities.

We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. As submitted by the ld. AR of the assessee, the land acquired are agricultural lands in nature, therefore, the provisions of section 194LA are not attracted to the payments made to the land owners. We, therefore, remit the matter back to the file of AO with a direction to decide the issue in accordance with law after providing reasonable opportunity of hearing to the assessee in the matter. The grounds raised by the assessee are treated as allowed for statistical purposes.

In the result, appeal of the assessee is allowed for statistical purposes in above terms. Pronounced in the open court on 7th April, 2021.