THE COMMISSIONER OF INCOME TAX (TDS)-1 CHD vs. M/S DEDICATED FREIGHT CORRIDOR CORPORATION LTD

ITA/204/2017HC Punjab & HaryanaPHHC01117397201710 May 2018Author: MR. JUSTICE DR. SHEKHER DHAWAN,MR. JUSTICE SURINDER GUPTA6 pages
AI SummaryDismissed

What were the facts?

The Commissioner of Income Tax (TDS), Chandigarh (Revenue) appealed against an order of the Income Tax Appellate Tribunal (Tribunal) for Assessment Year 2013-14. The appeal arose from an inspection of M/s Dedicated Freight Corridor Corporation Limited (Assessee) where it was found that TDS was deposited late for two quarters and TDS was not deducted on interest payments towards compensation for non-agricultural land. The Assessee contended that the delay in TDS deposit was due to late TAN allotment and that the 12% per annum payment on compensation was part of the land compensation as per the Land Acquisition Act, 1894, not interest requiring TDS. The Assessing Officer created a demand of `5,28,43,296/-. The CIT(Appeals) partly allowed the appeal, confirming interest under Section 201(1A) for late TDS deposit but deleting the demand related to Section 194A, holding the impugned amount as additional compensation. The Revenue appealed to the Tribunal, which dismissed the appeal.

What did the High Court hold?

The High Court held that the Tribunal was correct in its findings. The Tribunal had noted that as per Section 145A(b) of the Income Tax Act, 1961, interest received on compensation or enhanced compensation is deemed income of the year of receipt and chargeable under 'income from other sources' as per Section 56(viii). TDS is deductible under Section 194A on interest other than interest on securities. The Tribunal further found that the payment was made as per Section 23(1A) of the Land Acquisition Act, 1894, and the use of the word 'interest' in the award was erroneous, as clarified by the Special Secretary Revenue, Government of Punjab. This clarification was accepted by the Assessing Officer in the remand report. The Tribunal agreed with the CIT(A) that the impugned amount was additional compensation under Section 23(1A) of the 1894 Act and not liable for TDS under Section 194A. The High Court found no substantial question of law arising from the Tribunal's order and dismissed the appeal.

What were the issues?

1. Whether, on the facts and circumstances, the Tribunal was right in holding that the payment @ 12% per annum of the compensation amount, recorded as interest in the "Award of Compensation" by the Punjab Government, is enhanced/additional compensation, despite the initial notification being published on 22.4.2010 and the award announced on 27.2.2012, implying the 12% payment is for delay and is in the nature of interest? (Question of law and fact, concerning Section 194A and Section 201(1A) of the Income Tax Act, 1961). 2. Whether, on the facts and circumstances, the Tribunal was right in holding that the payment @ 12% per annum is enhanced/additional compensation, ignoring that it was recorded as interest in the "Award of Compensation" of the Punjab Government, relying on the principle that words should be read in their ordinary, natural, and grammatical meaning (Navinchandra Mafatlal vs. Commissioner of Income Tax)? (Question of law and fact, concerning Section 194A and Section 201(1A) of the Income Tax Act, 1961). Assessee's contentions: The 12% per annum payment was part of the land compensation as per the Land Acquisition Act, 1894, and not interest requiring TDS deduction. The term 'interest' was erroneously used in the award. Revenue's contentions: The 12% per annum payment was for delay in payment and was clearly in the nature of interest. The judgment in Navinchandra Mafatlal was relied upon to emphasize the ordinary meaning of words.

Which sections of the Income-tax Act were involved?

Section 260A,Section 194A,Section 201(1A),Section 206AA,Section 203A,Section 56(viii),Section 145A,Section 194LA

AI-generated summary — verify with the full judgment below

ITA No. 204 of 2017

1

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

ITA No.204 of 2017

Date of decision: May 10, 2018

The Commissioner of Income Tax (TDS) 1, Chandigarh

……Appellant

Vs. M/s Dedicated Freight Corridor Corporation Limited

…..Respondent CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTAL ACTING CHIEF JUSTICE HON’BLE MR. JUSTICE TEJINDER SINGH DHINDSA

Present: Mr. Denesh Goyal, Sr. Standing Counsel for the appellant- Revenue.

Ms. Radhika Suri, Sr. Advocate with Mr. Manpreet Singh, Advocate.

Ajay Kumar Mittal, ACJ.

1.

The appellant-revenue has filed the present appeal under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 30.6.2016 Annexure A.3 passed by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (in short, “the Tribunal”) in ITA No.131/Chd/2016 for the assessment year 2013-14, claiming following substantial questions of law:- “i) Whether on the facts and circumstances of the case, the Hon’ble ITAT is right in holding that the payment

The order continues below.

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