MURLIDHAR AND ANR. vs. THE COMPETENT AUTHORITYLAND ACQ. ANDORS.

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CW/3708/2018HC RajasthanRJHC01027063201812 July 2019Bench: PUSHPENDRA SINGH BHATI3 pages
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What did the High Court hold?

The High Court directed the respondents to reconsider the TDS deduction on the compensation awarded to the petitioners, taking into account the amendment made in Section 194LA of the Income Tax Act, 1961, by the Finance Act, 2017, effective from April 1, 2017. The Court held that if, after this re-computation, TDS is found not to be leviable, it shall not be levied. Furthermore, if TDS has already been unlawfully levied, it shall be refunded. The respondents were given a period of three months to take the necessary decision. The principle established is that TDS under Section 194LA is not to be deducted on compensation for acquired agricultural land if such award or agreement is exempted under Section 96 of the Act of 2013, especially after the amendment to Section 194LA.

What were the facts?

The petitioners, Murlidhar and Ghanshyam Gangwani, owned agricultural land in Jodhpur which was acquired for widening National Highway 65. The acquisition was conducted under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (the Act of 2013). The petitioners approached the High Court seeking a direction to the Competent Authority, Land Acquisition, to pay the compensation amount without deducting Tax Deducted at Source (TDS) and to refrain from depositing the deducted TDS with the Income Tax Department. They contended that the TDS deduction was made without authority of law.

What were the issues?

1. Whether the respondent no. 1 (Competent Authority, Land Acquisition) may be directed to pay the petitioners the amount deducted as TDS from their compensation without authority of law, and restrained from depositing the same with the Income Tax Department, in light of Section 96 of the Act of 2013 and Section 194LA of the Income Tax Act, 1961? Assessee's Contention: The petitioners argued that TDS was deducted in flagrant violation of Section 96 of the Act of 2013. They further submitted that an amendment to Section 194LA of the Income Tax Act, 1961, effective from April 1, 2017, provides that no TDS shall be deducted if the payment is made in respect of an award or agreement exempted from income-tax under Section 96 of the Act of 2013. They relied on the Finance Act, 2017, which inserted this proviso. Revenue's Contention: The learned counsel for the respondents was not in a position to refute that the amendment to Section 194LA had been brought into effect from April 1, 2017.

Which sections of the Income-tax Act were involved?

Section 96,Section 194LA

AI-generated summary — verify with the full judgment below

HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR S.B. Civil Writ Petition No. 3708/2018 1. Murlidhar S/o Rochiram, By Caste Sindhi, R/o Subhash Chowk, Ratanada, Jodhpur. 2. Ghanshyam Gangwani S/o Chhagan Lal, By Caste Sinhi, R/o Subhash Chowk, Ratanada, Jodhpur. ----Petitioners Versus 1. The Comptetent Authroity Land Acquisition And Adm Iii, Jodhpur, National Highway No. 65, Nagaur- Jodhpur. 2. The Principal Commissioner Of Income Tax Tds, N.c.r.b. Statue Circle, Jaipur, Raj. 3. The Union Of India, Ministry Of Finance, Department Of Revenue, Central Board Of Direct Taxes, Ita. Ii Division, North Block, New Delhi. ----Respondents For Petitioner(s) : Mr.Pradeep Swami. For Respondent(s) : Mr.GS Chouhan for Mr.KK Bissa. HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI Order 12/07/2019 1. The petitioners have approached this Court claiming the following prayers :- “It is, therefore, most respectfully prayed on behalf of the petitioners that the writ petition may kindly be allowed and by an appropriate writ, order or direction :- (A) The respondent no. 1 may be directed to pay to the petitioners immediately, the amount which he has deducted as TDS from the compensation amount of the petitioners agricultural land without authority of law ; (B) The respondent no. 1 may be restrained from depositing the amount deducted from the compensation of

(2 of 3) [CW-3708/2018] the petitioners land with the Department of Income Tax since this deduction is blatant violation of the provisions of the Act of 2013 as well as the Income Tax Act, 1961.” 2. Brief facts of the case as noticed by this Court are that the petitioners were having possession and ownership of agricultural land in khasra no.458/6 situated in Village Netra, Tehsil Baori, District Jodhpur. The said land has been acquired for widening of National Highway 65, Jodhpur-Nagaur as per the provisions of Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (for short, ‘the Act of 2013’). 3. The limited contention of the petitioners is that in flagrant violation of Section 96 of the Act of 2013, the respondents are charging T.D.S. upon the compensation amount. 4.1 Learned counsel for the petitioners submits that the T.D.S. amount has been deducted in the year 2018 whereas an amendment has been brought in Section 194LA of the Income Tax Act, 1961 by the Finance Act, 2017 w.e.f. 1.4.2017 published in gazette on 31.3.2017, which reads as follows :- “67. In section 194LA of the Income-tax Act, after the proviso and before the Explanation, the following proviso shall be inserted, namely:— “Provided further that no deduction shall be made under this section where such payment is made in respect of any award or agreement which has been exempted from levy of income-tax under section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.”. 4.2 Learned counsel for the petitioners, therefore, makes a limited submission that as per the second Proviso to Section

(3 of 3) [CW-3708/2018] 194LA of the Income Tax Act, the respondents have to do away with the T.D.S. on the compensation amount for the acquired agricultural land of the petitioners. 5. Learned counsel for the respondents is not in a position to refute that the amendment has been brought in Section 194LA of the Income Tax Act w.e.f. 1.4.2017. 6. After hearing the learned counsel for the parties and after perusing the material available on record and looking into the limited submission, this Court directs the respondents to take into consideration the amendment made in Section 194LA of the Income Tax Act, 1961 by the Finance Act, 2017 w.e.f. 1.4.2017 while computing T.D.S. afresh upon the compensation awarded to the petitioners. It is needless to say that if by the aforesaid exercise, T.D.S. is not made out, then the same shall not be levied and if the same has been levied unlawfully, then the same shall be refunded. The necessary decision shall be taken by the respondents within a period of three months from today. 7. The present writ petition is disposed of in the above terms. 8. Stay petition no.10060/2019 also stands disposed of accordingly. (DR. PUSHPENDRA SINGH BHATI)J. 16-SPhophaliya/-

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