AJAY KUMAR MITTAL, J.
1. The petitioners have approached this Court by way of instant petition under Articles 226/227 of the Constitution of India for a direction to the respondents to refund the tax deducted at source on the amount of the land acquisition compensation which is exempted from deduction under Section 194LA of the Income Tax Act, 1961 (in short “the Act”) along with interest on the said amount.
2. Put shortly, the facts necessary for disposal of the writ petition are that the land of the father of the petitioners, namely, Darshan Singh situated in village Budha Khera, Hadbast No. 1, Tehsil and District Karnal was acquired by the Collector on 2.1.2001 vide notification under Section 4 of the Land Acquisition Act, 1894 (in short “1894 Act”) for public purpose, i.e for development and utilization of land as residential and commercial area for sectors 9 parts 32 and 33, Urban Estate, Karnal. The Land Acquisition Collector assessed the compensation at the rate of Rs. 4 lacs per acre for plain land and Rs. 3 lacs per acre for low lying area and other benefits, i.e solatium and additional amount of 12% compensation were also granted. The said award was challenged under Section 18 of the 1894 Act and the references were accepted with costs vide award dated 11.8.2009 They filed execution proceedings as the tax was deducted at source under Section 194A of the Act. Hence, the present writ petition.
3. We have heard learned counsel for the parties.
4. It is not in dispute that the payment which has been released to the petitioners is on account of interest paid by the department. The averments made in para 8 of the writ petition read as under:-
“8. That the land of the petitioners was also acquired and reference court has decided the reference on dated 11.8.2009 The income tax authorities has deducted the amount under section 194A of the Income Tax Act which is illegal. The matter is squarely covered by the judgment passed by Hon'ble Supreme Court in view of the judgment Risal Singh v. Union of India as this land was absolutely agricultural land as per award dated 11.8.2009 in LA Case No. 25/06, 26/06, 35/06, 36/06, 37/06, 41/06 and 42/06.”
5. It has further been accepted by the petitioners in para 10 of the writ petition that the tax has been deducted at source as per Section 194A of the Act.
6. Where the amount paid to the claimants related to amount of enhanced compensation and also interest thereupon, this Court considering similar matter in Kulwant Rai v. State of Haryana, CWP No. 10333 of 2011 decided on 2.6.2011, noticed that the interest element on enhanced compensation was taxable in the year of receipt and in such a situation, the petitioners were required to file the income tax returns as tax was payable on the said amount. It was further observed that the petitioners have an alternative remedy by way of filing the income tax returns and getting the tax deducted at source adjusted against their tax liability. If any amount deducted at source was found to be in excess of the tax liability, the petitioners were entitled to refund in accordance with the provisions of the Act.
7. In view of the above, the writ petition is disposed of with liberty to the petitioners to file the income tax returns and seek refund of excess tax deducted at source, if any, in accordance with law.
Comments