Case Number: ITA 39/DEL/2021
Appellant: Land Acquisition Office, Gurgaon
Respondent: DCIT (TDS), Gurgaon
Assessment Year: 2010-11
Case Filed On: 2021-01-20
Order Type: Final Tribunal Order
Date of Order: 2022-03-22
Pronounced On: 2022-03-22
Case Conclusion: ITA Nos. 39, 40 & 41/Del/2021 Land Acquisition Office vs DCIT
ITA Nos. 39, 40 & 41/Del/2021
Asstt.Years:2010-11, 2011-12 & 2012-13
Land Acquisition Office, Huda Complex, Sector 14, Gurgaon, Haryana – 122001 PAN RTKL00706G
Vs. DCIT, (TDS) Gurgaon (Appellant) (Respondent)
Assessee by: Shri Jitender Wadhwa, CA
Department by: Shri N.C. Swain, CIT DR
Date of Hearing: 14/02/2022
Date of Pronouncement: 22/03/2022
PER ASTHA CHANDRA, JM
These three appeals of the assessee Land Acquisition Office (“LAO”) are filed against the order dated 5.11.2015 under section 201(1) and 201(1A) of the Income Tax Act, 1961 (the “Act”) for the assessment years 2010-11 and 2011-12 and order dated 23.12.2015 for the assessment year 2012-13 passed by the Commissioner of Income Tax (Appeals)-2, Gurgaon (“CIT(A)”). These appeals were heard together and are being disposed of by this common order.
It is a case of TDS survey/inspection which was conducted by ACIT, TDS Circle, Gurgaon (“AO”) on 19.4.2012 at the office premises of the deductor, LAO. During the course of inspection and subsequent follow-up, the Ld. AO found that the deductor LAO had deducted tax at source from the payment of interest to the farmers (landowners) on enhanced compensation in assessment year 2010-11 and 2011-12 at the normal rate (which is 10%) whereas the deduction should have been made @ 20% as the deductor had not been able to prove that PAN of each deductee was taken at the time of payment. In response to the show-cause notice, the assessee furnished an explanation which was not acceptable to the Ld. AO who observed that the assessee failed to deduct tax at source as per the provisions of section 194A of the Act and raised a demand of Rs. 23,99,524/- and Rs. 34,99,95,274/- for the assessment year 2010-11 and 2011-12 respectively under section 201(1) and 201(1A) of the Act.
During proceedings for assessment year 2012-13 on 17.1.2014, the assessee filed a letter stating that in view of the judgment dated 18.7.2013 of the Hon’ble Punjab & Haryana High Court in the case of Jagmal Singh vs. State of Haryana (Civil Revision No. 7740 of 2012), the proceedings be dropped as in that case it has been held that no TDS is required to be deducted on the interest payments which fall under section 28 of Land Acquisition Act, 1894 (“LA Act”), being a part of compensation only. The Ld. AO replied back to the assessee on 17.2.2014 stating, inter alia, that the decision in the case of Jagmal Singh (supra) is case specific and is not applicable to the assessee and that the assessee having paid interest on compensation/enhanced compensation was liable to deduct tax at source under section 194A of the Act. Accordingly, on the lines of earlier years, the Ld. AO raised the demand of Rs. 52,18,90,623/- under section 201(1) and 201(1A) of the Act for assessment year 2012-13.
Before the Ld. CIT(A), the assessee reiterated its stand and filed an affidavit stating that the entire interest had been paid on enhanced compensation under section 28 of the LA Act and no amount of interest was paid under section 34 of the LA Act and that the interest paid by the assessee has been held to be a part of compensation itself by the Hon’ble Jurisdictional High Court in the case of Jagmal Singh (supra) and by the Hon’ble Supreme Court in the case of CIT, Faridabad vs. Ghanshyam (HUF) (Civil Appeal No. 440 of 2009). It was also stated that additional grounds of appeal were taken before the Ld. CIT(A) vide letter dated 26.09.2014. The Ld. CIT(A) did not give relief to the assessee on the ground that the issue whether the interest received under section 28 of the LA Act is taxable as income under section 56 of the Act or not and whether such payments are liable to TDS provisions are debatable issues. He further observed that no ground of appeal has been raised by the assessee on these issues in any of the two assessment years 2010-11 and 2011-12.
In the appellate order for assessment year 2012-13, Ld. CIT(A) reproduced the written submissions dated 30.10.2015 of the assessee in para 3.3 as under:
“3.3. The AR of the appellant filed written submissions dated 30.10.2015. Relevant part of the written submissions is reproduced as under:- It is humbly submitted in respect of demand raised for A. Y. 2012-13 on TDS on interest payment made u/s 28 of Land Acquisition Act, 1894 on enhanced compensation by treating it wrongly as interest whereas it is a part of the compensation itself. It is humbly submitted as under:-
We have considered the facts of the case, the submissions made and the case laws relied upon by the assessee.
At the outset, it is submitted that as per section 28 of the LA Act, the interest on enhanced compensation is not taxable as income. Therefore, TDS provisions are not applicable to such payments. In fact, the Hon’ble Supreme Court has settled this issue in the case of CIT vs. Ghanshyam (HUF) 2009 (315 ITR 1) wherein it has been held that interest received under section 28 of the LA Act is a part of compensation and hence not liable to tax. Moreover, the Hon’ble Jurisdictional High Court in the case of Jagmal Singh (supra) has held that such interest is a part of enhanced compensation and hence not liable to TDS provisions.
In light of the above facts and decisions, the appeals filed by the assessee for all three assessment years are allowed.
Land Acquisition Office vs DCIT, Gurgaon – ITA No. 39/DEL/2021
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