By K. B. Bhujle | Advocate
New Page 1
7. TDS : S.
194LA of Income-tax Act, 1961 : Compensation for acquisition of agricultural
land : Collector had no jurisdiction to deduct tax at source : Deduction
illegal.
[Risal Singh v. UOI, 321 ITR 251
(P&H)]
The petitioners received
compensation for acquisition of their agricultural land. While disbursing the
compensation, the Collector made deduction of tax at source and remitted the
amount to the Revenue. The Collector rejected the petitioners’ objection stating
that the deduction has been made on the instructions of the Haryana Urben
Development Authority.
On a writ petition filed by the
petitioners, the Revenue contended that alternative remedy is available to the
petitioners to seek refund after getting assessment done. The Punjab and Haryana
High Court allowed the petition and held as under :
“(i) In the absence of
jurisdiction to deduct tax from compensation for agricultural land, the
stand of the Income-tax Department that since there was a remedy of getting
the assessment done and to receive refund could not be accepted.
(ii) The Collector could not
have made deduction without determining the jurisdictional fact that
compensation was for property other than agricultural land. Thus deduction
of tax at source without determining the plea of the petitioner that the
land was agricultural land was not justified. The amount was said to have
been remitted to the Income-tax Department which was illegal.
(iii) We allow this petition and
direct the Income-tax Department to refund the amount to the Collector within
one month from the date of receipt of a copy of this order. Thereafter, the
Collector will determine whether compensation paid is for property other than
agricultural land or otherwise and whether deduction of tax at source was
permissible under any provisions of law. Whether deduction is permissible or not
will be decided by the Collector within two months from the date of receipt of a
copy of this order. If deduction is found not permissible, the amount will be
refunded to the petitioners not later than three months from receipt of a copy
of this order.”
