COMMISSIONER OF INCOME TAX (TDS) Vs. MACKAR KUNJU

JUDGEMENT

(1.) The issue that arises for consideration in this batch of writ appeals relate to the question whether tax is liable to be deducted at source for amounts paid as compensation arrived at under negotiated settlements during acquisition of property. The learned Single Judge held that tax cannot be deducted at source under Section 194LA of the Income Tax Act, 1963 (for short, 'the Act') in respect of compensation paid to the land owners which was arrived at based on negotiated settlements.

(2.) The above question springs from proceedings for acquisition of land initiated under Section 11 of the Land Acquisition Act, 1894 (for short, 'the LA Act') for implementing the Kochi Metro Rail Project. After proceedings were initiated for the acquisition of property under the L.A.Act, negotiations were held and settlements were arrived at with the respective land owners by the District Level Purchase Committee. In effect consent awards were passed by the District Collector under Section 11(2) of the LA Act, pursuant to the agreement between the parties on the price payable for the land acquired as compensation. The writ petition was filed contending that the lands having been purchased by the Government, on the basis of negotiated settlements, there is no compulsory acquisition and hence Section 194LA of the Act was not applicable. Reliance was placed on the decisions reported in Info Park Kerala v. Asst. Commissioner of Income Tax [2008 (4) KLT 782] as well as in Thomas v. District Collector [2013 (3) KLT 941].

(3.) The learned Single Judge upheld the claim of the writ petitioners and allowed the writ petitions by restraining the revenue officials from deducting any tax at source under Section 194LA of the Act, in respect of the compensation paid to the writ petitioners.