LAND ACQUISITION COLLECTOR, IMPROVEMENT TRUST, JALANDHAR Vs. ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE-III, JALANDHAR

JUDGEMENT

(1.) This is an appeal against the order of the Income Tax Appellate Tribunal dismissing the appellant/assessee's appeal against the order of the Commissioner of Income Tax (Appeals) dated 30.11.2007 relating to the assessment year 2005-06.

(2.) Mr. Jhingan, the learned counsel appearing on behalf of the appellant pressed only question nos. (iii) and (iv) which in our view raise substantial questions of law. The appeal is, therefore, admitted on the following substantial questions of law:-

(3.) The appellant is a local authority and its income was exempted upto the assessment year 2002-03 under section 10(2) of the Income Tax Act, 1961 (for short 'the Act'). The State Government acquired about 170 acres of land for which the appellant had to make payment. Before making the payment, the appellant addressed a letter dated 17.01.2005 to the Commissioner of Income Tax enquiring about the rate at which the TDS was to be deducted in respect of the amounts to be paid to Non-Resident Indians. This letter is not annexed to the appeal. What is annexed is a letter dated 25.01.2005 addressed by the Income Tax Officer in reply to the petitioner's letter. The subject of the letter is: "Rate of TDS on compulsory acquisition of land from NRIs-Regarding" By this letter the appellant was informed that under the provisions of section 195 of the Act tax was to be deducted at 30% of the compensation amount and that 2% surcharge on income tax was also deductable. What is important to note is that the letter is only in respect of TDS qua the amounts payable to Non-Resident Indians. It does not relate to the payment made to residents of India. We will indicate the importance of this distinction later.