STATE OF BIHAR Vs. KAPILDEO VISHKARMA

JUDGEMENT

(1.) Heard learned junior counsel to Additional Advocate General No. 7 and Mr. Lalit Kishore, learned Additional Advocate General No. 3 for the appellants, and Mr. L.N. Rastogi for the Department of Income Tax.

(2.) This matter has been coming up repeatedly before the Bench without much of result. Lands of indigent farmers are acquired under the provisions of the Land Acquisition Act. It is a common experience in the State of Bihar that the proceedings under the Act take an unduly long time. The State of Bihar takes over possession of the land and the land owner has to wait for many years for compensation. He is deprived of his primary for sole source of livelihood without payment of compensation for years and years, often times covering two decades or more. The State of Bihar quite often prefers trivial appeals before this Court where the valuation of the appeal ranges between Rs. 500/- to Rs. 25,000/- and beyond. Although the State Government issued a circular nearly three decades,ago that it shall withdraw all its land acquisition appeals pending in the High Court up to the valuation of Rs. 25,000/-, which by necessary implication also means that appeals up to that valuation shall not be filed. The first part is implemented with hiccups. and the second part remains unnoticed. In other words, the State of Bihar does not itself take any step to withdraw such pending appeals and the Court has to take steps to ensure that such appeals stand withdrawn, fresh appeals up to the valuation of Rs. 25,000/- continue to be filed. The result is that the poor farmer, who has been deprived of his source of livelihood, is harassed no end, and the Court is burdened with most unwanted litigations on account of such delayed payment of compensation, accrues which is cumulatively liable, to tax under Section 194-A of the Income Tax Act Most of these land owners are indigent persons and can never be income tax payees, but for the accumulation of interest for circumstances beyond their control. While making payment of the amount of compensation, the Collector of the district relies on the circulars issued by the Income Tax Department that income tax on such accumulated interest has to be deducted at source. The aforesaid vital aspects of the matter do not seem to have been taken into account while issuing these circulars. I am aghast at the heartless and unrealistic answer of the Department during the earlier stages of the present proceedings that he can always claim refund. The Board must remind itself that most of such landowners are living in a State of abject poverty. Many of them are in a state of human existence that, if they meet each other in the second half of the lay. they do not greet each other by saving. How are you". They instead say "Have you taken food". One bland, coarse meal a day is a luxury for them.

(3.) This Court had, therefore, desired the Board of Direct Taxes to consider the issue relating to TDS with respect to the accumulated interest and take appropriate remedial measures. The Department has placed before me the inter-departmental communication dated 20.3.2006, wherein the issue has been disposed of by the following resolution of the Board: The issue of interest on delayed payment of compensation on compulsory acquisition of land whether interest is to be staggered over the years to which it pertained for the purposes of TDS was discussed. The Board is of the opinion that provisions of Section 194A is very clear and it does not allow staggering of interest over the years to which it pertained for the purpose of TDS. Therefore, the Affidavit filed by the officers of CCIT, Patna, before Patna High Court has to be modified and the correct position of scheme of tax deduction at source has to be brought to the notice of the High Court. At sane time it should be clarified that the CBDT has never contemplated issuing any circular to this effect as stated in the said Affidavit.