Mistake in Demanding Tax without giving Credit to TDS on Compensation from NHAI: Delhi HC directs Re-Adjudication [Read Order]
TDS on Compensation from NHAI – Delhi HC directs Re-Adjudication – TAXSCAN
TDS on Compensation from NHAI – Delhi HC directs Re-Adjudication – TAXSCAN
In a significant case, the Delhi High Court directed re-adjudication since the department mistakenly demanded tax without giving credit to Tax Deducted at Source (TDS) on compensation from the National Highways Authority of India (NHAI).
The land which belonged to the petitioner, Subhash Chander Kathuria was acquired by the National Highways Authority of India (NHAI) in the exercise of powers conferred upon it under the National Highways Act, 1956.
Concededly, the petitioner was granted compensation as well as interest on the said compensation. While the petitioner’s stand, at the relevant point in time, was that the compensation and interest received from the NHAI were not amenable to the imposition of income tax, NHAI deducted tax at source, both vis-à-vis the principal amount as well as the interest.
Tax at source was deposited by the NHAI for the relevant period i.e. AY 2020-21. However the principal amount, initially, tax at source was not deposited for the AY in issue i.e., AY 2020-21 but for another AY. NHAI, having realised that a mistake and made a course correction.
The intimation under Section 143(1) of the Act served on the petitioner is dated 08.05.2021 which demanded amounting to Rs.2,95,490/- without giving credit for the tax deducted at source on compensation.
It was found that the petitioner had earlier moved a rectification application under Section 154 of the Act, which was disposed of via an order dated 15.02.2022, whereby demand for the AY in issue i.e., 2020-21 was scaled down to Rs.16,440/-.
Although the rectification application seeks credit for tax deducted at source vis-à-vis interest, it appears the petitioner has already received the same.
A two-judge bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia disposed of the writ petition with the directions to Jurisdictional Assessing Officer (JAO) to render a decision on the pending rectification application dated 18.08.2022.
To Read the full text of the Order CLICK HERE
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