In a recent ruling, the Income Tax Appellate Tribunal (ITAT), Delhi bench has held that no TDS can be levied on the enhanced compensation for the compulsory acquisition of the agricultural land. The Tribunal further directed the Assessing Officer to refund the TDS amount deducted by the department.
The assessee is an agriculturist and inherited land from his parents as an agricultural property. The land was acquired by the Government and the assessee had received enhanced compensation of Rs.4,69,20,146/- including interest. The assessee claimed exemption under section 10(37) of the Income-tax Act, 1961 and claimed refund of Rs.33,84,464/- in the return of income.
During the proceedings, the AO found that as per Form D issued by the Land Acquisition Officer, Panchkula, the assessee had received enhanced compensation of Rs.4,69,20,146/- which includes principal amount of Rs.2,70,33,074/- and interest amount of Rs.1,98,85,972/- from the LAO, Panchkula, during the year and on the enhanced compensation received, TDS amounting to Rs.93,84,030/- was deducted out of which amount of Rs.74,45,433/- was refunded to the assessee and credited in his account on 1.7.2011.
The Tribunal noticed that according to the decision of the Supreme Court in the case of Hari Singh that after examining the facts to apply the provisions contained in the Income-tax Act with a specific reference to the agricultural land stating that in case if it is found that the compensation was received in respect of the agricultural land, the tax deposited with the Income-tax Department shall be refunded to these depositors.
“When the Hon’ble Supreme Court specifically directs in the case of Hari Singh (supra), the learned AO shall examine the facts of the case and then apply the law as contained, CIT(A) has not stated that such an amount shall be brought to tax u/s 45(5) without applying the provisions under 10(37) of the Act, which exempts such receipts from being taxed. It could be noted that Section 45(5) makes no reference to the nature of property that is acquired but it deals with the category of cases which falls in the description of “capital assets”. However, Section 10(37) exempts specifically an income chargeable under the head “capital gains” arising from the transfer of agricultural land.”
“We, therefore, do not have any doubt in our mind as to the law in this aspect and while respectfully following the ratio laid down by the Hon’ble Supreme Court in the case of Ghanshyam and Hari Singh (supra) above, direct the ld. AO to refund the TDS amount that was deducted on account of the enhanced compensation. With these directions, we allow the appeal of the assessee,” the Tribunal said.
Subscribe Taxscan Premium to view the Judgment
