GANAPATI S/O SUBRAY HEGDE V. COMMISSIONER OF INCOME TAX (TDS)

WP/102616/2015

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The case involves Ganapati S/o Subray Hegde, the petitioner, who sought a refund of Rs.4,31,351 deducted as tax from compensation for agricultural land acquired for a Hydro Electric Project by Karnataka Power Corporation Ltd. The petitioner argued that the tax deduction was not applicable on the compensation for agricultural land, referencing previous court decisions that supported his claim. The respondents, however, cited a decision that allowed tax deduction on the interest portion of the compensation. The court found that while no tax should be deducted from the basic compensation, the interest portion might be subject to tax, requiring further verification by the Income Tax Authority.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 755389 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 17-06-2016
• Assessment Year: misc
• Other Referred Cases: Mysore Urban Development Authority by its Commissioner, the Chief Accounts Officer, Mysore Urban Development Authority and the Special Land Acquisition Officer, Mysore Urban Development Authority \/vs\/ The Income Tax Officer (TDS) and the Commissioner of Income Tax, Akkamma \/vs\/ Registral General, High Court of Karnataka, Bangalore, Guru Rao \/vs\/ State of Karnataka
• Laws Referred To: Articles 226 and 227 of the Constitution of India, Section 239 of the Income Tax Act
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: Y V RAGHURAJ; MRUTYUNJAYA HALLIKERI
• Assessee Lawyers: VISHWANATH HEGDE
• Keywords: Agricultural Land; Compensation for land acquisition; Mandamus; Refund; Tax deduction at source
• Section: 226; 239; 227

Judgement Text

"1 IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH DATED THIS THE 17TH DAY OF JUNE, 2016 BEFORE THE HON’BLE MR.JUSTICE A.S.BOPANNA WRIT PETITION No. 102616/2015 (T-IT) BETWEEN: GANAPATI S/O SUBRAY HEGDE AGE:80 YEARS, OCC. AGRICULTURE R/O R.H. CENTRE HALAVALLI PO. KALLESHWARA TQ. ANKOLA DIST. NORTH CANARA ... PETITIONER (BY SRI VISHWANATH R HEGDE, ADV.) AND : 1. COMMISSIONER OF INCOME TAX (TDS) ROOM NO.59 H.M.T. BHAVAN 4TH FLOOR, BELLARY ROAD GANGANAGAR, BENGALURU 2. KARNATAKA POWER CORPORATION LTD., REPRESENTED BY MANAGING DIRECTOR SHAKTI BHAVAN RACE COURSE ROAD BENGALURU ... RESPONDENTS (BY SRI Y V RAGHURAJ, ADV. FOR R1 SRI MRUTYUNJAYA S. HALLIKERI, ADV. FOR R2 ) 2 THIS PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING To; DIRECT RESPONDENTS NO.1 AND 2 TO REFUND Rs.4,31,351/- TO PETITIONER. IN THE ALTERNATIVE DIRECT THE RESPONDENTS 1 AND 2 TO CONSIDER APPLICATION DATED 31.12.2014 VIDE ANNEXURE-D. THIS PETITION COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER Learned counsel for respondent No.2 has filed the objection statement. The same is taken on record. 2. The petitioner is before this Court seeking issue of mandamus to direct respondents No.1 and 2 to refund Rs.4,31,351/- to the petitioner. In the alternative, the petitioner has sought for direction to respondents No. 1 and 2 to consider the application dated 31.12.2014 as at Annexure-D and pass appropriate orders in accordance with law. 3. The petitioner claims that he was the owner of the agricultural lands bearing Sy.No.108/2A2 3 measuring 1 acre 38 guntas and Sy.No.109-B measuring 3 acres 4 guntas of Birkol village, Joida Taluk. The said lands were acquired for the purpose of Hydro Electric Project. The compensation was determined in LAC No.257/2006. Respondent No.2 while disbursing the compensation amount has deducted a sum of Rs.4,31,351/- towards tax to be deducted at source. The grievance of the petitioner is that such tax was not deductable on the compensation payable on acquisition of agricultural land. 4. Learned counsel for the petitioner in that regard has relied on the decisions of this Court in the case of Mysore Urban Development Authority by its Commissioner, the Chief Accounts Officer, Mysore Urban Development Authority and the Special Land Acquisition Officer, Mysore Urban Development Authority –vs- The Income Tax Officer (TDS) and the Commissioner of Income Tax reported in 2008 (4) KCCR SN 247 and in the case of 4 Akkamma –vs- Registral General, High Court of Karnataka, Bangalore reported in KCCR-2011-1-58. In that view, it is contended that the amount deducted is to be refunded to the petitioner by respondent No.2. 5. The respondents have however relied on the decision of this Court in the case of Guru Rao –vs- State of Karnataka reported in ILR 2012 KAR 6485 wherein the issue relating to the deduction of the tax in respect of the interest portion payable on the compensation for acquisition of agricultural land has been considered by this Court. 6. In the light of the said decisions, there can be no dispute to the fact that insofar as the basic compensation amount as determined for the agricultural property, no tax would be payable. However, in respect of the interest portion, a consideration is required to be made by respondent No.2 and thereafter a decision is to be taken. 5 7. Therefore, in a circumstance where respondent No.2 has already deducted the amount and transmitted to respondent No.1 and issued Form No.16-A to the petitioner, at this stage, a direction to respondent No.2 to refund the amount would not arise. All that is necessary to be directed is that the petitioner shall file the necessary returns as contemplated under Section 239 of the Income Tax Act and in that light, the jurisdictional Competent Income Tax Authority shall verify the same and pass appropriate orders for refund if any, to the petitioner. Such procedure shall be followed in accordance with law and as expeditiously as possible. The petition is accordingly disposed of. Sd/- JUDGE hrp "