The Land Acquisition Collector, Jalandhar V. The Income Tax Officer, TDS-II, Jalandhar

ITA 93/ASR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9570 (ITAT-AMRITSAR)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 30-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 15-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKER
• Assessee Lawyers: ASHWANI GUPTA
• Keywords: Recovery proceedings; Non-deduction of tax
• Section: 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. (CAMPT AT JALANDHAR) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO.93ASR)/2016 ASSESSMENT YEAR:2008-09 PAN : AAATJ4768N THE LAND ACQUISITION COLLECTOR, VS. INCOME TAX OFFI CER, JALANDHAR IMPROVEMENT TRUST, TDS-II, JALANDHAR. JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH.ASHWANI GUPTA, RESPONDENT BY: BHAWANI SHANKER DATE OF HEARING: 30/06/2016 DATE OF PRONOUNCEMENT: 15/09/2016 ORDER PER T.S. KAPOOR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD. CIT(A)-2, JALANDHAR, RELATING TO ASSESSMENT YEAR 20 08-09. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1 THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS MISDIRECTED HIMSELF IN LAW, IN SUSTA INING THE ORDER OF THE ITO, TDS-II, JALANDHAR BY UPHOLDING TH AT AO IS FULLY JUSTIFIED IN CREATING DEMAND OF RS.44,432/- U /S 201(1A) OF THE ACT FOR FAILURE ON THE PART OF THE DEDUCTOR- ASSESSEE TO DEPOSIT TDS DEDUCTED ON INTEREST PAYMENTS. 2. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES IN REJECTING THE CONTENTION THAT PAYM ENTS MADE ON ACCOUNT OF INTEREST ON COMPENSATION AND ENH ANCED COMPENSATION ARE NOT PAYMENTS OF INTEREST U/S 194A OF THE ITA NO. 93/ASR/2016 A.Y. 2008-09 2 ACT, LIABLE FOR TDS, AS PER ESTABLISHED LAW OF HON BLE APEX COURT. 3. THAT WITHOUT PREJUDICE TO ABOVE, THE LD. CIT(A) HAS GROSSLY ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES IN NOT APPRECIATING THE FACT THAT PR HAS DEPOSITED THE TA X IN GOVERNMENT UPON THE PAYMENT BY COURT TO PAYEES, WHE N THE MANDATORY PARTICULARS OF PAN WAS MADE AVAILABLE BY PAYEES AND PR WAS NOT ASSESSEE IN DEFAULT. 4. THAT THE ORDERS AND FINDINGS OF AUTHORITIES BELO W, TO THE EXTENT DISPUTED HEREIN ABOVE, ARE AGAINST LAW AND F ACTS OF THE CASE. 5. THAT THE APPELLANT ASSESSEE CRAVES THE RIGHT TO AMEND, ADD OR ALTER ANY GROUND OF APPEAL BEFORE THE APPEAL IS FINALLY DISPOSED OFF. 2. THE BRIEF FACTS, AS NOTED IN THE ASSESSMENT ORDE R ARE THAT THE ASSESSEE IS A LAND ACQUISITION COLLECTOR, WHO IS PE RSON RESPONSIBLE (IN SHORT, PR) FOR DEDUCTION OF TAX ON PAYMENTS MADE BY IT FOR ACQUISITION OF LAND. THE OFFICE OF THE PR WAS SURVEYED AND DURING INSPECTION, IT WAS OBSERVED THAT THE ASSESSEE HAD ACQUIRED LAND MEASUR ING 94.5 ACRES AND 70.5 ACRES AND IN A NUMBER OF CASES, THE PAYMENT OF ENHANCED COMPENSATION WAS MADE CONSEQUENT UPON THE ORDERS OF THE COURT AS THE ASWARDEES HAD FILED COURT CASES. THE COMPENSATION SO ALLOWED WAS DEPOSITED WITH THE COURT AND TAX WAS DEDUCTED FRO M INTEREST AT THE TIME OF MAKING THE PAYMENT TO THE COURT. HOWEVER, T HE SAID TAX WAS DEPOSITED IN GOVERNMENT ACCOUNT AT THE TIME WHEN TH E PAYMENT WAS DISBURSED BY THE COURT TO THE RESPECTIVE PERSONS. T HE ASSESSEE WAS SHOW CAUSED AS TO WHY INTEREST ON ENHANCED COMPENSATION WAS DEPOSITED WITH THE GOVERNMENT AT THE TIME OF DISBURSEMENT OF COMPENSATION BY ITA NO. 93/ASR/2016 A.Y. 2008-09 3 THE COURT AND NOT AT THE TIME OF DEPOSIT OF AMOUNT WITH THE COURT. THE ASSESSEE SUBMITTED THAT THE COMPENSATION MONEY WAS DEPOSITED IN THE COURT AS TRUST MONEY FOR PAYMENT TO ACTUAL OWNERS/ PAYEES AND TDS WAS DEDUCTED WITHIN TIME PRESCRIBED WHEN THE COURT ISSUED CHEQUES TO THE ACTUAL OWNERS. IT WAS FURTHER SUBMITTED THAT WH EN THERE IS NO PAYMENT TO THE PAYEES/DEDUCTEES AND HENCE, THERE IS NO LIABILITY TO DEPOSIT OF TDS AT THAT POINT OF TIME. IT WAS FURTH ER SUBMITTED THAT THE ISSUE OF ONE CONSOLIDATED CHEQUE TO COMPLY WITH T HE LEGAL FORMALITIES CANNOT BE CONSTRUED AS PAYMENT TO THE PAYEE/LAND OW NER IN ANY CIRCUMSTANCES. HOWEVER, THE AO WAS NOT SATISFIED WI TH THE SUBMISSIONS OF THE ASSESSEE AND RELYING UPON THE DECISION OF T HE HONBLE PUNJAB & HARYANA HIGH COURT, IN THE CASE OF BALDEEP SINGH V S. UNION OF INDIA, REPORTED AT 199 ITR 628, HELD THAT TAX WAS TO BE DE DUCTED BY THE SAID OFFICER WHEN HE DEPOSITED THE MONEY WITH THE COUR T. IN VIEW OF THE JUDGMENT OF HONBLE P & H HIGH COURT, THE AO HELD T HAT THE DATE OF PAYMENT BY THE COURT WAS NOT MATERIAL, AS THE COUR T WAS NOT A PERSON RESPONSIBLE. THE AO ALSO RELIED UPON THE CBDT CIRCU LAR NO.526, DATED 05.12.1988 FOR THE PROPOSITION THAT THE PERSON RESP ONSIBLE SHALL, AT THE TIME OF CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF CHEQUES OR D RAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT INCOME TAX THERE ON AT THE RATES IN FORCE. KEEPING IN VIEW THE ABOVE, THE AO CREATED DE MAND OF RS.44832/-. ITA NO. 93/ASR/2016 A.Y. 2008-09 4 3. AGGRIEVED WITH THE ORDER, THE ASSESSEE FILED APP EAL BEFORE THE LD. CIT(A) AND MADE VARIOUS SUBMISSIONS BEFORE THE LD. CIT(A). IT WAS ALSO SUBMITTED BEFORE THE LD. CIT(A) THAT THE INTEREST P AYMENT ON ENHANCED COMPENSATION WAS NOT A INTEREST AND IN FACT A PART OF COMPENSATION AND THEREFORE, TAX WAS NOT LIABLE TO BE DEDUCTED. 4. THE LD. CIT(A), HOWEVER, REJECTED THE CONTENTION S OF THE ASSESSEE BY HOLDING AS UNDER: 5.2. I HAVE CONSIDERED THE OBSERVATIONS OF THE ASS ESSING OFFICER ON THE ISSUE UNDER REFERENCE AS MADE BY HIM IN THE ORD ER UNDER APPEAL. I HAVE ALSO CONSIDERED WRITTEN SUBMISSIONS FILED BY THE LD. AR OF THE DEDUCTOR-ASSESSEE VIDE LETTER DATED 01.12.2015. I H AVE FURTHER CONSIDERED VARIOUS JUDICIAL PRONOUNCEMENTS RELIED U PON BY THE LD. AR OF THE DEDUCTOR-ASSESSEE AS WELL AS OTHER DOCUME NTS BROUGHT BY THE DEDUCTOR-ASSESSEE ON RECORD. ON CAREFUL CONSIDE RATION OF THE RIVAL CONTENTIONS, IT HAS BEEN NOTICED THAT THE LD. AR OF THE DEDUCTOR- ASSESSEE AFTER RELYING ON VARIOUS JUDICIAL PRONOUNC EMENT OF VARIOUS COURTS INCLUDING APEX COURT HAS DENIED ITS LIABILIT Y EVEN TO DEDUCT TAX AT SOURCE ON INTEREST PAYMENTS AS IN HIS OPINION TH E INTEREST PAYMENT ON ENHANCED COMPENSATION IS NOT AN INTEREST WHICH WILL ATTRACT PROVISIONS OF SECTION 194A OF THE ACT. IN H IS OPINION, THE INTEREST ON ENHANCED COMPENSATION IS ALSO COMPENSAT ION AND CANNOT BE TERMED AS INTEREST WHICH WILL ATTRACT PROVISIONS OF SECTION 194A OF THE ACT. ON CAREFUL CONSIDERATION OF THE SUBMISSION S OF THE ASSESSEE, I AM OF THE OPINION THAT THE JUDICIAL PRONOUNCEMENT S RELIED UPON BY THE LD. AR OF THE DEDUCTOR-ASSESSEE HAVE ENTIRELY D IFFERENT FACTS FROM THE FACTS OF THE CASE OF DEDUCTOR-ASSESSEE AS THE ISSUE BEFORE THE HONORABLE COURTS WERE DIFFERENT FROM THAT OF TH E ISSUE INVOLVED IN THE CASE OF THE DEDUCTOR-ASSESSEE. MOREOVER, THE DE CISIONS RELIED UPON BY THE ASSESSING OFFICER ARE DIRECTLY ON THE I SSUE UNDER REFERENCE R JIT CANNOT HE DENIED THAT THE DEDUCTOR-ASSESSEE PAI D INTEREST PAYMENTS ON ENHANCED COMPENSATION AND ALSO DEDUCTED TAX WHILE DEPOSITING THE AMOUNT WITH THE HONORABLE COUR T. THE CONTENTION OF THE LD. AR OF THE DEDUCTOR-ASSESSEE I S NEGATED BY THE ACTION OF THE DEDUCTOR-ASSESSEE HIMSELF. AS THE INT EREST ON ENHANCED COMPENSATION IS TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES, PROVISIONS OF SECTION 194A OF THE ACT ARE CLEARLY A TTRACTED ON INTEREST PAYMENTS ON ENHANCED COMPENSATION. IN SUCH CIRCUMST ANCES, NO FAULT CAN BE FOUND IN THE ORDER OF THE ASSESSING OF FICER VIDE WHICH A DEMAND OF RS.44,432/- UNDER SECTION 201(1 A) OF THE ACT HAS BEEN ITA NO. 93/ASR/2016 A.Y. 2008-09 5 RAISED AGAINST THE DEDUCTOR-ASSESSEE. MOREOVER, THE DEDUCTOR- ASSESSEE COULD NOT REBUT THE BINDING DECISIONS OF T HE HONORABLE PUNJAB & HARYANA HIGH COURT WHICH HAS BEEN RELIED U PON BY THE ASSESSING OFFICER AND IS DIRECTLY ON THE ISSUE UNDE R REFERENCE. 5.3. IN VIEW OF THE ABOVE STATED FACTS AND IN THE C IRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT THE A.O. IS FULL Y JUSTIFIED IN CREATING DEMAND OF RS.44,432/- UNDER SECTION 10(1A) OF THE A CT IN THIS CASE FOR FAILURE ON THE PART OF THE DEDUCTOR-ASSESSEE TO DEPOSIT THE TDS DEDUCTED BY HIM ON INTEREST PAYMENTS. THE DEMAND OF RS.44,432/- CREATED IN THIS CASE IS, THEREFORE, UPHELD. IN THE RESULT, THE GROUNDS NO. 1, 2 & 3 OF APPEAL TAKEN BY THE DEDUCTOR-ASSESS EE ARE DISMISSED. 5. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 6. BEFORE US ALSO, THE ASSESSEE SUBMITTED THAT THE COMPENSATION AND ENHANCED COMPENSATION WAS GOVERNED BY THE PROVISIO NS OF LAND ACQUISITION ACT, 1894 AND AS PER PROVISIONS OF SEC TION 23 & 28, THE INTEREST IS ONLY ACCRETION TO LAND VALUE, LIABLE TO CAPITAL GAINS AND RELIANCE IN THIS RESPECT WAS PLACED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. GHANSHYAM, HUF , IN CIVIL APPEAL NO.4401 OF 2009, DATED 16.07.2009. FURTHER RELIANC E WAS PLACED ON THE FOLLOWING CASE LAWS, WHEREIN THE AFORESAID DECISION OF THE HONBLE SUPREME COURT WAS FOLLOWED: I) STATE OF PUNJAB V. AMARJIT SINGH, DATED 08.02.20 11 (COPY OF ORDER PLACED ON PB 22 TO 24) II) BALDEV SINGH VS. INCOME TAX OFFICER AND OTHERS, DATED 02.02.2016 OF ITAT, CHANDIGARH BENCH, PASSED IN IT A NOS. 313, 314, 315/CHD/2015 (COPY PLACED AT PB 25 TO 34) . ITA NO. 93/ASR/2016 A.Y. 2008-09 6 III) BIKRAM SINGH AND OTHERS VS. LAND ACQUISITION C OLLECTOR AND OTHERS (SC), 224 ITR 551 (SC) 7. ALTERNATIVELY, IT WAS ARGUED THAT THE PAYMENT OF COMPENSATION WAS DEPOSITED WITH THE COURT BY CONSOLIDATED CHEQUE AF TER DEDUCTION OF AMOUNT EQUAL TO TAX DEDUCTED AT SOURCE AND FOR PAYM ENT DEPOSITED WITH THE COURT IS NEITHER THE PAYMENT TO BENEFICIARY NOR CREDIT TO ACCOUNT OF BENEFICIARY. THEREFORE, THE ASSESSEE WAS NOT REQUIR ED TO DEDUCT TAX AT SOURCE AT ALL. RELIANCE IN THIS RESPECT WAS PLACED ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF UCO BANK V. UNION OF INDIA & ORS. IN W.P.(C) 3563/2012 & CM NO.7517/2012, DATED 11.11.2014 (COPY OR ORDER PLACED AT PB 38 TO 51) 8. IN VIEW OF THE ABOVE SUBMISSIONS, THE LD. COUNSE L FOR THE ASSESSEE PRAYED THAT THE ADDITION SUSTAINED BY THE LD. CIT(A ) BE DELETED. 9. THE LD. DR, ON THE OTHER HAND, HEAVILY PLACED RE LIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE GO NE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT INTEREST PAID UNDER SECTION 28 OF THE LAND ACQUISITION ACT, 1894 IS NECESSARILY A PART OF COMPENSATION WHEREAS INTEREST UNDER SECTION 34 FOR DELAY IN MAKI NG PAYMENT IS TAXABLE AS INTEREST. IN THE PRESENT CASE, IT IS NOT CLEAR A S TO WHETHER INTEREST UNDER DISPUTE IS UNDER SECTION 28 OR UNDER SECTION 34. IF THE INTEREST IS UNDER SECTION 28 THEN NECESSARILY THE INTEREST PORT ION IS PART OF COMPENSATION AND WHEREAS IF INTEREST HAS BEEN PAID U/S 34, THE AMOUNT IS NECESSARILY THE INTEREST WHICH REQUIRED TAX DEDU CTION AT SOURCE. THERE, ITA NO. 93/ASR/2016 A.Y. 2008-09 7 THE FIRST LIMB OF ARGUMENT OF THE LD. COUNSEL FOR T HE ASSESSEE CANNOT BE ADJUDICATED IN VIEW OF THE FACT THAT THE NATURE OF INTEREST IS NOT APPARENT FROM THE MATERIAL ON RECORD. HOWEVER, THE ALTERNATI VE ARGUMENT OF THE ASSESSEE THAT THE DEPOSIT OF COMPENSATION WITH THE COURT IS NEITHER PAYMENT TO BENEFICIARY NOR CREDIT TO THE ACCOUNT O F THE BENEFICIARY, THEREFORE, WAS NOT LIABLE TO TAX DEDUCTION AT SOURC E CAN BE ADJUDICATED. WE FIND IT IS A FACT THAT THE AMOUNT OF COMPENSATIO N WAS DEPOSITED WITH THE COURT AND THE ACTUAL NAMES OF THE PAYEES AND TH EIR PAN WERE NOT AVAILABLE WITH THE PERSON RESPONSIBLE AND MOREOVER, THE DEPOSIT OF COMPENSATION WITH THE COURT CANNOT BE SAID TO BE P AYMENT TO THE BENEFICIARY. THE LD. COUNSEL FOR THE ASSESSEE HAS P LACED RELIANCE ON THE CASE OF HONBLE DELHI HIGH COURT IN THE CASE OF UCO BANK VS. UNION OF INDIA & ORS. (SUPRA). IN THIS CASE AT THE DI RECTIONS OF THE COURT FIXED DEPOSITS WERE MADE IN THE NAME OF THE REGISTR AR GENERAL OF COURT AND BANK ISSUED FIXED DEPOSITS RECEIPT. THE BANK D ID NOT DEDUCT TAX AT SOURCE ON THE INTEREST ACCRUED ON THESE FIXED DEPOS ITS AND THEREFORE, THE PROCEEDINGS WERE INITIATED AGAINST THE BANK FO R NON-DEDUCTION OF TAX. THE BANK ULTIMATELY FILED WRIT PETITION WI TH THE HONBLE DELHI HIGH COURT AND THE HONBLE DELHI HIGH COURT HAS HELD THAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT TDS, AS THE REG ISTRAR GENERAL OF COURT WAS NOT A PAYEE UNDER SECTION 194A OF THE ACT . THE HONBLE HIGH COURT HAS HELD THAT THE REGISTRAR GENERAL OF COURT WAS NEITHER THE RECIPIENT OF THE AMOUNT CREDITED TO THE ACCOUNT NO R WAS RECIPIENT OF ITA NO. 93/ASR/2016 A.Y. 2008-09 8 INTEREST ACCRUING THEREON. THEREFORE, IT WAS HELD THAT THE REGISTRAR GENERAL CANNOT BE CONSIDERED AS A PAYEE FOR THE P URPOSES OF SECTION 194A OF THE ACT. THE RELEVANT FINDINGS OF THE HONB LE COURT, AS CONTAINED IN PARAS 19 TO 23 ARE REPRODUCED AS UNDER: 19. THE REGISTRAR GENERAL OF THIS COURT IS, CLEARLY, NO T THE RECIPIENT OF THE INCOME REPRESENTED BY INTEREST THAT ACCRUES ON THE DEPOSITS MADE IN HIS/HER NAME. THE REGISTRAR GENERAL IS ALSO NOT AN ASSESSEE IN RESPECT OF THE DEPOSITS MADE WITH THE P ETITIONER BANK PURSUANT TO THE ORDERS OF THIS COURT. THE DEPOSITS KEPT WITH THE PETITIONER BANK UNDER THE ORDERS OF THIS COURT ARC, ESSENTIALLY, FUNDS WHICH ARE CUSTODIA LEGIS, THAT IS, FUNDS IN THE CUS TODY OF THIS COURT. THE INTEREST ON THAT ACCOUNT - ALTHOUGH CREDITED IN THE NAME OF THE REGISTRAR GENERAL - ARE ALSO FUNDS THAT REMAIN UNDE R THE CUSTODY OF THIS COURT. THE CREDIT OF INTEREST TO SUCH ACCOUNT IS, THUS, NOT A CREDIT TO AN ACCOUNT OF A PERSON WHO IS LIABLE TO BE ASSES SED TO TAX. IN THIS VIEW, THE PETITIONER WOULD HAVE NO OBLIGATION TO DE DUCT TAX, BECAUSE AT THE TIME OF CREDIT THERE IS NO PERSON ASSESSABLE IN RESPECT OF THAT INCOME WHICH MAY BE REPRESENTED BY THE INTEREST ACC RUED/PAID IN RESPECT OF THE DEPOSITS. THE WORDS CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OCCURRING IN SECTION 194A OF THE ACT HAVE TO BE ASCRIBED A MEANING IN CONFORMITY WITH THE SCHEME OF THE ACT AND THAT WOULD NECESSARILY IMPLY THAT DEDUCTION OF TAX BEARS NEXUS WITH THE INCOME OF AN ASSESSEE. 20. IN ABSENCE OF AN ASSESSEE, THE MACHINERY OF PR OVISIONS FOR DEDUCTION OF TAX TO HIS CREDIT ARE INEFFECTIVE. THE EXPRESSION PAYEE UNDER SECTION 194A OF THE ACT WOULD MEAN THE RECIPI ENT OF THE INCOME WHOSE ACCOUNT IS MAINTAINED BY THE PERSON PA YING INTEREST. IN THE PRESENT CASE, ALTHOUGH THE FD IS MADE IN THE NAME OF THE REGISTRAR GENERAL, THE ACCOUNT REPRESENTS FUNDS WHI CH ARE IN CUSTODY OF THIS COURT AND THE REGISTRAR GENERAL IS NEITHER THE RECIPIENT OF THE AMOUNT CREDITED TO THAT ACCOUNT NO R THE INTEREST ACCRUING THEREON. THEREFORE, THE REGISTRAR GENERAL CANNOT BE CONSIDERED AS A PAYEE FOR THE PURPOSES OF SECTION 194A OF THE. ACT. THE CREDIT BY THE PETITIONER BANK IN THE NAME OF TH E REGISTRAR GENERAL WOULD, THUS, NOT ATTRACT THE PROVISIONS OF SECTION 194 A OF THE ACT. ALTHOUGH, SECTION 190(1) OF THE ACT CLARIF IES THAT DEDUCTION OF TAX CAN BE MADE PRIOR TO THE ASSESSMENT YEAR OF REG ULAR ASSESSMENT, NONETHELESS THE SAME WOULD NOT IMPLY TH AT DEDUCTION OF TAX IS MANDATORY EVEN WHERE IT IS KNOWN THAT THE PAYEE IS NOT THE ASSESSEE AND THERE IS NO OTHER ASSESSEE. ITA NO. 93/ASR/2016 A.Y. 2008-09 9 20. IT IS RELEVANT TO NOTE THAT THERE IS NO ASSESS EE TO WHOM INTEREST INCOME FROM THE DEPOSITS IN QUESTION CAN B E ASCRIBED; NO PERSON CAN FILE A RETURN CLAIMING THE INTEREST PAYA BLE BY THE PETITIONER AS INCOME. THE NECESSARY IMPLICATION OF THIS SITUATION IS RECOVERY OF TAX WITHOUT THE CORRESPONDING INCOME BE ING ASSESSED IN THE HANDS OF ANY ASESSEE. THE ULTIMATE RECIPIENT OF THE FUNDS FROM THE FD WOULD ALSO NOT BE ABLE TO AVAIL OF THE CREDI T OF TDS. IT IS APPARENT THAT IN ABSENCE OF AN ASCERTAINABLE ASSESS EE THE MACHINERY OF RECOVERING TAX BY DEDUCTION OF TAX AT SOURCE BREAKS DOWN BECAUSE IT DOES NOT AID THE CHARGE OF TAX UNDE R SECTION 4 OF THE ACT BUT TAKES A FORM OF A SEPARATE LEVY, INDEPE NDENT OF OTHER PROVISIONS OF THE ACT. THIS IS, CLEARLY, IMPERMISSI BLE. 21. THE IMPUGNED CIRCULAR PROCEEDS ON AN ASSUMPTIO N THAT THE LITIGANT DEPOSITING THE MONEY IS THE ACCOUNT HOLDER WITH THE PETITIONER BANK AND/OR IS THE RECIPIENT OF THE INCO ME REPRESENTED BY THE INTEREST ACCRUING THEREON. THIS ASSUMPTION IS F UNDAMENTALLY ERRONEOUS AS THE LITIGANT WHO IS ASKED TO DEPOSIT T HE MONEY IN COURT CEASES TO HAVE ANY CONTROL OR PROPRIETARY RIGHT OVE R THOSE FUNDS. THE AMOUNT DEPOSITED VESTS WITH THE COURT AND THE DEPOS ITOR CEASES TO EXERCISE ANY DOMINION OVER THOSE FUNDS. IT IS ALSO NOT NECESSARY THAT THE LITIGANT WHO DEPOSITS THE MONEY WOULD BE THE UL TIMATE RECIPIENT OF THOSE FUNDS. AS INDICATED EARLIER, THE PERSON WH O IS ULTIMATELY GRANTED THE FUNDS WOULD BE DETERMINED BY ORDERS THA T MAY BE PASSED SUBSEQUENTLY. AND AT THAT STAGE, UNDISPUTEDL Y, TAX WOULD BE REQUIRED TO BE DEDUCTED AT SOURCE TO THE CREDIT OF THE RECIPIENT. HOWEVER, THE LITIGANT WHO DEPOSITS THE FUNDS CANNOT BE STATED TO BE THE RECIPIENT OF INCOME FOR THE REASONS STATED ABOV E. 22. DEDUCTING TAX IN THE NAME OF THE LITIGANT WHO DEPOSITS THE FUNDS WITH THIS COURT WOULD ALSO CREATE ANOTHER ANO MALY BECAUSE THE AMOUNT DEDUCTED WOULD NECESSARILY LIE TO HIS CR EDIT WITH THE INCOME TAX AUTHORITIES. IN OTHER WORDS, THE TAX DED UCTED AT SOURCE WOULD REFLECT AS A TAX PAID BY THAT LITIGANT/DEPOSI TOR. HE, THUS, WOULD BE ENTITLED TO CLAIM CREDIT IN HIS RETURN OF INCOME. THE IMPLICATIONS OF THIS ARE THAT WHEREAS THIS COURT HA D REMOVED THE FUNDS FROM THE CUSTODY OF A LITIGANT/DEPOSITOR BY J UDICIAL ORDERS, A PART OF THE ACCRETION THEREON IS RECEIVED BY HIM BY WAY OF TAX DEDUCTED AT SOURCE. THIS IS CLEARLY IMPERMISSIBLE B ECAUSE IT WOULD RUN CONTRARY TO THE INTENT OF JUDICIAL ORDERS. 11. FOLLOWING THE RATIO OF THE ABOVE SAID JUDGMENT OF HONBLE DELHI HIGH COURT, WE HOLD THAT THE HONBLE COURT WITH WHO M COMPENSATION AMOUNT WAS DEPOSITED WAS NOT A PAYEE AND THEREFORE, THE ASSESSEE WAS ITA NO. 93/ASR/2016 A.Y. 2008-09 10 NOT LIABLE TO DEDUCT TAX AT THE TIME OF DEPOSIT OF COMPENSATION WITH THE COURT. THE ASSESSEE HAS RIGHTLY DEPOSITED THE AMOUN T OF TAX RETAINED BY IT AT THE TIME OF FINAL DISBURSEMENT BY THE COURT TO THE ACTUAL PAYEE. IN VIEW OF THE ABOVE, WE ARE IN AGREEMENT WITH GROUND NO. 3 TAKEN BY THE ASSESSEE AND ACCORDINGLY WE ALLOW THE APPEAL OF THE ASSESSEE. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15/09/201 6. SD/- SD/- (A.D. JAIN) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER /SKR/ DATED: 15/09/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:THE LAND ACQUISITION COLLECTOR, JALAND HAR IMPROVEMENT TRUST, JALANDHAR 2. THE ITO TDS-II, JLANDHAR. 3. THE CIT(A), JALANDHAR 4. THE CIT, JALANDHAR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.