IN SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 15041 OF 2017 (Arising out of SLP (C) No. 28069 of 2010) UNION OF INDIA AND ORS. ... Appellants VERSUS HARI SINGH AND ORS. ... Respondents WITH Civil Appeal No. 15040/ 2017 (Arising out of SLP(C) No. 28070/2010) Civil Appeal No. 15042/ 2017 (Arising out of SLP(C) No. 227/2011) Civil Appeal No. 15043/ 2017 (Arising out of SLP(C) No. 20100/2012) Civil Appeal No. 15044/ 2017 (Arising out of SLP(C) No. 23614/2011) Civil Appeal No. 15045/ 2017 (Arising out of SLP(C) No. 13942/2011) Civil Appeal No. 15046/ 2017 (Arising out of SLP(C) No. 16832/2011) Civil Appeal No. 15047/ 2017 (Arising out of SLP(C) No. 18566/2011) Civil Appeal No. 15048/ 2017 (Arising out of SLP(C) No. 28127/2011) Civil Appeal No. 15070/ 2017 (Arising out of SLP(C) No. 19703/2011) Signature Not Verified Digitally signed by NIDHI AHUJA Date: 2017.10.07 Civil Appeal No. 15071/ 2017 12:13:51 IST Reason: (Arising out of SLP(C) No. 23602/2011) Civil Appeal No. 15073/ 2017 (Arising out of SLP(C) No. 22457/2011) 1 C.A. No. 15041/ 2017 (@ SLP (C) No. 28069/ 2010)etc. Civil Appeal No. 15072/ 2017 (Arising out of SLP(C) No. 22456/2011) Civil Appeal No. 15078/ 2017 (Arising out of SLP(C) No. 29048/2011) Civil Appeal No. 15074/ 2017 (Arising out of SLP(C) No. 22459/2011) Civil Appeal No. 15075/ 2017 (Arising out of SLP(C) No. 26558/2011) Civil Appeal No. 15092/ 2017 (Arising out of SLP(C) No. 31941/2013) Civil Appeal No. 15076/ 2017 (Arising out of SLP(C) No. 27268/2011) Civil Appeal No. 15081/ 2017 (Arising out of SLP(C) No. 29050/2011) Civil Appeal No. 15080/ 2017 (Arising out of SLP(C) No. 29049/2011) Civil Appeal No. 15077/ 2017 (Arising out of SLP(C) No. 27269/2011) Civil Appeal No. 15079/ 2017 (Arising out of SLP(C) No. 30287/2012) Civil Appeal No. 15083/ 2017 (Arising out of SLP(C) No. 33942/2011) Civil Appeal No. 15082/ 2017 (Arising out of SLP(C) No. 30644/2011) Civil Appeal No. 15085/ 2017 (Arising out of SLP(C) No. 10186/2012) Civil Appeal No. 15093/ 2017 (Arising out of SLP(C) No. 25873/2013) Civil Appeal No. 15039/ 2017 (Arising out of SLP(C) No. 34011/2011) Civil Appeal No. 15084/ 2017 (Arising out of SLP(C) No. 226/2012) Civil Appeal No. 15088/ 2017 (Arising out of SLP(C) No. 11465/2012) 2 C.A. No. 15041/ 2017 (@ SLP (C) No. 28069/ 2010)etc. Civil Appeal No. 15087/ 2017 (Arising out of SLP(C) No. 224/2012) Civil Appeal No. 15086/ 2017 (Arising out of SLP(C) No. 225/2012) Civil Appeal No. 15089/ 2017 (Arising out of SLP(C) No. 2734/2012) Civil Appeal No. 15094/ 2017 (Arising out of SLP(C) No. 19887/2014) W.P.(C) No. 590/2016 W.P.(C) No. 405/2017 (X) Civil Appeal No. 15145/ 2017 (Arising out of SLP(C) No. 18495/2017) O R D E R Leave granted. In all these appeals short question of law which needs consideration is as to whether tax at source is to be deducted on amounts which are paid as compensation or enhanced compensation, etc., on account of compulsory acquisition of land under provisions of Land Acquisition Act, 1894. admitted fact which is common in all these appeals is that while disbursing compensation, Land Acquisition Collector had deducted tax at source and deposited same with Income Tax Department. These appellants preferred writ petition in High Court stating that no such deduction at source was permissible in 3 C.A. No. 15041/ 2017 (@ SLP (C) No. 28069/ 2010)etc. view of provisions of Section 194LA of Income Tax Act, 1961, since land which was acquired was agricultural land and this provision categorically mentions that in respect of agricultural land, tax at source is not to be deducted. There is no quarrel about position of law mentioned above. After examining this provision, High Court had passed order directing Income Tax Department to refund amount to Collector with direction to Collector to determine whether compensation is paid for property other than agricultural land or otherwise and whether deduction of tax at source was permissible under any provision of law. manner in which Land Acquisition Collector has to proceed further after determining aforesaid issue is contained in paragraph 8 of Writ Petition No. 9912 of 2009 decided on 11.01.2001, which is reproduced below: 8. Accordingly, we allow this petition and direct Income Tax Department to refund amount to collector within one month from date of receipt of copy of this order. Thereafter, Collector will determine whether compensation paid is for property other than agricultural land or otherwise and whether deduction of tax at source was permissible under any provision of law. Whether deduction is permissible or not will be decided by Collector within two months from date of receipt of copy of this order. If deduction is found not permissible amount will be refunded to petitioners not later than three months from receipt of copy of this order. It is made clear that this order will not affect right of income tax department to take such action as may be permissible under law. 4 C.A. No. 15041/ 2017 (@ SLP (C) No. 28069/ 2010)etc. Similar directions are given in other case as well. It is submitted by Mr. Maninder Singh, learned Additional Solicitor General, that direction to refund amount and calling upon Collector to determine as to whether compensation paid is for property other than agricultural land or not, is not in accordance with provisions of Income Tax Act. He submitted that matter should have been remitted to Assessing Officer to decide nature of land acquired in each case, inasmuch as, it is Assessing Officer who is to come to conclusion whether land is agricultural land or not keeping in view definition thereof as contained in Section 2(14)(iii) of Income Tax Act and other incidental provisions. He has also drawn our attention to judgment of Kerala High Court in case of 'Nalini v. Dy. Collector, Land Acquisition' [2006 (4) ILR Kerala 229] wherein High Court spelled out following modalities which should be undertaken in such cases. 6. learned counsel appearing for petitioner has argued that at present there is no practice of giving notice to party regarding his liability to pay income tax from amount of compensation awarded by Land Acquisition Officer. It is argued that parties are not even aware of any such deduction and there is no practice of issuing Tax Deduction Certificate by Land Acquisition Officer under relevant rules. It is argued that even when enhanced compensation is awarded by 5 C.A. No. 15041/ 2017 (@ SLP (C) No. 28069/ 2010)etc. court parties are not informed about quantum of income tax deducted and also no certificate is issued. It is not disputed by learned Senior Government Pleader that at present no notice is issued by Land Acquisition Officer to claimant informing him about liability to pay income tax. I am of view that it is only just and proper that parties are given advance notice regarding liability to pay income tax. Land Acquisition Officer can note this fact also, in notice issued to claimant under Section 9 of Land Acquisition Act. claimant shall be informed about this fact during award enquiry stage. In award, income tax deducted shall be separately shown. 7. If claimants are told about their liability to pay income tax before deducting same they will have option to get certificate of exemption from payment of tax, reduced rate of tax etc., from competent officer under Section 197 of Income Tax Act. So it is only just and proper that State Government issues necessary directions to Land Acquisition Officer to give notice regarding liability of claimants to pay income tax even before passing of award. Learned counsel appearing on behalf of respondents have submitted that in some of cases tax which was deducted has already been refunded to them. They have also referred to Circular dated 13.04.2011 issued by Department of Land Resources, Ministry of Rural Development, Government of India, on this subject and submitted that this Circular is binding on Income Tax Department. We find force in submission of learned Additional Solicitor General insofar as challenge to direction given to Land Acquisition Collector to determine as to whether land in question is agricultural land or not. Since Land Acquisition Collector had 6 C.A. No. 15041/ 2017 (@ SLP (C) No. 28069/ 2010)etc. already deducted tax at source and deposited with Income Tax Department, in such circumstances, better course of action, which is in consonance with provisions of Income Tax Act, is for respondents to approach concerned Assessing Officer(s) and to raise issue that no tax is payable on compensation/enhanced compensation which is received by them as their land was agricultural land. Once such issue is raised before Assessing Officer(s), it is for Assessing Officer(s) to examine facts of each case and then apply law as contained in Income Tax Act to determine aforesaid question. Insofar as these cases are concerned, we allow these appeals by setting aside directions contained in paragraph 7 and substitute same with following directions: (1) respondents shall file appropriate returns before Assessing Officer(s) in respect of Assessment Years in question within period of two months from today in case they feel that compensation in respect of land belonging to them which had been acquired was agricultural land, and claim refund of tax which was deducted at source and deposited with Income Tax Department. On filing of these returns, Assessing Officer(s) shall go into aforesaid question and wherever it is found that compensation was received in respect of 7 C.A. No. 15041/ 2017 (@ SLP (C) No. 28069/ 2010)etc. agricultural land, tax deposited with Income Tax Department shall be refunded to these respondents. (2) While determining as to whether compensation paid was for agricultural land or not, Assessing Officer(s) will keep in mind provisions of Section 28 of Land Acquisition Act and law laid down by this Court in 'Commissioner of Income Tax, Faridabad v. Ghanshyam (HUF)' [2009 (8) SCC 412] in order to ascertain whether interest given under said provision amounts to compensation or not. (3) direction to refund amount of Tax Deducted at Source (TDS) to Land Acquisition Collector is, accordingly, set aside. However, in those cases where amount has already been refunded, no interference is called for and it will be for Income Tax Department to proceed in accordance with provisions of Income Tax Act. (4) Where such notices have not already been issued or assessments have not already been made, if such action is taken within period of two months from today, issue of limitation would not come in way of Income Tax Department. This order is passed having regard to fact that present proceedings 8 C.A. No. 15041/ 2017 (@ SLP (C) No. 28069/ 2010)etc. were pending in this Court because of which it was not possible for Income Tax Department to issue these notices earlier. (5) In future, Land Acquisition Collectors shall follow procedure as stipulated by High Court of Kerala in Nalini's case, which is reproduced above. All these appeals and writ petitions are disposed of with aforesaid observations. ........................, J. [ A.K. SIKRI ] ........................, J. [ ASHOK BHUSHAN ] New Delhi; September 15, 2017. 9 C.A. No. 15041/ 2017 (@ SLP (C) No. 28069/ 2010)etc. ITEM NO.1 COURT NO.6 SECTION IV-B S U P R E M E C O U R T O F I N D I RECORD OF PROCEEDINGS Petition(s) for Special Leave to Appeal (C) No. 28069/2010 (Arising out of impugned final judgment and order dated 11-01-2010 in CWP No. 10123/2009 passed by High Court of Punjab & Haryana at Chandigarh) UNION OF INDIA AND ORS. Petitioner(s) VERSUS HARI SINGH AND ORS. Respondent(s) WITH SLP(C) No. 28070/2010 (IV-B) SLP(C) No. 227/2011 (IV-B) SLP(C) No. 20100/2012 (IV-B) SLP(C) No. 23614/2011 (IV-B) SLP(C) No. 13942/2011 (IV-B) SLP(C) No. 16832/2011 (IV-B) SLP(C) No. 18566/2011 (IV-B) SLP(C) No. 28127/2011 (IV-B) SLP(C) No. 19703/2011 (IV-B) SLP(C) No. 23602/2011 (IV-B) SLP(C) No. 22457/2011 (IV-B) SLP(C) No. 22456/2011 (IV-B) SLP(C) No. 29048/2011 (IV-B) SLP(C) No. 22459/2011 (IV-B) SLP(C) No. 26558/2011 (IV-B) SLP(C) No. 31941/2013 (IV-B) SLP(C) No. 27268/2011 (IV-B) SLP(C) No. 29050/2011 (IV-B) SLP(C) No. 29049/2011 (IV-B) SLP(C) No. 27269/2011 (IV-B) (With IA 3/2017 - FOR SUBSTITUTION, IA 4/2017 - FOR CONDONATION OF DELAY IN FILING SUBSTITUTION APPLN. and IA 5/2017 - FOR EXEMPTION FROM FILING O.T.) SLP(C) No. 30287/2012 (IV-B) SLP(C) No. 33942/2011 (IV-B) SLP(C) No. 30644/2011 (IV-B) SLP(C) No. 10186/2012 (IV-B) SLP(C) No. 25873/2013 (IV-B) SLP(C) No. 34011/2011 (IV-B) SLP(C) No. 226/2012 (IV-B) SLP(C) No. 11465/2012 (IV-B) SLP(C) No. 224/2012 (IV-B) 10 C.A. No. 15041/ 2017 (@ SLP (C) No. 28069/ 2010)etc. SLP(C) No. 225/2012 (IV-B) SLP(C) No. 2734/2012 (IV-B) SLP(C) No. 19887/2014 (IV-B) W.P.(C) No. 590/2016 (X) W.P.(C) No. 405/2017 (X) (With IA No.46762/2017-INTERVENTION/IMPLEADMENT, IA No.46119/2017-CLARIFICATION/DIRECTION and IA No.46763/2017-CLARIFICATION/DIRECTION) SLP(C) No. 18495/2017 (III) (With IA No.51421/2017-CONDONATION OF DELAY IN FILING) Date : 15-09-2017 These matters were called on for hearing today. CORAM : HON'BLE MR. JUSTICE A.K. SIKRI HON'BLE MR. JUSTICE ASHOK BHUSHAN For Parties Mr. Karan Dewan, Adv. Ms. Aanchal Jain, Adv. Mr. Rahul Gupta, AOR Mr. Munawwar Naseem, AOR Mr. Hizab Fatima, Adv. Mr. A. Tewari, Adv. Ms. Eliza bar, Adv. Mr. Shree Pal Singh, AOR Mr. Sangram S. Saron, Adv. Dr. Monika Gusain, Adv. Mr. Manik Garg, Adv. Mr. Maninder Singh, ASG. Mr. Shekhar Vyas, Adv. Mr. H. R. Rao, Adv. Mr. Prabhas Bajaj, Adv. Mr. Akshay Amritanshu, Adv. Ms. Anil Katiyar, AOR Mr. Ashu Bhatiya, Adv. Mr. Anantha Narayana, Adv. Ms. Noopur Singhal, Adv. Mr. Piyush Hans, Adv. Mr. Manik Garg, Adv. Mr. Sanjay Kumar Visen, AOR Mr. Hiren Dasan, Adv. Mr. Rajnish Gupta, Adv. Mr. Chand Qureshi, Adv. 11 C.A. No. 15041/ 2017 (@ SLP (C) No. 28069/ 2010)etc. Ms. Sarla Chandra, AOR Mr. Vikas Mehta, Adv. Ms. Anushree M., Adv. Ms. Kiran Suri, Sr. Adv. Mr. S. J. Amith, Adv. Mr. Satish Kumar Gupta, Adv. Ms. Prem Lata, Adv. Dr. (Mrs. ) Vipin Gupta, AOR Mr. Jasbir Singh Malik, Adv. Ms. Usha Nandini. V, AOR Mr. B. V. Balaram Das, AOR Mr. Kamal Mohan Gupta, AOR Mr. Anil Kumar Tandale, AOR Ms. Anubha Agrawal, AOR Mr. Ansar Ahmad Chaudhary, AOR Mr. Ardhendumauli Kumar Prasad, AOR Ms. Anantha Narayana M.g., AOR UPON hearing counsel Court made following ORDER Delay condoned. Leave granted. appeals and writ petitions are disposed of in terms of signed order. Applications for impleadment/ intervention/ substitution are allowed. Pending applications stand disposed of. (NIDHI AHUJA) (MALA KUMARI SHARMA) COURT MASTER COURT MASTER [Signed order is placed on file.] 12 Union of India and Ors. v. Hari Singh and Or