Law:

Section:

Section 2(14)(iii) of the Income-tax Act, 1961 - Capital asset - Agricultural land - Whether sub-clause (iii) of clause (14) of section 2 is ultra vires - Held, no Section 2(1A) of the Income-tax Act, 1961 - Agricultural income - Whether amounts received as compensation consequent to compulsory acquisition of agricultural land specified under section 2(14)(iii) is not agricultural income but capital gain and exigible to income-tax - Held, yes - Whether interest paid/payable for paying compensation belatedly is agricultural income - Held, no Section 194A of the Income-tax Act, 1961 - Deduction of tax at source - Interest other than interest on securities - Whether provisions of section 194A apply to interest paid/payable for paying compensation for acquisition of land as falls under section 2(14)(iii) belatedly - Held, yes Section 4 of the Income-tax Act, 1961 - Income - Chargeable as - Whether amount received as interest on amount of compensation assessed under Land Acquisition Act, 1894, or under Requisition and Acquisition of Immovable Property Act is income taxable under the Income-tax Act - Held, yes Interpretation of statutes - Rule of liberal construction FACTS Extensive agricultural land was acquired under the Land Acquisition Act after due process of law. The Land Acquisition Collector gave his award assessing the market value of the land. The District Court, however, enhanced the compensation. The claimants/land holders were awarded solatium and also interest. On further appeal to the High Court the compensation and interest payable were determined. The claimants received compensation. They were, however, not required to pay any income-tax on the amount so received as also on interest. Notices under section 194A were issued to the land owners wherein they all had been informed that certain amount was required to be deducted on account of income-tax on the amount of interest received by them. It also laid that all such persons/claimants were required to deposit the amount mentioned in such cases towards the amount of income-tax chargeable on the amount of interest so received by them. On writ, the petitioners challenged the said notices. They also…

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