Law:

Section:

Section 194A of the Income-tax Act, 1961 - Deduction of tax at source - Interest other than interest on securities - Whether where land is compulsorily acquired and money to be paid as enhanced compensation, is deposited in execution Court and interest is awarded on such compensation, Court is not person responsible for paying any income by way of interest to assessee - Held, yes - Whether real person responsible for paying income by way of interest is Land Acquisition Officer or Collector who has money in his possession and is responsible for making payment of that income to assessee - Held, yes - Whether since Court is acting only as a conduit for getting payment made to claimant in execution of decree passed by Court, there is no liability of Court to deduct tax under section 194A - Held, yes HELD Under section 194A, tax deduction at source is permissible in respect of interest on compensation on compulsory acquisition of land and also accrued on enhanced compensation under section 18 of the Land Acquisition Act where the total income assessable to tax exceeds the taxable limit. Interest accrued after order from the date of delivery of possession of land till the date of order granting enhanced compensation and its yearwise break-up should be taken into account. [Para 8] This section has to be read in conjunction with section 204 which furnishes the meaning of 'person responsible for paying'. Where land is compulsorily acquired and the money to be paid as enhanced compensation is deposited in the execution Court and interest is awarded on such compensation, the Court is not the person responsible for paying any income by way of interest to the assessee. The real person responsible for paying income-tax by way of interest is the Land Acquisition Officer/Collector who has money in his possession and is responsible for making the payment of that income to the assessee. [Para 8] Thus : (a ) Under section 194A, the tax deduction at source is permissible in respect of interest accrued or interest payable on enhanced compensation under sections 18 and 30 of the Land Acquisition Act. (b ) Since the amount of tax is not deductible by the Court, the Court is not…

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