ORDER
N.K. Patil, J.
1. In all those 15 Civil Revision Petitions the petitioner being aggrieved by the common order dated 0-6-2004 passed in Execution case Nos. 9/04, 10/04, 11/04, 18/04, 34/03, 41/03, 42/03, 43/03, 50/03 & 51/03, 78/04, 79/04, 80/04, 81/04 & 92/04 on the file of Principal Civil Judge (Senior Division), Dharwad, has presented the instant Civil Revision Petitions.
2. The respondents herein filed Execution Petitions on the file of Principal Civil Judge, (Senior Division), Dharvad, as referred to above. The said matter had coma up for consideration before the Execution Court on 8-6-2004.
3. The Execution Court after hearing both the sides and after considering the material available on record has passed a common order in respect of 15 Execution Petitions as referred to above, by holding that deduction of income tax on interest payable under Section 28 or 34 of the Land Acquisition Act is not permissible and the objections raised by the JDR-petitioner herein was rejected.
4. Assailing the correctness of the impugned common orders passed by the Execution Court as stated supra, the petitioner being a beneficiary of the acquisition felt necessitated to present the instant Revision Petitions.
5. Learned Counsel appearing for the petitioner in all these cases Sri S.J. Puranik 2nd the learned Government Pleader at the outset submitted that the impugned common order passed by the Execution Court is liable to be Bet aside at threshold on the ground that the Execution court has committed grave arror and has passed the order contrary to the statutory provisions of Section 194-A read with Section 194 of the Income-Tax Act. The Court below ought not to have held that the deduction of income tax on the interest payable under Section 28 or 34 of the Land Acquisition Act is not permissible as the same is one without jurisdiction and contrary to the statutory provisions. To substantiate the said submission Sri S.J. Puranik: placed reliance on the Judgment of the Apex court in the case of Bikram Singh and Ors. v. Land Acquisition Collector and Ors. and submitted that it is settled law that the interest received on delayed payment of the compensation is a revenue receipt exigible to income tax. When once the claimants are made to pay the income tax, that portion of the amount should be deducted and thereafter the remaining amount may be paid to the claimants as provided under the relevant previsions of the Income Tax Act.
6. Inadvertently, the learned Counsel representing the petitioner and the Government Pleader appearing for the respondent – L.A.O., have not brought to the notice of the Court below, the settled proposition of law as referred to above. Farther, he submitted that following the Judgment of the Apex court and the Division Bench of Delhi High Court in the case of Shankar and Ors. v. Union of India and Ors. Reported in [2003] 1284 ITR 260, the Court below has held that the respondents-claimants are liable to pay income tax on the belated payment of interest received thereon. Therefore, the Court below held that the respondents-claimants are liable to pay income tax regarding the belated payment of interest received by them. Therefore he submitted that the impugned common order passed by the Execution Court is liable to be set aside.
7. The respondents are served unrepresented, except in C.R.P. No. 1166/04. In the said case Sri Suresh P. Hudedagaddi, appears for respondent Nos. 1 to 3.
8. I have heard the learned Counsel for the petitioner and the learned Counsel appearing for the respondents in C.R.P. No. 1166/04 as also the learned Government Pleader. The remaining respondents are served unrepresented.
9. After careful perusal of the impugned order passed by the Execution court it is manifest on the basis of the order that the Execution Court has committed grave error of law muchless material irregularity and proceeded to pass the order contrary to the relevant provisions of Income Tax Act, as it is Section 194-A read with Section 194-L proviso. It is worthwhile to extract Section 194-L proviso wherein it is provided that no deduction shall be made under the said Section where the amount of such payment or as the case may case, the aggregate amount of such payments to a resident during the financial year does not exceed one thousand rupees.
10. In the instant case, as rightly pointed out by the learned Government Pleader appearing for the Assistant Commissioner/L.A.O., that all the claimants who have received a sum of Rs. 1,00,000/- are liable to pay income tax towards belated payment of interest. It is significant to note that the trial Court has placed reliance on the Judgment of the Apex Court reported in 1998(1) LACC 339 and another Judgment reported in 199(2) LACC of Andhra Pradesh High Court while dealing with Section 23 of L.A. Act and Section 194 of the Income Tax Act. After careful perusal of the relevant extract of the Judgment at paragraph-14 wherein it is ha Id by the Andhra Pradesh High court that the courts can not give order for deduction of income tax at source from the amount of compensation. Provisions of Section 194 of the Income-Tax Act are not applicable to the compensation amount payable under the Land Acquisition Act. The said reliance placed by the learned Counsel for the respondent has been accepted and therefore the award passed by the trial Court is without reference to the relevant provisions which is applicable to the instant case as it is 194-A of the Income Tax Act.
11. He further placed reliance on the Judgment of the Apex court as referred to above reported in 1998(1) LACC 339. The said decision has no application to the facts of this case. It is well settled principle of law that the interest received on delayed payment of compensation is a revenue receipt exigible to Income-Tax. However, it was held that amended definition of interest was not intended to exclude the revenue receipt of interest on delayed payment of compensation from taxability, once it is construed to be a revenue receipt, necessarily, unless there is an exemption under the appropriate provisions of Income Tax Act, the revenue receipt is exigible to tax.
12. The aforesaid provision is only to bring within its tax net, income received from the transaction covered under the definition of interest. It would mean that the interest received as income on the delayed payment of the compensation determined under Section 28 or 34 of the Land Acquisition Act is a taxable event. Therefore, it is a revenue receipt exigible to tax under Section 4 of the Income Tax Act.
13. After careful perusal of the Judgment of the Apex Court as referred to above, it is clear that the Apex court has held in unequivocabla terms that the interest received on belated payment of compensation is a revenue receipt exigible to income tax and it is income and the claimants are liable to pay the tax as provided under the relevant provisions of the Income Tax Act.
14. The Execution court further committed grave error in not considering the relevant provisions which is applicable to the case pending adjudication before the Court below. Sections 194-A and 194-L have not been referred to except the Judgment of the Apex Court and the Andhra Pradesh Court as referred to above, in those cases what has bean held and considered is regarding deduction of Income Tax at source from the amount of compensation. But in those cases, whether the claimants are liable to pay tax has not been considered nor decided. If that is so, the court below ought not to have rejected the objection raised by the petitioner and the respondent – The Assistant Commissioner & the Land Acquisition Officer. Therefore, the finding recorded by the trial court cannot be sustained. Therefore, it is liable to be set aside.
15. In the light of the facts & circumstances of the case as stated above, I pass the following order.
(1) All the 15 civil Revision Petitions are allowed.
(2) The impugned common order dated 8-6-2004 passed in Execution Nos. 9/04, 10/04, 11/04, 18/04, 34703, 41/03, 42/03, 43/03, 50/03 & 51/03, 79/04, 79/04, 80/04, 81/04 & 82/04 on the file of Principal civil Judge (Senior Division), Dharwad, are hereby set aside.
