Civil Writ Petition No. 9739 of 2011 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Civil Writ Petition No. 9739 of 2011 Date of decision: 30.5.2011 Sarti --- Petitioner Versus Haryana State Industrial & Infrastructure Development Corporation Ltd. and others --- Respondents CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL ACTING CHIEF JUSTICE HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present: Mr. Sudhir Mittal, Advocate for the petitioner. --- AJAY KUMAR MITTAL, J. Whether the interest payable on the amount of compensation and the enhanced compensation for the acquired land is subject to deduction of tax at source is the sole question raised in this petition. 2. The prayer of the petitioner is for issuance of a writ quashing the certificate dated 28.1.2011 of deduction of tax at source issued under Section 203 of the Income Tax Act, 1961 (in short “the Act”) and also for a direction to the respondents to refund the amount deducted on the aforesaid count. Civil Writ Petition No. 9739 of 2011 2 3. In order to appreciate the question, some facts are necessary, which are: 4. A large piece of agricultural land owned by the petitioner was acquired by the State Government, by notification dated 22.01.2002. The petitioner struggled up to this Court by means of Regular First Appeal against the Reference Court to get the best on account of compensation for her acquired land. After the passing of the award by the Reference Court, the petitioner had been paid an amount of Rs. 30,57,810/-. The respondent-Corporation while making payment deducted Rs. 6,11,562/- as tax deduction at source and issued a certificate in Form 16-A of the Act in that behalf, a copy whereof is Annexure P-2 on the record. 5. We have heard learned counsel for the petitioner and have perused the record. 6. A perusal of Annexure P-2 clearly depicts that the nature of interest received by the petitioner falls under Section 194-A of the Act on account of delayed payment made by the State Government for acquisition of her land. Learned counsel for the petitioner submitted that since the interest was received in respect of the land, which was agricultural in nature, it had also attained the character of ‘agriculture income’ and, therefore, no tax was deductible thereon in view of the decision of this Court in Civil Writ Petition No. 9912 of 2009 (Risal Singh and another v. The Union of India and others) decided on 11.1.2010. 7. We are unable to accept the contention. 8. This Court, in Income Tax Appeal No. 209 of 2004, decided on 27.10.2010 (Commissioner of Income Tax, Faridabad v. Civil Writ Petition No. 9739 of 2011 3 Bir Singh (HUF), Ballabgarh) had held that interest paid to the assessee under Section 28 of the Land Acquisition Act, 1894 (for brevity, “1894 Act”) on enhanced amount of compensation in respect of the acquired land falls for taxation under Section 56 of the Act as “income from other sources” and is exigible to tax in the year of receipt under cash system of accountancy. It had also been observed that where the assessee is not maintaining books of accounts by adopting any specific method, it shall be treated to be cash system of accountancy. In the present case, the interest received by the petitioner was on account of delay in making the payment of enhanced compensation and, therefore, would fall under Section 28 of the 1894 Act. Such payment could not par-take the character of compensation for acquisition of agricultural land and, thus, was not exempt under the Act. Once that was so, the tax at source had been rightly deducted by the payer. We find no infirmity in the ‘Tax Deducted at Source’ certificate issued by the payer of the amount . Accordingly, there is no merit in the writ petition and the same is dismissed. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) May 30, 2011 ACTING CHIEF JUSTICE *rkmalik*