COCP No. 2439 of 2011 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH COCP No. 2439 of 2011 Date of Decision: 14.10.2011 Hem Chander ....Petitioner. Versus Shri Ram Avtar Gupta and another ...Respondents. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Amit Jain, Advocate for the petitioner. Mr. P.S. Batta, Additional Advocate General, Haryana. AJAY KUMAR MITTAL, J. 1. This order shall dispose of two petitions bearing COCP Nos. 1281 and 2439 of 2011 as identical questions are involved therein. For brevity, the facts are taken from COCP No. 2439 of 2011. 2. The petitioner has approached this Court under Sections 10 and 12 of the Contempt of Courts Act for initiating the contempt proceedings for disobedience of the order dated 15.9.2010 (Annexure P-3) passed by this Court in CWP No. 16549 of 2010 and other connected petitions. 3. I have heard learned counsel for the partes. 4. The case of the petitioner is that the petitioner had received certain interest on the enhanced compensation. According to him, no tax was required to be deducted at source in view of the decisions of this Court in CWP No. 9912 of 2009 (Risal Singh and another versus COCP No. 2439 of 2011 -2- The Union of India and others) decided on 11.1.2010 and CWP No. 16580 of 2010 (Bikramjeet Sood v. State of Punjab and others) decided on 15.9.2010 (Annexures P-2 and P-3). It was submitted that this Court in Bikramjeet Sood's case (supra) had issued directions to the Chief Secretaries of the Punjab and Haryana and also to Chief Commissioner of Income Tax, Chandigarh to issue appropriate directions to all concerned not to deduct tax at source on payment of compensation due to the claimant in respect of the agricultural land acquired by the State. It was urged that inspite of aforesaid general directions, tax at source was being deducted from payments made to the petitioner. 5. A perusal of the aforesaid judgments shows that both the cases were relating to payment of enhanced compensation in respect of agricultural land and no deduction of tax at source could be made under Section 194LA of the Act. The present case as is evident from the perusal of Form 16A, Annexure P-1, relates to the payment of interest on enhanced compensation. This Court in Income Tax Appeal No. 209 of 2004, Commissioner of Income Tax, Faridabad v. Bir Singh (HUF) dealing with interest received on enhanced amount of compensation had held as under:- “26. To conclude, from the above it emerges:- (a) that ‘income from Business or profession’ and ‘income from other sources’ are ascertained on the basis of system of accountancy followed by the assessee; (b) where assessee is not maintaining books COCP No. 2439 of 2011 -3- of accounts by adopting any specific method, it shall be treated to be cash system of accountancy; (c) the interest under Section 34 to be awarded by the Collector partakes the character of compensation and is taxable in the year of receipt in view of Section 45(5)(b) of the Act; and (d) under cash system of accountancy, the element of interest awarded by the Court received on enhanced amount of compensation under Section 28 of the 1894 Act falls for taxation under Section 56 as ‘income from other sources’ in the year of receipt.” 6. Similar issue came up for consideration before Division Bench of this Court in CWP No. 10333 of 2011, Kulwant Rai and others v. State of Haryana and others decided on 2.6.2011, wherein this Court had held that where interest was received on enhanced compensation, the tax was payable on the interest so received and the remedy available to the petitioner was to file the return and claim refund, if any. The relevant observation reads thus:- “8. Learned counsel for the petitioners was unable to dispute that in view of receipt of interest element on enhanced compensation, the same being taxable in the year of receipt, the petitioners were required to file return as tax was payable on the said amount. In COCP No. 2439 of 2011 -4- such a situation, the petitioners have an alternative remedy by way of filing the income tax return and getting the tax deducted at source adjusted against their tax liability. If any amount deducted at source is found to be in excess of the tax liability, the petitioners are entitled to refund in accordance with the provisions of the Act.” 7. In view of the above, no action is called for against the respondents under the Contempt of Courts Act, 1971 and both the petitions are disposed of as such. October 14, 2011 (AJAY KUMAR MITTAL) gbs JUDGE COCP No. 2439 of 2011 -5- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH COCP No. 1281 of 2011 Date of Decision: 14.10.2011 Tara Singh alias Tara Chand and others ....Petitioners. Versus Shri Ram Avtar Gupta and another ...Respondents. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Amit Jain, Advocate for the petitioner. Mr. P.S. Batta, Additional Advocate General, Haryana. AJAY KUMAR MITTAL, J. For orders, see COCP No. 2439 of 2011 (Hem Chander v. Shri Ram Avtar Gupta and another). October 14, 2011 (AJAY KUMAR MITTAL) gbs JUDGE