THE HON'BLE SRI JUSTICE L.NARASIMHA REDDY WRIT PETITION No.5267 of 2011 ORDER: The lands of the petitioners were acquired by the Government for the benefit of Singareni Collieries Company Limited, respondent No.2 herein, way back in the year 1989. An award was passed on 27.03.1991 by the Land Acquisition Officer, respondent No.1 herein. Not satisfied with the compensation, the petitioners sought reference under Section 18 of the Land Acquisition Act, 1894. The matter assumed finality with the judgment of the Hon’ble Supreme Court in Civil Appeal No.5710 of 2005 and batch. The petitioners and others pursued the matter with respondent No.1 for payment of enhanced amount of compensation. On a request made by respondent No.1, respondent No.2 deposited a sum of Rs.11,90,07,370.76 ps. It is stated that respondent No.1 has prepared cheques for distribution of the amount to the petitioners and other beneficiaries. At that stage, respondent No.2 addressed a letter, dated 10.01.2011, stating that the income tax at the rate of 20% is liable to be levied upon the interest component and that the further steps be withheld. Acting on the same, respondent No.1 returned the entire amount to respondent No.2 through covering letter, dated 20.01.2011. The same is challenged in this writ petition. Heard the learned counsel for the petitioners, learned Senior Counsel for the Income Tax Department, the learned Government Pleader for Land Acquisition and the learned Standing Counsel for Singareni Collieries Company Limited. The respondents do not deny the entitlement of the petitioners to be paid the enhanced amount of compensation together with interest. In fact, steps were taken for payment of the said amount. At that stage, respondent No.2 entertained a doubt as to its obligation to pay the income tax, at source. That gave rise to the return of the amount of compensation by respondent No.1. Section 145A(b) of the Income Tax Act (for short ‘the Act’)as it stands now makes it obligatory on the part of an assessee to pay interest on compensation or enhanced compensation and the same is deemed as income of the year in which it is received. In case the income of the individual petitioners exceeds the limits stipulated under the Act and the Rules made thereunder, they would be under obligation to pay the tax. On the other hand, if they are not within the taxable limits, they need not be levied the tax on the interest component. This, however, is a matter for verification, for which, the petitioners have to make declaration in the prescribed form in terms of Section 197A of the Act. Hence, the writ petition is disposed of, directing that: (a) the petitioners shall file declaration in terms of Section 197A of the Act as to their obligation to be levied income tax on the interest payable on the compensation; (b) respondent No.2 shall make available the funds for payment of enhanced compensation together with interest; (c) respondent No.1 shall be under obligation to deduct the income tax from such of the petitioners, who are found liable under Section 145A of the Act after verification of the declaration. Further steps shall be taken by respondent No.1 as per the directions of the Hon’ble Supreme Court; and (d) respondent No.1 shall make available the relevant particulars to the petitioners to enable them to calculate the interest and other figures within a period of two weeks from the date of receipt of a copy of this order. There shall be no order as to costs. _______________________ L.NARASIMHA REDDY,J Dt:09.03.2011. Note: Issue cc in one week. (B/o) kdl