Bhikubhai Balabhai v. Income Tax Officer-Tds-1 Surat And Anr. Reported In 2017(2) Glh 554 By Relying On A Decision Of The Apex Court In The Case Of Commissioner Of

IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/SPECIAL CIVIL APPLICATION NO. 3055 of 2019 =============================================================== REJENDRASINH VIRSINH VASAVA DECD. THRU. LEGAL HEIR VersusSTATE OF GUJARAT ============================================================== Appearance:MR KM SHETH(838) for the Petitioner(s) No. 1,1.1,1.2,1.3MR CHINTAN DAVE, AGP (5) for the Respondent(s) No. 1NOTICE SERVED BY DS(5) for the Respondent(s) No. 2,3============================================================== CORAM: HONOURABLE THE ACTING CHIEF JUSTICE ANANT S. DAVEandHONOURABLE MR.JUSTICE BIREN VAISHNAV Date : 07/03/2019 ORAL ORDER (PER : HONOURABLE THE ACTING CHIEF JUSTICE ANANT S. DAVE) 1.Heard learned advocates appearing on behalf of the respective parties. 2.In this petition filed under Article 226 of the Constitution of India, the prayer is to declare the action of respondents of deducting Rs.18,53,176/- towards TDS in LAR Case No. 2571 of 2006 registered before the Reference Court at Rajpipla as illegal, arbitrary, unjust and violative of Articles 14 and 19 of the Constitution of India. 3.The Division Bench of this Court in the case of Movaliya Bhikubhai Balabhai vs. Income Tax Officer-TDS-1 Surat and Anr. reported in 2017(2) GLH 554 by relying on a decision of the Apex Court in the case of Commissioner of Income Tax, Faridabad vs. Ghanshyam (HUF) reported in (2009) 8 SCC 412 held in paragraphs 13 & 14 as under: “13. The upshot of the above discussion is that since interest under section 28 of the Act of 1894, partakes the character of compensation, it does not fall within the ambit of the expression interest as contemplated in section 145A of the I.T. Act. The first respondent - Income Tax Officer was, therefore, not justified in refusing to grant a certificate under section 197 of the I.T. Act to the petitioner for non-deduction of tax at source, inasmuch as, the petitioner is not liable to pay any tax under the head income from other sources on the interest paid to it under section 28 of the Act of 1894. 14. The petitioner had earlier challenged the communication dated 9[th] February, 2015 whereby its application for a certificate under section 197 of the I.T. Act had been rejected, and subsequently, tax on the interest payable under section 28 of the Act of 1894 has already been deducted at source. Consequently, the challenge to the above communication has become infructuous and hence, the prayer clause came to be modified. However, since the amount paid under section 28 of the Act of 1894 forms part of the compensation and not interest, the second respondent was not justified in deducting tax at source under section 194A of the I.T. Act in respect of such amount. The petitioner is, therefore, entitled to refund of the amount wrongly deducted under section 194A of the I.T. Act.” 4.Based on the above, this Court has also passed various orders by issuing directions to respondent authorities to refund wrongly deducted TDS amount out of compensation that is to be paid to the claimants awarded under Section 28 of the Land Acquisition Act, 1894. 5.Learned Assistant Government Pleader appearing for respondent authorities however would contend that in the case of Movaliya Bhikubhai Balabhai (supra) this Court directed first respondent therein namely Income Tax authorities to forthwith deposit such amount (deducted TDS amount) with the Reference Court, which shall in turn disburse such amount to the petitioners and therefore once the amount of TDS is credited in the PAN of the claimants, it is difficult for the respondent authorities to recover from the Income Tax department and therefore concerned Income Tax department be directed to refund such amount of TDS so credited in the PAN of the claimants/petitioners to the State authorities. 5.Learned Assistant Government Pleader appearing for respondent authorities however would contend that in the case of Movaliya Bhikubhai Balabhai (supra) this Court directed first respondent therein namely Income Tax authorities to forthwith deposit such amount (deducted TDS amount) with the Reference Court, which shall in turn disburse such amount to the petitioners and therefore once the amount of TDS is credited in the PAN of the claimants, it is difficult for the respondent authorities to recover from the Income Tax department and therefore concerned Income Tax department be directed to refund such amount of TDS so credited in the PAN of the claimants/petitioners to the State authorities. 6.As against above, learned advocate appearing on behalf of the petitioners would contend that for no fault on the part of the petitioners such an amount is wrongly deducted contrary to the decision in the case of Movaliya Bhikubhai Balabhai (supra) and petitioners may not be subjected to the rigmarole of applying before the Income Tax authorities and State government is duty bound to refund such an amount to the petitioners. 7.Considering the facts, law on the subject and submissions made by the learned advocates appearing on behalf of the respective parties, we direct the respondent state authorities to forthwith address a communication to the concerned income tax department by citing the case law on the subject more particularly the case ofMovaliya Bhikubhai Balabhai (supra) and seek refund of the TDS amount so deducted by the authorities contrary to the law laid down in the case of Movaliya Bhikubhai Balabhai (supra). The entire exercise to be completed within three weeks from the date of receipt of the writ of the order of this Court meaning thereby within a week from today the concerned state authorities shall address a communication to the department of Income Tax for claiming the refund of wrongly deducted TDS amount from the compensation under Section 28 of the Land Acquisition Act, 1894 and within two weeks thereafter the amount in question (TDS) shall be refunded by the Income Tax authorities to the concerned Land Acquisition Officer which in turn shall be disbursed by the Land Acquisition Officer to the claimants. For one or the other reason, if the amount so deducted by the respondent State authorities is not refunded by the income tax department it shall be the liability of respondents State Government to disburse such amount to the petitioners within a period of four weeks thereafter. 8.With the above directions, petition is disposed of. Direct service is permitted. (ANANT S. DAVE, ACJ) DIVYA (BIREN VAISHNAV, J)