Compensation amount for property acquired for bullet train project not taxable: Bombay HC – Times of India

MUMBAI: Bombay high court on Thursday had held that compensation received by a woman whose plot in Thane was acquired by National High-Speed Rail Corporation for the Mumbai-Ahmedabad bullet train project through private negotiations and sale deed is exempted from income tax.
“The corporation already deducted the TDS— in 2019 —which it ought not to have deducted,” said the HC bench of Justices S V Gangapurwala and MG Sewlikar.
The HC directed the rail corporation to issue a correction and declare that it has wrongly deducted the tax and Income Tax department shall then process the correction statement for refund of the tax amount.
Thane resident Seema Patil had assailed the corporation’s action in deducting income tax at source from the compensation paid for the land acquisition in Bhiwandi, Thane. Her counsel said in a such compulsory acquisition for public project the amount received was not taxable as the 2013 Right to Fair compensation Act carved an exemption. But the rail corporation said it was taxable as it was a private transaction and thus not a compulsory acquisition under the act.
The HC judgment said, “ It appears that the public notice was issued for acquisition of land through direct purchase and private negotiations by the office of the sub divisional officer, Bhiwandi Division, Bhiwandi for implementing the project —Mumbai-Ahmedabad Hi-Speed Rail Project.”
The notice said the compensation will be fxed by giving 25% enhanced amount of the total compensation under the Act.
“Undisputedly, the land was acquired for a public project. Policy decision has been taken by the State Government under its Government Resolution dated 12th May 2015 for acquiring the property by private negotiations and purchases for implementation of public project. Methodology is also provided. The computation of compensation has to be under the provisions of the Act, 2013 to expedite the acquisition for the implementation of the project. If the parties would not agree with the negotiations and direct purchase, then the compulsory acquisition under the provisions of the Act, 2013 has to be resorted to,” said the HC.
The Act also recognizes the acquisition through an agreement said the HC.
Section 96 of the Act, 2013 unequivocally provides that no income tax or duty shall be levied on any award or agreement made under the Act except under Section 46,which applies only to the “specified persons”—any person other than the Government or Government Company, Association of persons or Trust or Society as registered under the Societies Registration Act, wholly or partially aided by the appropriate Government or controlled by the Appropriate Government.
The HC noted that the rail corporation is not a specifed person hence no income tax can be levied in the present matter.