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Income Tax – TDS from compensation of acquired land – Illegal

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The land admeasuring 9302.7 sq.mts of the petitioner at village Poisar, Kandivali, was reserved for public purpose of Cemetery under the Maharashtra Regional and Town Planning Act, 1966.

On 4.11.2022, the Mumbai Municipal Corporation took the possession of the acquired land and the said property was transferred vide registered transfer deed dated 12.1.2023 for compensation of Rs.99,19,50752/- arrived at by agreement.

However, 10% TDS of Rs.9,91,95,076/- was deducted from the compensation amount.  This was challenged in the writ petition for violation of the Land Acquisition, Rehabilitation and Resettlement Act, 2013 and CBDT Circular No.36 of 2016 dated 25.10.2016.

Section 96 of the Land Acquisition, Rehabilitation and Resettlement Act, 2013, provide for exemption from income tax on the compensation of the acquired land and therefore, it is also not taxable under the Income Tax Act, 1961.

In view of this, the authority deducting TDS is to file correction statement under the proviso to sub-section (3) of Section 200 of the Income Tax for remission of the TDS amount.

Reference of earlier decision of the Bombay High Court in Seema Jagdish Patil case of 2022 SCC OnLine Bom 1174

Judgment dated 25.7.2024 of the Bombay High Court in Writ Petition (L) No.34615 of 2023 of Bombay Real Estate Development Company Private Limited and others    Vs. Municipal Corporation of Greater Mumbai and others

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