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2026 Arbitration High Court Income Tax Latest Legal May 2026

Income Tax Immunity of Land Acquisition Arbitral Awards

May 13, 2026 legaldeli

Income Tax Immunity of Land Acquisition Arbitral Awards

No TDS Deduction from Compensation under NH Act 1956

Executing Court Cannot Order TDS Deduction from Land Compensation

The petitioners filed petitions for execution of the arbitral award dated 22.4.2014 passed under Section 3G(5) of the National Highways Act, 1956.

The Executing Court, while permitting withdrawal of deposited compensation amount, directed TDS deduction of 10% amount to be credited with the competent authority of Land Acquisition.

Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, provides that no income tax shall be levied on any award or agreement made under the said Act.

It is held that no deduction of TDS is permissible from the compensation awarded under the arbitral award passed under Section 3G(5) of the National Highways Act, 1956, having regard to the provisions of Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

Another important reason why TDS cannot be deducted is that the arbitral award is executable as a decree of a Court of law. In the present case, the amount has been deposited before the Executing Court in Page 12 of 15 “This is the corrected order upon Speaking to the Minutes recorded on 08/05/2026” WP 914-2026 and oth (corrected) satisfaction of the arbitral award and, therefore, assumes the character of a decretal debt.

Judgment dated 6.5.2026 of the High Court of Bombay, Bench at Aurangabad, in Writ Petition No.914 of 2026 of Tukaram Kana Pawara Vs. The Project Director and others with connected writ petitions.

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