Tuesday 13 May 2014

Payment of income tax on compensation received in land acquisition reference

It is required to
be noted that though the original compensation as per the Award of the
Reference Court came to Rs.19,34,403/,
the amount of Rs.18,30,786/
was arrived at after deducting incometax
in the sum of Rs.1,08,784/.
Since the total compensation has now come down to Rs.13,01,804/and
since the petitioners have already been allowed to withdraw
Rs.9,15,393/,
the petitioners would be entitled to withdraw the balance
amount as per their entitlement. However, the aspect of the income tax having already been deducted from the amount of Rs.19,34,403/would
have to be taken into consideration at the time of calculating the
petitioners’ entitlement in terms of the judgment and order of this Court
in First Appeal No.89/1995. 
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH, NAGPUR.
WRIT PETITION NO.2292/2011

Mohmmad Shabir Shaikh Ajij,


...VERSUS...

The State of Maharashtra,

CORAM
: R. M. SAVANT J.
DATED : 09.08.2011
Citation;2011(5) ALL M R661 Bom

1) Rule with the consent of the parties made returnable forthwith and
heard.
2) The above petition filed under Articles 226 and 227 of the
Constitution of India takes exception to the order dated 16/06/2010
passed by the Executing Court i.e. the learned Civil Judge, Senior
Division, Pusad, by which order the application at Exhibit1
in M.J.C.
No.62/2009 filed by the petitioners herein was partly allowed and out
of the total amount of Rs.9,15,393/,
which is kept in FDR bearing
No.SD/A 29 275192 in the State Bank of India Pusad Branch. The
petitioners were held to be entitled to only an amount of Rs.2,82,794/and
the remaining amount of Rs.6,32,599/was
directed to be refunded
to the State. The said M.J.C. proceedings being No.62/2009 has
been filed for execution of the Award passed by this Court in First
Appeal No.89/1995 decided on 3rd April, 2009. The Reference Court had

granted compensation to the petitioner at the rate of Rs.3,50,000/per
hectare for the agricultural land. In terms of the Award of the Reference
Court, the Special Land Acquisition Officer had deposited the total
amount of Rs.18,30,786/on
09/10/1995 in this Court at the time of the
admission of the First Appeal. By an order passed on 25/01/1996, 50%
of the said amount was directed to be paid to the petitioners and the
remaining amount of Rs.9,15,393/was
directed to be kept in FDR with
the State Bank of India Pusad Branch, the said FDR was renewed from
time to time and presently it bears the new No.SAA
49 221102. In First
Appeal No.89/1995 filed by the State the compensation which was
awarded by the Reference Court at the rate of Rs.3,50,000/per
hectare
was brought down to Rs.2,40,000/per
hectare on the basis of which the
petitioners had sought to withdraw the amount, which was due to them
as per the judgment and order of this Court. The petitioners had
accordingly filed the application Exhibit1
for withdrawal of the amount
as per the petitioners’ entitlement.
3) In the said application Exhibit1
the State filed its reply wherein it
was stated that an amount of Rs.6,32,599/with
interest accrued thereon
is required to be refunded to the State and the remaining amount of
Rs.2,83,794/along
with the interest accrued thereon was required to be
paid to the petitioners. The Executing Court accepted the said contention

of the State and has passed an order on 16/06/2010, which is the subject
matter of the present petition.
4) On behalf of the petitioners a grievance has been made that the
Executing Court has accepted the calculation of the State without
considering whether in fact the State was entitled to the said amount of
Rs.6,32,599/out
of the amount deposited by it in this Court. It is
contended that the calculations of the State have been accepted blindly
without carrying out the exercise as regards the entitlement of the
petitioners and the State.
5) In the above petition pursuant to the directions of this Court, an
affidavit in reply has been filed on behalf of the State by the Special Land
Acquisition Officer, Benefited Zone, District Yavatmal to which is
appended a chart. The amounts calculated on the basis of the
compensation at the rate of Rs.3,50,000/per
hectare and as per the
judgment of this court in First Appeal No.89/1995 i.e. at the rate of
Rs.2,40,000/per
hectare has been mentioned in the said chart. In terms
of the calculation made at the said rate of Rs.2,40,000/per
hectare, the
total amount of compensation comes to Rs.13,01,804/.
It is required to
be noted that though the original compensation as per the Award of the
Reference Court came to Rs.19,34,403/,
the amount of Rs.18,30,786/
was arrived at after deducting incometax
in the sum of Rs.1,08,784/.
Since the total compensation has now come down to Rs.13,01,804/and
since the petitioners have already been allowed to withdraw
Rs.9,15,393/,
the petitioners would be entitled to withdraw the balance
amount as per their entitlement. However, the aspect of the incometax
having already been deducted from the amount of Rs.19,34,403/would
have to be taken into consideration at the time of calculating the
petitioners’ entitlement in terms of the judgment and order of this Court
in First Appeal No.89/1995. The matter is therefore required to be
relegated back to the Executing Court for a de novo consideration of the
said application Exhibit1
filed by the petitioners. Hence, the following
order.
ORDER
i) The impugned order dated 16/06/2010 is quashed and set aside
and the said application Exhibit1
is relegated back to the
Executing Court for a de novo consideration.
ii) The said application Exhibit1
would have to be considered in
terms of the observations made herein above and in the light of the
calculations, which have been appended to the affidavit in reply
filed by the Special Land Acquisition Officer in the present petition.
iii) The Executing Court to take into consideration the fact that an

amount of Rs.1,08,784/has
already been deducted as incometax
from the original amount of compensation and hence the
petitioners would have to be given the benefit on a pro rata basis
on the amount to which they are now found to be entitled.
iv) The parties to appear before the Executing Court on 2nd of
September, 2011. The Executing Court thereafter to dispose of
application Exhibit1
within a period of two months of the first
appearance of the parties.
6) Rule is accordingly made absolute in the aforesaid terms with
parties to bear their respective costs.

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