'Compensation amount for property acquired for bullet train project not taxable'

The Bombay High Court has held that income tax cannot be deducted from an amount given by way of compensation for property the National HiSpeed Rail Corporation Ltd NHSRCL acquired for the MumbaiAhmedabad bullet train projectA division bench of Justices S V Gangapurwala and M G Sewlikar passed its order on Thursday on a petition filed by one Seema Patil who sought a refund of the income tax deducted at the source by the NHSRCL after it acquired her property at Bhiwandi in Thane district for the projectThe court in its order noted that the petitioners land was acquired for a public project and that acquisition of property through private negotiations and purchases was permitted to expedite the process for implementation of a public projectIf the parties would not agree with the negotiations and direct purchase then compulsory acquisition is resorted to the bench saidNo income tax can be levied in the present matter for the amount of compensation Hence the NHSRCL could not have deducted the TDS amount from the compensation paid to the petitioner Income received by the petitioner on account of property acquired by the NHSRCL by private negotiations and sale deed is exempted from tax the bench saidThe court directed the NHSRCL to file a correction statement within a month to the effect that the TDS deducted by it while paying the compensation amount to Patil was not liable to be deductedThe Income Tax department shall process the correction statement and take steps for refund of the amount the court directedPatils advocate Devendra Jain had argued that the provisions of the Right to Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlement Act exempt payment of income tax on an amount of compensation paid under an awardagreementThe NHSRCL however claimed that the amount received by the petitioner was taxable as the acquisition was by an agreement between the parties and not compulsory acquisitionIt further claimed that a sale deed was entered between Patil and the NHSRCL through direct purchase method and tax was deducted as per the Income Tax RulesAccording to the NHSRCL the deducted tax has already been deposited with the Income Tax department and the TDS certificate has also been provided to PatilThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever