Point of Law : Compensation payable thereunder would not attract any income tax or stamp duty in terms of Section 96 of the Act of 2013 which is reinforced by the second proviso to Section 194LA of the IT Act.

ORDER :

1. Learned Additional Government Advocate accepts notice for respondents.

2. The petitioner is before this Court seeking for the following reliefs:

“(a) Issue a Writ in the nature of Certiorari to quash the order dated 21.04.2023 in EP No. 610/2018 passed by the learned Prl. District and Sessions Judge, Raichur, vide Annexure-J, in the interest of justice and equity.

(b) Issue such other writ or order or direction as this Hon'ble Court deems just and proper in circumstances of the case and allow this Writ Petition, in the interest of justice and equity.”

3. The petitioner claims to be the owner of the land in Sy.No. 152/B measuring 8 acres situated at Chikkaberagi village, Sindhanur Taluk, Raichur District. The said land was proposed to be acquired by the respondent No. 2 by issuing a notification under Section 4(1) of the Land Acquisition Act on 05.12.2011.

4. Out of 8 acres of land, the possession of six acres was taken over prior to such notification for construction of percolation tank. Since acquisition was not completed and in the meanwhile, the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013 (for short hereinafter referred to as the ‘Act of 2013’) came into force, a reference was made under Section 64(1) of the Act of 2013, as regards compensation, which came to be numbered as LAC No. 6/2017 before the First Additional District and Sessions Judge, Raichur.

5. The said Court fixed the compensation of Rs.2,99,435/- per acre, additional market value at 12% per annum and 12% solatium on compensation and awarded 9% interest per annum for a period of one year from the date of preliminary notification and thereafter interest at the rate of 15% per annum.

6. Since the amounts were not paid by the State, Execution Petition came to be filed by the petitioner in Execution Petition No. 610/2018 before the First Additional District Judge, Raichur. The State continued to default on the payment to be made, the petitioner filed I.A.No. III under Order 21 Rule 46B read with Section 151 CPC for garnishee order to be passed as regards the bank where the account of the State is held which also came to be allowed.

7. Finally, the Additional District Judge, Raichur directed payment of necessary amount to the petitioner by way of e-payment. However, before such payment, the said Court by its letter on 17.04.2023 addressed to the Special Land Acquisition Officer, Raichur, sought for information as regards whether the amount of compensation is taxable or not and what is the percentage of Tax to be Deducted at Source on the compensation amount.

8. Shockingly, the Special Land Acquisition Officer (for short hereinafter referred to as ‘SLAO’) furnished the information stating that in terms of Section 194LA of Income Tax Act, 1961 (for short, hereinafter referred to as ‘IT Act’), 10% would be deductible on interest on the compensation, in the event of PAN card details are furnished and in case PAN Card details are not furnished 20% would have to be deducted.

9. The Income Tax Ward Officer, Raichur replied to the letter of the First Additional District Judge, Raichur by extracting Section 194LA of the Act without replying to the queries raised by the Court.

10. Shockingly, the Principal District and Sessions Judge, Raichur, vide order dated 21.04.2023, directed withholding of 30% of the amount on the accrued interest and to make payment of the balance amount to the petitioner and deposit the deducted amount to the income tax department. It is challenging the said order that the petitioner is before this Court.

11. Sri Mahantesh Patil, learned counsel for the petitioner would submit that what has been ordered is compensation on account of land being acquired by the State, the compensation amount not being covered under Section 194LA of the IT Act, more so, in terms of second proviso thereof wherein it has been categorically stated that no deduction shall be made under this section where such paymen