IMPORTANT POINT
Compensation for land acquisition under the Acquisition Act of 2013 is exempt from income tax, and TDS cannot be deducted from such compensation.

JUDGMENT :

M.S. SONAK, J.

1. Rule. The Rule is made returnable immediately with the consent of the learned counsel for the parties.

2. Heard learned counsel for the parties.

3. The Petitioners contend that the deduction of TDS by the Municipal Corporation of Greater Mumbai (“MCGM”) on the total monetary compensation amount payable to the Petitioners for acquisition of the Petitioners’ property under the right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. (“Acquisition Act of 2013”), is arbitrary and ultra vires.

4. The 1st Petitioner was the owner of the property measuring 9302.7 sq. mtrs. situated at village Poisar, Kandivali, bearing CTS No. 809/A/1/19A/1/1/1C/2 (“the said property”). Under the Development Control and Promotion Regulations, 2034 (“the DCPR 2034”), the said property was reserved for the public purpose of setting up a Cemetery (RSK 4.8) in terms of the Maharashtra Regional and Town Planning Act, 1966 (“the MRTP Act”). Incidentally, under the previous Development Plan of 1991 (“DCR 1991”) the said property was also reserved for a cemetery.

5. The MCGM, which had reserved the said property under the above DCRs, proposed to acquire it by issuing a public notice dated 14 September 2021 in two newspapers. The MCGM offered to pay monetary compensation for the acquisition. After negotiating the matter with the Petitioners, the MCGM decided to acquire the said property under the Acquisition Act of 2013. This was preceded by an exhaustive Title Investigation Report dated 29 September 2021. On 4 November 2022, the MCGM took over possession of the said property from the Petitioners and even issued a possession receipt of the said date.

6. A registered Transfer Deed dated 12 January 2023 was entered into between the Petitioners and the MCGM, and the said property was transferred to the MCGM. This deed records that the MCGM would pay compensation of Rs.99,19,50,752/- to the first Petitioner upon the MCGM’s name being entered into the record of rights in substitution for the name of the first Petitioner.

7. The Petitioners have relied upon an E-mail dated 15 February 2023 addressed by the MCGM to the first Petitioner offering to pay the entire amount of Rs.99,19,50,752/- to the first Petitioner. Mr. Dubhash pointed out that this E-mail, which was styled as a “Purchase Order” at Page 97 shows that “Nil Tax” was levied on the transaction, and the total Purchase Order value was Rs.99,19,50,752/-.

8. The Petitioners have pleaded that on 15 February 2023, the Petitioners received payment advice of even date from the MCGM after deducting a sum of Rs.9,91,95,076/- by the MCGM as TDS from the total monetary compensation of Rs.99,19,50,752/- otherwise payable to the Petitioners. Thus, only Rs.89,27,55,676/- was transferred by RTGS into the 1st Petitioner’s bank account towards the total monetary compensation for acquiring the said property owned and held by the 1st Petitioner.

9. The Petitioners protested against the above deduction of Rs.9,91,95,076/- from out of the total compensation payable to the Petitioners. The Petitioners were, however, informed that the MCGM deposited the deducted amount with the Income Tax Department, and further, since the same amount was already adjusted by the Department against some earlier demands against the Petitioners, nothing further could be done in the matter. Hence the present Petition.

10. Mr. Dubhash, the learned counsel for the Petitioners, submitted that the Petitioners would be satisfied if this Court grants the alternate relief in terms of prayer clause A(ii). This relief reads as follows:

“(A)(ii) in the alternative to (i) above, direct the Respondent Corporation to file a correction statement as provided under the proviso to section 200(3) of the Income Tax Act, 1961 within a period of 30 days, for deletion of information pertaining to the Petitioners in the previous statement filed and pay the said amount of Rs.9,91,95,076/- (Rupees nine cror