JUDGMENT :

The Special Tahsildar Land Acquisition (General), Malappuram has filed this writ petition being aggrieved by the demand for payment of interest under sub-section (1A) of Section 201 of the Income Tax Act, on account of delayed remittance of TDS deducted from compensation paid to persons from whom land was acquired for the purposes of establishing the Government Medical College at Manjeri. It is not in dispute that the amounts were deducted in the month of January 2014 and the amounts were to be paid over to the Income Tax Department on or before 07.02.2014. It is also not in dispute that the amounts were actually paid only on 30.06.2014. It is the case of the petitioner that the officer then holding the charge of Special Tahsildar Land Acquisition (General), Malappuram was deputed for election duty during the period from January 2014 to May 2014 in connection with the General Elections to the Lok Sabha, 2014. A certificate issued by the Deputy Collector (Election), Malappuram has been annexed to the writ petition as Ext.P1, to confirm this fact.

2. Smt.Thushara James, the learned Senior Government Pleader appearing on behalf of the petitioner contends that the levy of interest under sub-section (1A) of Section 201 is clearly unwarranted, in the facts and circumstances of this case. It is submitted that a reading of the provisions of Section 201 clearly indicate that the liability to deduct tax and to pay it to the Income Tax Department is only in respect of sums for which the provisions of the Act require a tax to be deducted at source. It is submitted that the lands, which were subject matter of acquisition were agricultural lands excluded from the definition of capital assets under Section 2(14) of the Income Tax Act and since these lands fell outside the definition of 'capital asset', there was no question of deducting any TDS in respect of compensation paid to the land owners. It is submitted that in respect of the land owners in question, the Income Tax Department itself had effected refund of the amounts paid as TDS. It is submitted that this is clear from Exts.P5 to P8 annexed to the writ petition.

3. Sri.Christopher Abraham, the learned Standing Counsel appearing for the respondent Department vehemently opposes the relief sought in the writ petition. He points out from the provisions of Section 201 of the Income Tax Act that the levy of interest is statutory and it is clear from a reading of subsection (1A) of Section 201 that the moment there is delay in payment of tax deducted, interest has to be levied. It is submitted that taking into consideration the overall facts and circumstances of the case, no penalty was levied under Section 221 in respect of the default committed by the petitioner. It is also submitted that the question as to whether the land in question was actually agricultural land falling outside the definition of capital asset for the purposes of the Income Tax Act and as defined in Section 2(14) of the said Act is to be the subject matter of inquiry and merely because refunds have been granted to the land owners in question, it cannot be said that the lands in question are agricultural lands falling outside the definition of capital asset under Section 2(14) of the Income Tax Act. The learned Standing Counsel also submits that the fact that the petitioner had actually remitted the tax deducted on 30.06.2014 shows that interest was to be levied in terms of sub-section (1A) of Section 201 of the Income Tax Act. He also submits that on refund to the respective tax payers, the Income Tax Department had to pay interest even from a date prior to the date on which the amounts were actually paid to the Department.

4. The learned Senior Government Pleader in reply again refers to the provisions of Section 201 and places emphasis on the language used in sub-section (1) of Section 201, which indicates that the levy of interest under sub-section 1A of Section 201 can only be on a person who is required to