IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 16^TH DAY OF FEBRUARY, 2026 PRESENT THE HON'BLE MR. JUSTICE S.G.PANDIT AND THE HON'BLE MR. JUSTICE K. V. ARAVIND WRIT APPEAL No. 68 OF 2026 (T-IT)

BETWEEN:

1. THE INCOME TAX OFFICER, TDS WARD, ATTAVARA, MANGALORE-575001.

2. THE CHIEF COMMISSIONER OF INCOME TAX BENGALURU, C.R. BUILDING, No.1, QUEENS' ROAD, BENGALURU-560001.

Digitally 3. THE CENTRAL BOARD OF DIRECT TAXES signed by DEPARTMENT OF REVENUE VINUTHA B S REPRESENTED BY ITS CHAIRMAN Location:

High Court of NORTH BLOCK, Karnataka NEW DELHI-110001.

4. UNION OF INDIA, REPRESENTED BY ITS SECRETARY MINISTRY OF FINANCE NORTH BLOCK, CENTRAL SECRETARIAT, NEW DELHI-110001.

5. UNION OF INDIA, REPRESENTED BY ITS SECRETARY, SECRETARY, MINISTRY OF ROAD TRANSPORT AND HIGHWAYS TRANSPORT BHAWAN-1, PARLIAMENT STREET, NEW DELHI-110001.

…APPELLANTS (BY SRI ARAVIND V. CHAVAN, SENIOR STANDING COUSNEL)

AND:

1. SMT. SUPRIYA S. SHETTY, AGED 53 YEARS, WIFE OF SANATH SHETTY, RESIDING AT 3501, PLANET, S.K.S. KADRI HILLS, MANGALORE-575 002.

2. THE PROJECT DIRECTOR NATIONAL HIGHWAYS AUTHORITY OF INDIA, DOOR No.3-29 BETHEL, THARETHOTA MANGALORE-575 005.

3. THE SPECIAL LAND ACQUISITION OFFICER\

AND THE COMPETENT AUTHORITY AND NATIONAL HIGHWAY, BEHIND MINI VIDHANA SOUDHA, MANGALORE-575 001.

4. THE DEPUTY COMMISSIONER AND ARBITRATOR, DAKSHINA KANNADA DISTRICT, MANGALORE-575 001.

…RESPONDENTS (BY SRI OJASWI, ADVOCATE FOR SRI K. V. DHANANJAY, ADVOCATE FOR R1)

THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER PASSED BY THE LEARNED SINGLE JUDGE IN WP No.30804/2024 DATED 20/11/2025.

THIS APPEAL, COMING ON FOR ORDERS THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE S.G.PANDIT and HON'BLE MR. JUSTICE K. V. ARAVIND

ORAL JUDGMENT

(PER: HON'BLE MR. JUSTICE K. V. ARAVIND)

Heard Sri Aravind V. Chavan, learned Senior Standing Counsel for the appellants and Sri Ojaswi, learned counsel for Sri K.V. Dhananjay, learned counsel for respondent No.1. 2. This intra-court appeal is filed under Section 4 of the Karnataka High Court Act by the Income-tax Department, challenging the order dated 20.11.2025 passed in Writ Petition No.30804/2024.

3. Respondent No.1 filed writ petition with the following prayers;

“a) Issue a writ of mandamus or any other appropriate writ declaring that Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 ('RFCTLARR Act') applies to the compensation received by the Petitioner for acquisition of her lands under the National Highways Act, 1956;

b) In the alternative, if this Hon'ble Court is not inclined to interpret Section 96 of the RFCTLARR Act, 2013 as applicable to acquisitions under the National Highways Act, 1956, then, to declare that the limitation of tax Act to only acquisitions under that Act, while exemption under Section 96 of the RFCTLARR denying the same benefit to similarly situated landowners whose lands are acquired under the National Highways Act, 1956, is unconstitutional as violating Article 14 of the Constitution; and c) Consequently, extend the benefit of tax exemption under Section 96 of the RFCTLARR Act to the Petitioner whose lands were acquired under the National Highways Act, 1956, a statute listed in the Fourth Schedule to the RFCTLARR Act, 2013;

d) Direct that no income tax shall be levied on the compensation received by the Petitioner;

e) Direct refund of tax deducted at source in respect of the Award passed by the Special Land Acquisition Officer and Competent Authority on 29-Jan-2021;

f) Pass such other Order or direction as this Hon'ble Court may deem fit in the facts and circumstances of this case.”

4. The above prayers were made on the premise that the land belonging to respondent No.1 was acquired by the Special Land Acquisition Officer for the purpose of formation of a National Highway, and tax was deducted at source (TDS) to the extent of Rs.16,00,000/- from the compensation amo