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Karnataka High Court has given a big decision saying that income tax cannot be deducted on the compensation given for acquiring land for public projects like National Highway.
New Delhi. Giving a big relief to the land owners, the Karnataka High Court in Bengaluru has clearly said that Income Tax cannot be deducted on the compensation given for projects like National Highway expansion. Court Supriya S. This decision was given while accepting Shetty’s petition. The matter arose when more than Rs 16 lakh was deducted as TDS from the amount received on the acquisition of his 33.50 cent land.
Supriya and her husband had purchased 17.5 acres of land in Tenkulipadi village about 20 years ago to build a wellness resort. But in 2020, part of their land was acquired for NH-169 widening. As per law, Section 96 of the RFCTLARR Act completely exempts land acquisition compensation from income tax, yet the authorities deducted TDS. In the court, the petitioner’s lawyer argued that this is against the order of the Parliament and puts undue burden on the public. He said that when land is taken for a public project, imposing tax on compensation is unfair and contrary to the purpose of the law.
Then the decision in favor of the land owner
Justice S.R. Krishnakumar had also ruled on the same issue in 2022 that TDS cannot be levied on compensation received under the RFCTLARR Act. The Supreme Court had also refused to stay that decision. On this basis, the court again gave its verdict in favor of the land owner.
Relief for thousands of land owners
This decision is a relief news for thousands of land owners in Karnataka, because in many places NH authorities, KIADB and other agencies used to deduct 10% TDS on the compensation. Now this order of the court will affect all acquisition cases of national highways, railways, pipelines and industrial projects.
