The Special Tahsildar vs Government Of India
2022 Latest Caselaw 10092 Ker

               IN THE HIGH COURT OF KERALA AT ERNAKULAM
                               PRESENT
                THE HONOURABLE MR. JUSTICE GOPINATH P.
   THURSDAY, THE 15TH DAY OF SEPTEMBER 2022 / 24TH BHADRA, 1944
                       WP(C) NO. 20430 OF 2021
PETITIONER:

          SPECIAL TAHSILDAR LAND ACQUISITION (GENERAL),
          B1 BLOCK, CIVIL STATION, MALAPPURAM - 676 505.

          BY ADV. THUSHARA JAMES (SR GP)



RESPONDENTS:

    1     GOVERNMENT OF INDIA,
          REPRESENTED BY THE SECRETARY, DEPARTMENT OF REVENUE,
          MINISTRY OF FINANCE, INCOME TAX DEPARTMENT, NEW DELHI,
          PIN- 110 092.

    2     PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX,
          KERALA, C.R.BUILDING, I. S. PRESS ROAD,
          KOCHI - 682 018.

    3     INCOME TAX OFFICER (TDS),
          OFFICE OF THE INCOME TAX OFFICER (TDS), 3RD FLOOR,
          AAYAKAR BHAVAN, NORTH BLOCK, MANANCHIRA,
          KOZHIKODE - 673 001.

    4     INCOME TAX OFFICER (TDS)
          OFFICE OF THE INCOME TAX OFFICE,
          TIRUR - 676 101.

          BY ADVS.
          CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT
          T.V.VINU



     THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
15.09.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
 WP(C) NO. 20430 OF 2021

                                         2




                                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 WP(C) NO. 20430 OF 2021

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 WP(C) NO. 20430 OF 2021

of interest is statutory and it is clear from a reading of sub-

section (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 WP(C) NO. 20430 OF 2021

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

deduct any sum in accordance with the provisions of the Act. It

is submitted that since the Income Tax Department itself had

refunded the amount of TDS as is evident from Exts.P5 to P8, it

cannot be said at this point of time that the land in question

was not agricultural land falling outside the definition of Capital

Assets under Section 2(14) of the said Act. The learned Senior

Government Pleader also relied on the judgment of a three

bench of the Supreme Court in Dwarka Nath v. Income-Tax

Officer [AIR 1966 SC 81] where, considering the power of

High Court under Article 226 of the Constitution of India, the

Supreme Court observed as follows:

6. This article is couched in comprehensive phraseology

and it ex facie confers a wide power on the High Courts to

reach injustice wherever it is found. The Constitution

designedly used a wide language in describing the nature of

the power, the purpose for which and the person or authority WP(C) NO. 20430 OF 2021

against whom it can be exercised. It can issue writs in the

nature of prerogative writs as understood in England; but the

scope of those writs also is widened by the use of the

expression "nature", for the said expression does not equate

the writs that can be issued in India with the those in England,

but only draws in analogy from them. That apart, High Courts

can also issue directions, orders or writs other than the

prerogative writs. It enables the High Courts to mould the

reliefs to meet the peculiar and complicated requirements of

this country. Any attempt to equate the scope of the power of

the High Court under Article 226 of the Constitution with that of

the English Courts to issue prerogative writs is to introduce the

unnecessary procedural restrictions grown over the years in a

comparatively small country like England with a unitary from of

Government to a vast country like India functioning under a

federal structure. Such a construction defeats the purpose of

the article itself. To say this is not to say that the High Courts

can function arbitrarily under this Article. Some limitations are

implicit in the article and others may be evolved to direct the

article through defined channels. This interpretation has been

accepted by this Court in T.C. Basappa v. Nagappa and Irani v.

State of Madras.

She also points out that while considering the matter in Ext.P3,

the Principal Chief Commissioner, Income Tax has in paragraph

5.3 of Ext.P3 found as under:

WP(C) NO. 20430 OF 2021

"It is contended that the petitioner has inadvertently

deducted TDS. If that were so, the proper course for him

would be return such TDS to the awardees, which has not

been done in this case. Further, the petitioner has also not

remitted such tax deducted into Government account

within the applicable time limits."

It is submitted that the fact that the amounts, which were

actually paid to the Income Tax Department, were refunded will

itself show that the amounts were not to be deducted under the

provisions of the Income Tax Act.

Having heard the learned Senior Government Pleader

appearing for the petitioner and the learned Standing Counsel

appearing for the respondent Department, I am of the view that

this writ petition is only to be allowed. It is clear from a reading

of Section 201 that the liability to deduct tax arises only when it

is required to be deducted under the provisions of the Act. In

other words, where there is no liability to deduct TDS, the mere

fact that TDS was so deducted and paid to the Income Tax

Department belatedly, cannot give rise to a claim for interest

under sub-section (1A) of Section 201 of the Income Tax Act. I

feel that this can be the only reasonable interpretation that can

be placed under the provisions of Section 201, as interest under WP(C) NO. 20430 OF 2021

sub-section (1A) of Section 201 is obviously to compensate the

Government / Income Tax Department for the delay in payment

of taxes, which are rightfully due to the Government. I must also

note that it is clear from Ext.P1 that the delay in remitting the

amounts deducted as TDS arose only on account of the fact that

the Officer in question was deputed for election duty for the

period from January 2014 to May 2014 in connection with the

Lok Sabha Election of 2014. Cumulatively, these facts compel

me to hold that the levy of interest under sub-section (1A) of

Section 201 was wholly unwarranted in the facts and

circumstances of this case. The contention that the Income Tax

Department had to pay interest on refund amount from a date

prior to the date on which the Department received amounts is

untenable. The Department was under no obligation to pay

interest from a date prior to the date on which it actually

received the amounts of TDS. The writ petition is, therefore,

allowed. Exts.P2 and P3 will stand quashed. No costs.

Sd/-

GOPINATH P.

JUDGE DK WP(C) NO. 20430 OF 2021

APPENDIX OF WP(C) 20430/2021

PETITIONER EXHIBITS

Exhibit P1 A TRUE COPY OF THE CERTIFICATE DATED 13.06.2017 ISSUED BY DEPUTY COLLECTOR (ELECTION), MALAPPURAM.

Exhibit P2 A TRUE COPY OF THE PROCEEDINGS OF THE INCOME TAX OFFICER (TDS), KOZHIKODE DATED 07.03.2017.

Exhibit P3 A TRUE COPY OF THE ORDER PASSED BY THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX, KERALA DATED 24.05.2018.

Exhibit P4 A TRUE COPY OF THE NOTICE ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER DATED 08.07.2021.

Exhibit P5 A TRUE COPY OF THE REFUND STATUS WITH RESPECT TO PAN NO.BKLPA2991J DATED 22.03.2016.

Exhibit P6 A TRUE COPY OF THE REFUND STATUS WITH RESPECT TO PAN NO.BKMPA1816M DATED 19.08.2016.

Exhibit P7 A TRUE COPY OF THE REFUND STATUS WITH RESPECT TO PAN NO.BSJPR9917D DATED 14.06.2016.

Exhibit P8 A TRUE COPY OF THE REFUND STATUS WITH RESPECT TO PAN NO.BKMPA1819E DATED 22.08.2016.