Tukaram Kana Pawara Vs Project Director Project Implementation Unit (Bombay High Court)
No TDS on National Highway Land Acquisition Compensation as Section 96 Grants Statutory Tax Exemption; Executing Court Cannot Order TDS Deduction Because Compensation Award Is Exempt From Income Tax; Compensation Must Be Paid in Full Because Arbitral Award Becomes a Judgment Debt; Full Land Acquisition Compensation Must Be Released Because Section 96 Overrides TDS Provisions; TDS on National Highway Compensation Invalid Because Income Tax Exemption Is Statutorily Guaranteed.
In this batch of writ petitions, the petitioners challenged orders passed by the District Court in execution proceedings directing deduction of 10% Tax Deducted at Source (TDS) from compensation awarded under arbitral awards passed under Section 3G(5) of the National Highways Act, 1956. The executing court had permitted withdrawal of the deposited compensation amount but ordered deduction of TDS and directed that the deducted amount be credited to the account of the Competent Authority for Land Acquisition (CALA).
The petitioners’ agricultural land had been acquired for widening of a National Highway. After the Competent Authority for Land Acquisition passed an award under Section 3G(1) of the National Highways Act, the petitioners sought arbitration under Section 3G(5). The Arbitrator enhanced the compensation and also awarded compensation for easementary rights. During execution proceedings, the acquiring body deposited the compensation amount before the executing court, which later directed deduction of 10% TDS while releasing the amount.
