Pimpri Chinchwad Municipal Corporation Vs ITO (Bombay High Court)
The Bombay High Court heard a writ petition filed by Pimpri Chinchwad Municipal Corporation (PCMC) seeking to quash orders passed under Sections 201 and 201(1A) of the Income Tax Act, 1961, along with the related demand notice under Section 156, all dated 31 March 2025. The petition also challenged a penalty notice under Section 274 read with Section 271C dated 22 April 2025, and the penalty order dated 30 September 2025.
Background of the Case
The Income Tax Department had treated PCMC as an assessee in default for not deducting tax at source under Section 194LA while issuing Transferable Development Rights (TDR) certificates in lieu of compensation for lands acquired from original owners for public purposes under Section 126 of the Maharashtra Regional and Town Planning (MRTP) Act, 1966.
Section 194LA of the Income Tax Act mandates deduction of tax when any person pays compensation to a resident for compulsory acquisition of immovable property. The issue before the Court was whether issuance of TDR certificates, which represent compensation in kind rather than in monetary form, attracts TDS obligations under this provision.
Petitioner’s Submissions
The petitioner argued that Section 194LA covers only monetary payments — specifically, compensation paid “in cash, by cheque, draft, or any other mode” — and that the phrase “any other mode” should be interpreted ejusdem generis (of the same kind) with the preceding words, i.e., as referring to monetary transactions similar to cash or cheque payments.
