Case Law Details
CIT (TDS) Vs M/s Mumbai Metropolitan Regional (Bombay High Court)
Section 194LA of the I.T.Act, 1961 inter alia deals with payment of compensation on acquisition of certain immovable property. Section 194LA of the I.T.Act, 1961 was brought into force with effect from 1st October, 2004. Section 194L of the I.T.Act, 1961 deals with payment of compensation on acquisition of a capital asset and was omitted with effect from 1st June, 2016. Basically, what both these provisions provide is that any person responsible for paying to a resident any sum in the nature of compensation or enhanced compensation or consideration or enhanced consideration on account of compulsory acquisition, under any law for the time being in force of any capital asset, at the time of payment of such sum in cash or by issue of a cheque or Draft or by any other mode, whichever is earlier, is liable to deduct an amount equal to 10% of such sum as TDS on the income comprised therein. The provisos to said sections are not really relevant or germane for our purpose. What can be seen from the aforesaid provisions is that TDS is to be deducted when compensation is paid on account of compulsory acquisition under any law for the time being in force. In the facts of the present case, as correctly recorded by the ITAT, for the purpose of implementing the scheme of the Government relating to road widening near the railway track, the assessee evacuated the illegal/unauthorized persons who were squatters/hutment dwellers. The fact of the matter was that the possession of these persons was unauthorized and illegal and they were not the owners of the land on which they had squatted / built their illegal hutments. In fact, they were trespassers. This being the case, there was no question of the land being acquired by the assessee. In fact the ITAT, and in our view correctly, came to the conclusion that the land always belonged to the State; it was encroached upon, which encroachment was removed by the assessee; and the encroaching squatters / hutment dwellers were rehabilitated. This being the case, we find that section 194L or section 194LA of the I.T. Act, 1961 had absolutely no application to the facts and circumstances of the present case. We find that the revenue has totally misunderstood the law when it assumes that the squatters / hutment dwellers are deemed owners of the land on which they squat or encroach upon. The squatters / hutment dwellers have absolutely no title in the land on which they squat or build their illegal and unauthorized hutments. This being the case, there is no question of there being any compulsory acquisition from them under any law either under the Land Acquisition Act, 1894 or any other enactments which permit compulsory acquisition of land. This being the case, we find that section 194L or section 194LA of the I.T. Act, 1961 has absolutely no application to the facts and circumstances of the present case. We, therefore, find that the first three questions of law [reproduced as questions (a) to (c)], do not give rise to any substantial question of law which would require us to admit these appeals.
Payment towards Annual Maintenance Contracts subject to TDS u/s 194C of Income Tax Act
ITAT correctly held that the assessee had made payments only in respect of maintenance contracts which relate to minor repairs, replacement of some spare parts, greasing of machinery etc. These services do not require any technical expertise, and therefore, could not be categorized as “technical services” as contemplated under section 194J of the I.T.Act, 1961. We must mention here that section 194J of the I.T.Act, 1961, deals with fees for professional or technical services. In contrast, section 194C of the I.T.Act, 1961 deals with payments to contractors. In the facts and circumstances of the present case, the assessee had correctly deducted TDS under the provisions of section 194C of the I.T.Act, 1961 and not as per the provisions of section 194J thereof.
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